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Simplify And Reduce Risk By Turning The Clock Back 15 Years.



May 31, 2011 – Comments (25) | RELATED TICKERS: PAY , CASH , CATO

Fifteen years ago I was 22 going on 23. At that time I had no credit cards, no car loan, no mortage and no student loans (I married into that). After struggling for years we rid ourselves of the credit cards and the car loans. (Yeah!!!) But we are still saddled with the mortgage and the student loans. (Boooo!!!)

There was something else I did not have 15 years ago; a debit card. That's right, I have not always had a debit card. It may seem like you have but it is not true. I had a ATM card from my credit union. That was it. I had a limit of $400 a day that I could take out. At the time I was still very much a kid, wanted the freedom to spend-spend-spend. Now as an adult I realize my eagerness to inject money into the economy was to my detrement. Being able to take out only $400 was helping to keep me in check. As soon as the new debit cards came out with the Visa/Mastercard logos on them I thought it was wonderful. I could swipe and buy way over my former $400 limit from the ATM. My accounts suffered for it. I suffered for it.

Flash forward to today: I'm on the verge of simplifying my life. I've decided to lock away the debit card, to only use a ATM card for the day to day stuff. My main concern today is not me. I long ago sobered up. By using the debit card for too much I expose myself and my accounts to electronic fraud. If I take the cash out ahead of time and pay as I go, like in 1996, my exposure to such risk will be less. I was able to do it and function then. I should be able to do it again.

25 Comments – Post Your Own

#1) On May 31, 2011 at 1:03 PM, Turfscape (< 20) wrote:

Giving you a rec for the ticker symbols alone! I'd give a second one for the content of your post...but the Fool only lets me rec once.

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#2) On May 31, 2011 at 1:13 PM, RexHavoc11 (< 20) wrote:

LOL!  I'm with Turfscape.  Despite being rec #1, I didn't notice that until now.

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#3) On May 31, 2011 at 1:18 PM, chk999 (99.97) wrote:

Great blog post.

Cash makes you focus. 

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#4) On May 31, 2011 at 1:22 PM, leohaas (29.35) wrote:

Well done!

But honestly, doesn't this sound a bit like Kirstie Alley blaming the availability of unlimited supplies of chocolate for her weight problems? Just because the chocloate was there did not mean she needed to eat it.

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#5) On May 31, 2011 at 1:24 PM, smartmuffin (< 20) wrote:

The $400 limit kept you in check?  How much money did you have that you had the opportunity to withdraw more than $400 on a regular basis?  To withdraw more than $400 a day would require you to be making more than $12,000 a month!

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#6) On May 31, 2011 at 1:28 PM, Valyooo (34.43) wrote:

If thats what makes you control yourself, then definitely stick with it.  I love credit cards because of the cash back.  However, I never use my credit card unless I have the cash in the bank to pay for it...I just like rewards.

But everyone has their sickness...mine is options

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#7) On May 31, 2011 at 1:29 PM, Starfirenv (< 20) wrote:

Cato- Cheap and Unfollowed! 

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#8) On May 31, 2011 at 1:37 PM, CluckChicken (< 20) wrote:

By using the debit card for too much I expose myself and my accounts to electronic fraud. If I take the cash out ahead of time and pay as I go, like in 1996, my exposure to such risk will be less. - If you fear this then there is something very simple you can do to avoid this. Ask you bank for just an ATM card, if they say they do not have one they can setup the cards to use different PIN for ATM transactions and debit transactions (they are lying to you if they say they cannot). If you still fear somebody getting your acct info then use a credit card (get a low limit or track your charges like you would with a checkbook) because it is always better to fight over the banks money then your money.


I agree with Leo, it isn't the credit system that has caused you any financial issue it is that you can not control your spending.

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#9) On May 31, 2011 at 1:40 PM, djemonk (< 20) wrote:

I'm with you (even basically the same age).  I ditched all my credit cards a few years ago.  I still have a debit card,  but only use that when I need to buy a new computer or something of that size.  Got married and paid off my wife's student loans right away and we are totally 100% debt-free.

+1 Rec for common sense!

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#10) On May 31, 2011 at 1:46 PM, L0RDZ (88.00) wrote:

Well at least this is better than what ALstry posts....  :)



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#11) On May 31, 2011 at 2:20 PM, ikkyu2 (98.57) wrote:

Have never understood why spending money in flavor X "feels" different than spending money in flavor Y.  Cash, checks, credit card, debit card, gold card, platinum card, black card, iPhone swipe, gift card balance, bank wire, or bartering an ounce of silver for a haircut - it's all the same kind of transaction: you're spending.  If you spend more than you take in, you go into debt.

I think most people must not think about this the same way I do.  And that's too bad. 

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#12) On May 31, 2011 at 2:20 PM, SultanOfSwing (32.43) wrote:

But we are still saddled with the mortgage and the student loans.

It depends on what rates you're paying for your student loans and especially your mortgage if you were fortunate enough to refi.  We were lucky enough to refi to sub 4.5%, 30-year fixed.  So that frees up funds to do other stuff, like invest!

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#13) On May 31, 2011 at 2:36 PM, catoismymotor (< 20) wrote:

All of us are not born knowing or even taught how to handle certain things in life. Some of us unintentionally find ourselves before Principle Hard Knocks where we are forced to learn the hard way. The tuition for such schooling is exacted from us as time, effort, cash or pain.

I believe in keeping some things simple. I have enough to juggle. Why throw the flaming chainsaw of credit card debt into the mix? Being in debt gives someone leverage over you and your family. If you take your head out of the game for just a little while debt will take over your life like a weed, so why let it in?

Re #1:

I'm glad you like it. The symbols worked out perfectly. :)

 Re #4:

I said I had a problem. I said I solved the problem. The reason for the change is my desire to minimize my exposure to fraud.

Re #5:

The $400 amount was the maximum the ATM at the branch offices would let you withdraw each day, but only if you had the funds available. My point was if I wanted to buy a $1500 television I could not just swipe the card. I'd have to open a line of credit (Yuck!), write a check (never had the book on me) or go back with cash. I used to be overly impulsive with my purchases. Having some time away to cool off before buying something like the afore mentioned television made me sober up, help me shift my priorities. Now the idea of making such a purchase makes me scrunch up my face, feel a little ill.

Re #6:

I used to work in banking so I know the cash back thing is a way to fool the clueless into paying more in fees. I'm glad you have the discipline to play their game and win. Most people don't. That is what they are counting on.

Re #8:

Thank you for the advise. I don't use credit cards so that option is not for me. I have been in control of my sepending for a long time now. It is no longer a problem, nor will ever be again. Thank you for your suggestion.

Re #9:

Awesome. Well done! BTW: You still can't have my piano. :)



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#14) On May 31, 2011 at 3:28 PM, mm5525 (< 20) wrote:

I am a big fan of cash versus debit/credit cards. It just makes me think twice before I buy something when I lay out 5 or 6 20's at the grocery store or at a department store. It "hurts" more to see the cash exit my wallet. I, too, worry about fraud since those debit cards are tied to my bank account. Since it is so easy to pay bills online now, I have a separate account just for bills and keep just enough money in there to pay electronically things like the cell phone, cable, utilities, insurance, etc. I am glad there is no overdraft "protection" automatically tied to your accounts anymore, and that you have to specifically opt-in to put that into effect. If there's not enough cash in the account, the card simply should not work is my belief.   

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#15) On May 31, 2011 at 3:57 PM, CluckChicken (< 20) wrote:

Why throw the flaming chainsaw of credit card debt into the mix? - Why is it always if somebody has a credit card that they must have credit card debt? I understand that people that have a difficult time controlling their spending could have a problem with credit cards but it does not mean that they will.


Credit Cards can offer great benefits to those that do control their spending. They offer an easy way for people to build a credit history. Some offer very good reward programs that are significantly better then spending cash. Also in many cases credit cards can be cheaper then cash, especially if you are away from your bank's area of business.


Also from history I can tell you that it is better to use a credit card for purchases or reservations if you fear your number getting stolen. Though the banks all say that they will refund all your money that was taken (some as soon as the next day) you still have an empty checking account till they do restore it. Also they will only restore the money that they believe was stolen till you can show that the amount in question was not stolen. As a bonus you can easily end up in fee-hell as payments start to bounce because of lack of funds and then all the fees that apply to those and then the overwhelming joy of dealing with the bank over those. If this happens with a credit card the account can be closed and a hold put on things while you and the bank work out what are legitimate charges and what are not all while still having access to all of your money.


If you know that a credit card is not good for you then don't get one, but don't tell others that are fine with them that all is better without them.

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#16) On May 31, 2011 at 4:12 PM, catoismymotor (< 20) wrote:

If you know that a credit card is not good for you then don't get one, but don't tell others that are fine with them that all is better without them.

You suggest that I suppress my opinion because there are people out there that are doing well without reading what I have to say? That makes no sense. Is your concern that I may hurt someone's feelings?

Do what works for you. I'm merely putting my experience into words. I think a blog about the virtues of credit cards would be an excellent project for someone well versed in the subject.

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#17) On May 31, 2011 at 4:16 PM, leohaas (29.35) wrote:

I was just pulling your leg. And Kirstie's, I guess.

Whatever works for you to spend less than you make, man. That's how you will never get into financial problems. If only the vast majority of Americans would subscribe to this philosophy.

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#18) On May 31, 2011 at 4:21 PM, catoismymotor (< 20) wrote:


Don't mess with a man that once upon a time had a Kirstie Alley crush. ;)


P.S. - I thought she was hot when she played Rebecca on Cheers.

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#19) On May 31, 2011 at 4:51 PM, BMFPitt (91.10) wrote:

Credit is like a knife.  It's a useful tool as long as you are smart enough to not stab yourself with it.  I don't quite understand why so few people are able to use it properly, but if safety scissors are what you need to do, then safety scissors it is.

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#20) On May 31, 2011 at 5:11 PM, awallejr (56.95) wrote:

Yeah I have to rec for the stock ticker symbols alone.

Credit cards can be very useful for those who are disciplined (which I suspect is the minority).  Paying cash, in the end, is best for most.

On a bright note, I read that households have pared down their debt 11% over the last 3 years.

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#21) On May 31, 2011 at 7:14 PM, devoish (86.34) wrote:

Nice post Cato.

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#22) On May 31, 2011 at 8:54 PM, JakilaTheHun (99.91) wrote:

I'm always interested to hear people's own experiences with debit and credit cards.  People seem to have radically different takes on them, and that's fine.  But it's interesting all the same.


For me, I will never carry an Debit and/or ATM card ever again in my life.  I had an experience with fraud when I was 19 years old.  I virtually never used the debit card, as I preferred to use my credit cards anywhere that accepted them.  Yet, in spite of this, I ended up with about $1500 worth of fraudulent purchases on shady websites in Eastern Europe.  My bank didn't question these purchases and tried to blame them on me, in spite of the fact that no one had access to my card and I don't think anyone even knew I had it other than me. 

Banks will always try to avoid paying for things, even if it's their own lax security procedures that causes the problem, and I'll never forget having to absorb that $1500 loss because the bank refused to take any accountability.  Of course, now that I'm older, a big @$$hole, and have a larger bank account, I probably wouldn't have the same issues, but I was just a 19 year old college kid at the time and wasn't all that assertive.  Moreover, they didn't care too much about my account. 


On the other hand, I use my credit cards for virtually everything and have had no issues in 12 years of using them.  I pay my bill off every single month (no ridiculously high interest), and it allows me to track all my purchases.  Moreover, I get the cash back and rewards stuff, too.  

Credit cards have much greater fraud protections, as well.

The great thing is that having my credit card has allowed me to  build great credit and made my life considerably simpler.  It's not everyone's story, but it's mine.  To each his own. 

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#23) On May 31, 2011 at 9:05 PM, HarryCaraysGhost (77.10) wrote:

Hi Cato.

Just wanted to chime in since I took the exact opposite route. In my youth I refused too even hold an A.utomatic T.eller M.achine machine card. Reason being I knew myself and was convinced that in my reckless ways I would blow my whole paycheck on a Weekend.

Now that I'm more settled down. I hold multiple cards (all by Visa btw) and pay them off every month. Only debt is a mortgage and I'm kinda of ticked about that since if I had waited a few yrs would have been able to pay cash.( I remember the conversation well, my girl was watching all those flip my house shows, and I casually mentioned does'nt this seem somewhat bubbly to you?)

So my goal now is to make enough on stocks to pay off the mortgage in full.


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#24) On May 31, 2011 at 9:33 PM, hondamikesd (< 20) wrote:

In defense of Kirstie Alley, she's back to looking good again after being on dancing with the stars.

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#25) On June 01, 2011 at 12:29 PM, whereaminow (< 20) wrote:


I enjoyed this post!  I didn't read the comments, but will go over them when I get a chance.

It's interesting. I'm actually the exact opposite of you!  I use a debit card rather than cash, because it helps control my spending.  I found that when I had cash, I spent like a drunken sailor.  

For security, I keep the debit card account balance very low. Never more than $1,000 no matter how "rich" I am at the time.  Usually, it averages $500.  I don't use overdraft protection either, since that's a big rip off, and I want my card to be denied if it gets stolen and a big charge is attempted.  I have a separate card for big purchases that I only bring out for special occasions.  (I call it the Billy Baroo).

Whatever works right?  Great post, cato!

David in Qatar 

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