debit or credit?

Those famous words are spoken every time someone pulls a card out of their wallet to pay for a purchase.  With us, it has always been credit.

Until Willow had a bad spell of being sick last spring, it was never an issue paying the card balance off every month.   After 3 overnight emergency room visits and two weeks in critical care, not only was the rest of our emergency fund drained, but we couldn’t pay off the card balance.

We’ve still kept using the card, as the interest rate isn’t very high at all.  We pay off what we spent each month then all the extra we think we can afford.

My thoughts have now turned to not using the credit card any longer, but using the debit card.  At least not until we pay off the credit card balance.  Our bank offers the same protection on our debit card as is on our credit card so unauthorised  usage would not be an issue.

I feel using the debit card would make us think twice or even three times about spending any money.  There is no way we would want to over draw the bank account.

I know what we need to cover the bills each month, including a payment on the credit card, so everything above that amount is ‘eligible’ to spend or save.

Scuba Man is none to keen on this idea.  He feels more secure in using the credit card and making sure we keep paying as we are.  That way, if we need to, we wouldn’t have to pay for everything immediately if we had cash flow problems.

I, however, want to save the credit card for the issue of a cash flow problem, or another true emergency.  I hate being in debt!

I face indecision.  Given my income will stop soon, I am not sure how to handle it.

Is it better to use the debit card and pay down the credit card to nothing?  This would save us money we pay in interest.

Or, is it best to continue using the credit card and just paying a set amount every month, banking everything else to make sure we don’t run out of cash for things like mortgage payments?

Or is it better to continue to use the credit card and not worry about a purchase draining the bank account because one or both of us hasn’t kept track of what we need for the bills?  Would this lead to us not paying enough attention to what we are spending as we are spending?

I need your opinions and some guidance here folks.  What has worked for you?  Which way would be best to handle the transition to just one income, even if it is only temporary?  Can this situation be handled without adding to the amount being carried on the credit card? Decisions…decisions…

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8 Responses to debit or credit?

  1. Papa Joe says:

    Hi Seashell!

    I don’t see why you can’t use a combination. In fact, as long as it’s tracked, you can even throw cash into the mix. When you see the money actually leave your wallet, it has a very sobering effect.

    I too have been down this road many years ago and started saving like crazy, putting every bit of extra cash into the bank even though it meant paying a credit card balance – and it’s interest – longer than I needed to. But as I paid my minimum balance and a bit each month, the credit card got lower. As the money got socked away, the bank account got higher.

    When the crossed paths I felt a great pride in paying off the remaining credit card balance all at once – then putting it away for good.

    What you do once it’s paid off is up to you. It sounds like you’ve got a good start on it either way. And tracking your expenses is important. Planning them, even more important.

    Good luck Seashell. I know it won’t be easy, but it will all work out in the end. 🙂

    – Papa Joe

    • Seashell says:

      This is a good one to discuss Papa Joe. I think my husband would feel more comfortable using cash instead of a debit card. And I like the idea of putting a set amount on the credit card and waiting to pay it off, especially now. I would rather have the money in savings in case it’s needed for a mortgage payment! Thanks for the ideas. I’m thinking they just might work for us!

  2. We paid off the cards with the highest interest first.

    Your position is not easy with the extra house and bills. Could you rent this house out on long or short term rental to help ease your cash flow?
    …the more I worry about money the more the knot of anxiety tightens in my stomach. I feel for you. Fingers crossed you find work quickly.
    PiP

    • Seashell says:

      Thanks PiP. We’ve tried the rental thing. It really doesn’t help much. Last year, the rental income barely covered 2 months of mortgage and utilities. I was telling Papa Joe with such little income, plus the cost of replacing items stolen and damaged by the renters, it just didn’t seem worth it, so we stopped. Unfortunately, long term renters are very rare in our little beach village. We’ll make it. It’s just a matter of figuring out what will work best for us.

  3. riverbkstar says:

    Tough decision. Considering that debit can have major fraud and your entire bank account can be cleaned. So debit is easiest yet the most unsafe.
    Credit is a good choice but can also be frauded aswell if you don’t have a large spending limit on it at a time/ but with a huge spending limit you can’t purchse expensive items even if it is once in a while without dealing with constant security resets
    Cash is best but if you were ever robbed then the money is gone forever. No bank can deposit that but the chances of being mugged are slim. So because Im a teen I say screw the polluting plastic fraud cards and just grab a wad of 20s

  4. got2havefaith says:

    Tough decisions. Whatever you do, don’t live off those credit cards when you find yourself out of work! We went through that last year…then a bankruptcy. We do not have credit cards at all. We live on cash and debit alone. The budget is stretched beyond belief. If we don’t have the money, we don’t buy it. We have had to make tough decisions on buying certain things…stupid things like buying a cheaper facial moisturizer ($14.99 compared to $6.99), buying the cheap chicken rather than the steak, our mortgage is a few days late, etc… It’s even harder when you have medical bills. I had some medical tests in December, I have insurance but I have a 20% co-pay, so I am making payments. It stinks that I can’t pay off $400 of medical tests…but what can you do? At least there isn’t any interest on the payment plan. I feel your pain. Good luck.

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