Rainy Day funds and the Credit card

[Andrew68]

in regard to budgets- rainy day funds/Emergency funds-
I have no debt outside of the basics, I currently pay cash for everything, my monthly reoccurring debt is as follows.
Insurance
Food
Fuel
Phone/internet

I Have a rainy day emergency maint fund- My question is do any of you (other roadies/off-griders/rv'rs) take into consideration or have a credit card?
I have paid them down to zero no reoccurring fees, There is no way some of you do not have one or two cards hidden away for that one big uh-oh?

Do you set it up for your reoccurring expenses, take it into account for emergency funds?

I am not aiming or directing this to only one type of financial person, I know some have more than others and some believe they can not live with out a CC, some will feel the opposite and will say they can't stand the debt however I am curious as to some of the more seasoned van dwellers.
Safety/Security/Transaction Protection/theft protection/Warranty protection/ease of transactions/perfect budget device(balance limiter/pay it off monthly)

Just asking for your thoughts?

 

[Almost There]

Both are wonderful things to have and now that I've got them I can't ever see being without them!

The credit card is great to have for paying for that emergency auto repair bill and then the rainy day fund is needed to pay off the credit card.

I don't like carrying excess amounts of cash and a repair bill will almost certainly (it's one of Murphys' laws ) exceed whatever cash I'm carrying at the time. When your only wheels are in the shop is not the time to be trying to find a bank or ATM.

I wouldn't travel without the credit card and the cash can safely stay in the bank!

 

[Andrew68]

Thank you, kind of the same theory and philosophy I am going with.
Use it and then have the discipline to pay it off at the end of the month in full.
I did decrease my balance just to help keep myself in check, cautiously learning to live with in the means.
I know this much the empowerment of not having any debt whatsoever is intoxicating.
I am my own person, I can come and go as I please and I don't give a hoot what people say.

 

[Almost There]

About decreasing the amount of credit available on a card - while it's always wise to keep your spending within your means, be careful not to decrease your limit too far.

My one credit card sends me a 'we'd like to increase your limit' letter every six months and then phones when I don't take them up on their offer.

BUT, I have a limit already that would allow me to replace the entire van (soon to be home ) AND everything in it and enough cash to do so.

Don't decrease your limit based on what you think will keep you out of financial trouble - that's what self discipline is for. Consider what you would need if ever the SHTF, not worldwide, I'm talking about an engine blowing up or a transmission going out and leave extra room because you'd probably need an alternative place to stay while repairs are being made.

 

[LeeRevell]

I keep my CC limit at a comfortable amount, that I can pay off in one or two months. A couple times the CC company has tried to 'reward' me by upping my credit limit to about double what I want. I called them both times and had it returned to my current level. I did get in trouble with multiple credit cards many years back, and I will NOT go there again! Higher credit limits are just too much temptation. This works fro me.

 

[rvwandering]

We have one for emergencies and any other large expenses. We also use it for monthly reoccurring expenses like phone service. We've always been good at living within a budget so our credit card bills have always been paid in full at the end of the month. We only have one card and keep our limit low in case of theft.

 

[HarmonicaBruce]

I think you must have a credit card to rent a car, hotel room, buy from amazon or anyone on the internet.  I use mine for everything I can because I get 1, 2, or 3% cash back.  With 2% off on diesel, it's cheaper to use the card than to get the cash discount.  If you go over your credit limit they can charge you, depending on the card I guess.  I guess you have to have self-discipline.  I keep all my money in my checking account and my credit card bill gets paid automatically, as do most of my bills.  I used to live in an apartment that took credit cards for rent, so I got a 1% discount on my rent.  

Then I have a second credit card just in case the first one won't work.  I've had them shut it off because I was traveling and having a second card came in handy.  Now, I know how important it is to not run my checking account down so I keep an eye on it.  But I have almost all my money there so I know I'll have enough.  I always pay my card in full, and at the end of the year I've paid no interest of late charges.

 

[Reducto]

The only reason to get rid of credit cards is if you or someone you're sharing credit with has a spending problem and can't be trusted with them.

When you're broken down in the middle of nowhere or have a health emergency it's wonderful to have instant access to funds. Your real rainy day funds can be locked up somewhere in an investment account earning interest. Absolute worst case I can max out my cards then default on them, so I do consider them part of my emergency funds. It's not ideal, obviously, but if the choice is between bad credit and dying because I can't afford medical treatment, I'm gonna use those cards.

During normal times it helps me to have all my expenses for the month show up on a credit card statement. It's hard to keep track when it's just small amounts of cash here and there. I pay it off in full and get some % back.

 

[Spaceman Spiff]

in regard to budgets- rainy day funds/Emergency funds-
My question is do any of you (other roadies/off-griders/rv'rs) take into consideration or have a credit card?

Do you set it up for your reoccurring expenses, take it into account for emergency funds?

I carry two credit cards, one being a backup (like HarmonicaBruce).  My primary card pays cash back on everything and I use it for almost everything; I hardly ever use cash.  Both cards are set up to automatically pay the balance when due, so I am never paying interest on that debt.  I like the protections that a credit card gives, as opposed to debit cards and cash.

All bills are set up for electronic fund transfers from my checking account (where my SS check is automatically deposited).  I track my spending and have a budget.  I use the minimum balance (to avoid fees) in my checking account for an emergency fund.

Credit cards are great only if you are disciplined.  Interest rates on credit cards are crippling.

 

[compassrose]

I think you should do what you are comfortable with.

 

[One Awesome Inch]

I have an emergency fund stashed in a bank and use a credit card with my monthly cellphone charge to keep it active. Credit cards can easily get out of control if not watched carefully. I've learned that the hard way.

 

[gramakittycat]

For me a debit card works just as well as a credit card.I can purchase off the internet and rent a car etc. I am also covered should any unauthorized purchase come up.I don't have to worry about interest rates or going over a limit.Works for me.

 

[mconlonx]

The only reason to get rid of credit cards is if you or someone you're sharing credit with has a spending problem and can't be trusted with them.

This is me. I have no credit cards. Won't get one until my life is in a better place and even then, it will be a secured credit card. The secured part will be my emergency fund, and the card used only in emergencies.* In this way, I am self-aware about staying out of debt and hopefully slowly training myself to eventually use credit responsibly. Baby steps...

I'm a compulsive spender, so right now I work with a bank account attached to a debit card, a cash reserve, and silver. With the debit card, I can do most things I'd need to be handling with a credit card.* Ordering/paying online, handing it over to secure a hotel reservation or stay, rent cars, etc. I also keep a cash reserve on hand, outside the bank, which also functions as current emergency fund. 

And silver -- as a compulsive spender, any time the urge hits, I'll buy some silver bullion. Not spending in big enough quantities to get gold, so silver it is. Assuages my need for spending and is an investment of sorts. Secondary emergency fund if need be, but primarily for long-term savings. I expect there will be some kind of irrational price spike over the next couple of decades, if history is any indicator, at which point I will cash out some or most and look brilliant. On a daily basis, it represents cash tied up in a form which is not as liquid and accessible as cash, but far more easily turned into cash or traded than stock investments. The return is so far abysmal, but it beats having spent the money on consumer detritus.

*I have run into issues with debit cards in a couple of situations and I'm sure there's others out there yet to be encountered. Overseas, debit cards may be declined if trying to use them like credit cards. In Hong Kong, the decline rate was about 50%. Also, if there's not enough cash to cover what a hotel or rental car company reserves or charges against your card in case of damages, it may be declined. This is the only issues which cause me to consider even a secured credit card.

 

[Optimistic Paranoid]

*I have run into issues with debit cards in a couple of situations and I'm sure there's others out there yet to be encountered. Overseas, debit cards may be declined if trying to use them like credit cards. In Hong Kong, the decline rate was about 50%. Also, if there's not enough cash to cover what a hotel or rental car company reserves or charges against your card in case of damages, it may be declined. This is the only issues which cause me to consider even a secured credit card.

I'm not sure, but I suspect that if a hotel or car rental company tries to reserve an amount larger than the amount you have securing the card, it will be declined also.  So I don't see where a secured credit card is any better than a debit card.  I mean, they're not going to let you charge more than the amount you have securing it, right?

Regards
John

 

[Almost There]

mconlonx - just a heads up on the secured credit cards.

Be very careful to read the fine print on those secured credit cards. Not sure how many but some of them have an upper limit on how much you can put on the card.

A friend was using one because of marital breakups/bad credit stuff. Last summer she went to go away on the first vacation in a decade and put extra money on her credit card so she didn't have to carry a larger sum of cash.

THEN found out that there was a limit to how much she was allowed to put on the credit card - it was way lower than the money that the company had accepted from her. Through bureaucratic nonsense it was going to take the c/c company 4 weeks to send her a refund and in the meantime she was limited to a $100.00 per day use of the credit card. With travelling expenses, that meant that gas, groceries and campground fees were all going to have to come out of the daily allowance - no way was it going to work - a tank of gas just about took care of the $100.

Essentially, they took her money and then wouldn't let her use it her way!

Needless to say, she was frantic - all the reservations had been made, boyfriends airfare booked and paid for, kids excited and packed etc. etc. In the end a family member loaned her enough cash to do the trip and she repaid the loan when she got back and got a refund from the credit card company - and yes, it carried the Visa logo!

 

[mconlonx]

I'm not sure, but I suspect that if a hotel or car rental company tries to reserve an amount larger than the amount you have securing the card, it will be declined also.  So I don't see where a secured credit card is any better than a debit card.  I mean, they're not going to let you charge more than the amount you have securing it, right?

I don't doubt that you are correct. And considering Almost There's post following your own, I will indeed need to be careful, read fine print, etc....

It may be that I just bite the bullet and get a regular credit card. And get it set up like Spaceman Spiff does, where the whole balance is paid automatically at the end of the month.

As it is, there has been no time in the past couple of years where not having a credit card has been an issue... But I really haven't been spending much, traveling internationally, or in need of hotel rooms/rental cars.

 

[ZoNiE]

Has anyone here considered Aflac? You can get cash for just about any emergency when you are injured, which, at the very least, will put a roof over your head and food on the table if you get hurt. Not sure how it works for people who are not fully employed, but I think you can still get it.
Living on the road is inherently more dangerous, all it takes is a tree limb falling on you or your tent, and you have to go lay up somewhere. Aflac would pay for some or most of that.

A car accident is also covered, so you get the cash you need to help with the expenses the auto insurance may not cover, including the deductible. Like a hotel room while your house is in the repair shop...

I think I pay $30 a month for it. With kids, it makes sense...

 

[Andrew68]

I have read all of the postings in regard to my question, thank you all for the replies this has helped immensly.
I was going to go with a cash all the way style and drop the cards, due to the reponse and the statements I am going to follow some of your leads.
I will keep 2 one for day to day and one for the uh oh (rainy day fund).
Let the auto pay work it magic. I am very confident I can be disciplined with the larger balance.

Next question:
We all know you can not carry a zero balance on the high limit amount with out using/exercising it, should I use it for a fuel and maint to keep something charging on it to maintain my balance. I know from experience I can not carry a card for 6 months with a zero balance they will reduce the limits with out telling you, what do you do to maintain your limits?

I have learned over the years you have to allow the balance to post prior to full payment to maintain a healthy relationship with the CC provider.

Thoughts/musing's?

 

[Optimistic Paranoid]

Funny, I never thought of the rainy day fund in that particular sense.  I always just thought of it in terms of the transmission falling out into the street, or some such.

For those of us retired or on disability, it probably makes no sense.  For those depending on workcamping and taking seasonal jobs with Amazon, AFLAC might be worth looking into.

Regards
John

 

[Andrew68]

I keep my CC limit at a comfortable amount, that I can pay off in one or two months.  A couple times the CC company has tried to 'reward' me by upping my credit limit to about double what I want.  I called them both times and had it returned to my current level.  I did get in trouble with multiple credit cards many years back, and I will NOT go there again!  Higher credit limits are just too much temptation.  This works fro me.

I like your approach-
In the postings on here it is about being debt free and paying everything off, I totally concur, I am not changing my stance.
However in regard to shutting down all alternatives in regard to financial protection on the road, on the internet, not carrying the burden all alone makes me feel more comfortable.