Q&A | Credit cards vs. cash + teaching kids how to drive
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Do you use credit cards, pay them off each month and get the benefit of the % return? Or do you feel, as I suspect that it is better to use cash, keep track of what you spend and feel that is more cost effective because one is less likely to part with beautiful dollars than use plastic.
Nancy
Actually, Mr. FG and I use a credit card for every purchase possible! We only ever use it to pay for things we can afford and we pay it off in its entirety every month.
Our current favorite is the Southwest Rapid Rewards credit card. (Compare this and other travel cards).
It does have an annual fee, but we earn so many miles, it's worth it to us. Plus, we get a bonus points award each year on our anniversary date of opening the card, so that helps too.
You can usually get a pretty great sign-up bonus by spending a certain amount within a few months, and sometimes the annual fee is waived for the first year.
You can check out the current offers here.
Please note: Credit cards are only worth it if you are able to control your spending and pay them off every month, so I don't recommend them to everyone across the board.
You have to take an honest look at yourself and your spending personality because credit card interest and credit card overspending will very quickly outweigh any potential benefit from credit card rewards.
So, if you try a rewards credit card but find yourself spending more than you would with cash/a debit card, then I recommend switching right back.
One other good cash back option is the Chase Sapphire Preferred card (compare this and other travel cards).
We've used this card before, and when you're a new customer, you get a really excellent bonus point offer plus no annual fee for the first year.
The bonus points from this card covered almost all of our lodging plus our car rental when Mr. FG and I went to California last year!
I have read your blog for a few years now and I really respect and appreciate your "methods". I have 3 teen boys and they are very scared to get behind the wheel. I think it's because of the accidents they hear about on tv. I have tried to reassure them that they can do it but they don't seem motivated to take on this responsibility and I am frustrated. They have never been in an accident and my husband and I are pretty good drivers, I think. We do not text or talk on the phone while driving so I am at a loss.
Wendy
P.S. They have taken drivers training and passed and drove well with the instructors but they will not complete their required hours.
Joshua (18) was pretty motivated to get his license, and while he's not a completely fearless driver, he's never been particularly scared of driving.
So, it wasn't a big problem for him to get his hours of practice in, and he got his license as soon as his learner's license period was up.
Lisey (17) wasn't quite as inspired about the whole driving thing, though she does have her license now and she's loving the freedom.
For both kids, I started out by taking them to an empty church parking lot for really basic practice.
After a number of half hour sessions there, we started venturing out on quiet neighborhood roads.
The next step was to go out onto non-neighborhood back roads.
And then we moved on to highways with stoplights, and eventually to freeways with higher speeds.
Once they were able to drive on non-neighborhood roads, I had them take over the driving when they needed to go places. For instance, Lisey drove to college and to our Kung Fu classes. This gave her parking practice too!
I'm not sure what all you've tried, but I'd suggest seeing if you can talk them into short sessions on totally not-scary roads. For our dedicated driving sessions, I just set my phone timer to 30 minutes. That's manageable for the learning driver and also for me. (!)
Also, are they motivated at all about the thought of independence? Lisey didn't relish the driving part of things, but she did definitely want the freedom to get together with friends, or to stay late at school and study. So, reminding her of that helped freshen up her motivation.
One last thought: would it be possible for you to cut back on how much chauffeuring you do, in order to motivate them to get behind the wheel? If you're willing to cheerfully drive them everywhere, they might not be as motivated.
Or could you say yes to social plans, but only on the condition that they drive on the way there?
Good luck with motivating your reluctant drivers!
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My thoughts on credit cards are that I need to shop around for a new one. I've had the same card since I got my first one in college (with USAA), and have had the same low credit limit on it for about 15 years (suddenly I feel old). I get some cash back, but not a lot, and we definitely are in the pay everything off immediately camp, so I think we could probably get a better reward of some sort. Just have to do the research.
My thoughts on three teenage boys driving? Well, my own three boys (and one girl) are still many years away from that, but my immediate reaction is, "Yikes." I'm going to be driving with new drivers for a full decade, I think. I'd better take up meditation now . . .
Love the advice of cutting back on chauferring that did the trick for my nervous girl. Little trips at quieter times of day are the way to go. They will get there, don’t push but make it routine part of their lives. It is a necessary skill depending On where they live—it will give them freedom and options so stick with it-they will get over it the initial reservations-kinda like making sure a nervous swimmer is safe around water
"It's a necessary skill depending on where they live"...it's crazy to think that! I grew up and live in a very rural area where we have to drive 30 minutes to the nearest big box store. I worked with a kid that came to my area for college from New York City -- I couldn't believe he didn't have a driver's license at 24! But, he explained how they don't need it. I just couldn't comprehend haha!
I'm glad this issue was bought up. We're 20 minutes walking away from any stores but we live car free. I was brought up in San Francisco, walking capital of the west coast so I didn't comprehend 20 minutes of walking = should get a car.
I think that's the gray area? Some people wonder how we live without a car and others are like "yeah ok." It's all about where you came from!
I'm totally cool with walking 20 minutes. The problem lies in what I want to carry home after.
Like, not a laundry detergent container from Costco.
We used primarily cash during day-today purchases and credit cards for things that we can't. We do pay them off each each month. We also enjoy the perks of the bonus points that add up. Credit cards are awesome if used responsibly, I think. As for teenage driving. I took my oldest daughter to empty parking lots and back roads to learn how to drive. We were both anxious but after driving a few times, it gets much better.
I don't know if this is so much advice, but it is what we did. All of my kids couldn't wait to get their licenses. When my now daughter-in-law was a senior in high school we took her in because of a bad living situation. At the time she was 17 and a senior in high school. She had no desire to get her driver's license, but I told her it was not an option. I told her she was taking her permit test on a certain date and took her to take it. Then my husband and I taught her how to drive. She is a good driver and is very thankful now that we did not give her the option of not learning how to drive.
We're getting a free trip to Europe this summer the is to our responsible credit card usage. Of course that means paying the bill in full and not buying anything extra.
I also use credit cards for the cash back rewards. I use Mint to track our expenses so I can use the card without blowing the budget. I acatually pay the balance once a week so we don’t have that huge bill at the end of the month.
Mr. FAF and I use credit cards for our everyday purchases too! But we pay off the balance at the end of each month and don't have any consumer debt. It's one way for us to track our monthly expenses. It's also nice to have the extra cash rewards 😀
Mr. FAF actually taught me how to drive. He was very patient and was a great instructor. And that's the story of how we started dating and got married 😉
I think credit cards are great if you have a very good financial cushion. One never knows what can happen from one day to the next. You might have thought you could easily pay off a credit balance entirely only to find out that your car needs major repairs. I think it is ONLY good to use a credit card if you have a very good emergency fund. This would be especially true for Americans who may not have good health insurance.
My college freshman son was not super interested in getting his license. In IL, they have to hold their permit for 9 months and practice for about 50 hours and be 16 to be licensed. He was eligible to get his license in October of his junior year in highschool but did not get it until the following June. Once he got it, he was still a bit of a nervous driver. Now almost 2 years later, he is a much more confident driver. For him, I think the issues were 3 fold: 1 - the responsibility weighed heavy on him, 2 - he has some fine motor issues and for him, coordinating all the motor skills required for driving was not easy and 3 - he had friends who would pick him up. I did end up just making him drive as often as possible to gain the experience before he got his license. It was not fun for either of us, but nothing builds comfort like experience. If he wanted to go somewhere, he had to drive me there and then we switched.
Empathy for your teens here! I was frightened by the movies of accidents shown in my high school drivers' training class; my parent was not patient when we practiced driving (in the cemetery, which doesn't have two lanes but there were clear roads, which were better to set a destination than an open parking lot); and my drivers' training teacher just presumed every teenager wanted to drive, so provided no helpful teaching. I walked everywhere. I did not want the responsibility of driving, or independence.
I finally learned to drive when I was 28 by taking a class at the university where I worked with about a dozen other people, for whom English was not their first language. We had classroom instruction, with lectures in slow, measured tones, and the behind-the-wheel part started with the most basic moves. Follow routines like pilots: Inspect the outside, adjust the inside, start the engine, drive forward, drive in reverse-- it calmed me down. Master one small move, then another. Don't push for more until you are bored with repeating the previous step.
I have read that fewer Americans are getting licenses these days, perhaps because of the costs and fuss of having cars in the cities. My teacher pointed out that many women in some Middle Eastern countries are not allowed to drive, and he directed his class toward their lack of knowledge.
We're good with controlling our spending so....we totally LOVE using credit cards. I'm currently shopping for a business one to put business expenses in. We could score another free flight for 2 if we keep this up!
Finanically, CCs reward those who have bigger pockets and restraint, which could be seem as a bit unfair and dangerous for those who can't spend.
We have a Chase credit card. We always take a credit card with a higher interest rate because we've found that it also offers higher cash back percentage because the company thinks they will make money off of you. 🙂 We have never once paid interest but have enjoyed the cash back! We earn about $500-600 per year and cash it in every December. We love it! We also pay our credit card off twice per month instead of once because otherwise it gets a little overwhelming.
I think it's wonderful and encouraging that your teenage sons are cautious about driving. Would that more people across all ages took the responsibility more seriously! However, I would comment that living in / being motivated by fear is never a good thing, for any aspect of life. One thing to evaluate and discuss with them is if they simply lack confidence because they lack experience behind the wheel, or if fear is driving them. Are they afraid in other areas of life? Are they afraid to play sports because they might get hurt? Are they afraid to talk to new people because they might be rejected or unwelcome? Are they afraid to try new experiences because it might not be as fun as they hoped or go poorly? If there is a pattern of conscious or subconscious fear-motivation (either self-imposed or through negative peer pressure), I think there will be more work involved in coaching and encouraging them through it. We learn by imitation, particularly from the people closest to us, so if you discover a pattern of fear in their lives, it's worth evaluating if you also struggle with this and can all work on and encourage each other together. Best wishes for parenting your sons wisely!
To gain confidence and learn real-world skills, I strongly suggest that every teen driver attend a Street Survival course if it's available in your area. Street Survival does not teach teens how to drive (one must have six months of experience), but instructs teens on real-world car-control and emergency situation techniques, utilizing in-car exercises with experienced instructors (of which I am one), plus classroom instruction. I don't know what other regions of the area charge, but the events in the Atlanta metro area run $75 for the one-day course and include breakfast and lunch.
Now for a bit of tough love. "They have never been in an accident and my husband and I are pretty good drivers, I think. We do not text or talk on the phone while driving so I am at a loss." Not to be harsh, but never having been in an accident and not using a phone while driving does not make one a good driver (nor does following all laws make one a good driver -- it makes one a lawful driver). Most folks think they're good drivers, but Dunning–Kruger is omnipresent, in my experience. The overwhelming majority of people do not understand how to actually drive their car well, especially in emergency situations, so they do not know the driving instruction they're giving their kids is lacking, nor do they have any way to teach their kids how to drive a car well. This is where the facilities and instructors that Street Survival uses come in to play -- we can provide what the average parent cannot.
NOTE: All Street Survival instructors are volunteers, and the only "pay" we get is breakfast & lunch (and a t-shirt). Combined with the sponsorship from Tire Rack and local businesses, this is how we can offer this instruction for such a reasonable rate.
http://streetsurvival.org/
Thanks for that tip; I just looked up Street Survival and it looks very useful. No workshops anywhere near us, but we have some time yet before we have any drivers so maybe we can express interest and get one around here. Developing the muscle memory of appropriate techniques early on in the driving career would be a great advantage! We live in an area that is very congested and lots of highway travel, so it is especially important to be an aware driver who can react well.
I liked the comment earlier on also, Heidi, whose drivers ed class had a different pace. I think it would be really useful to have that beginning drivers ed class able to be categorized for different interest levels/approaches - e.g., a class aimed at the more timid beginning drivers. It could focus on the measured, progressive approach she mentioned, as opposed to what was standard in my day at least (assumed the teen was overconfident and they had to scare you straight with gruesome accident stories). That was the flavor of the classes recently for my cousin's kids, and it really doesn't help teens who are already a bit anxious.
Who knew people would have so many interesting points to offer about teen driving; thanks!
You're welcome, Suz! While Street Survival puts every participant through the same exercises, they're adjusted to suit the participant's demeanor, experience, and progress throughout the day -- overly-confident kids quickly learn how over-confident they are when they see they cannot perform to their own hype, and overly-nervous kids almost always progress quickly from shaky nerves to outright smiles and fun as they learn what they can do. All of this is quite safe (and I would not be an instructor if it weren't).
That sounds great - how cool it must be to see the kids' progression - Thanks to all you volunteer trainers!
You're welcome. It's fulfilling to see the direct effects of one's efforts. 🙂
What you do is pretty cool!
It is! Glad you think so! 🙂
We pay for almost everything with our credit card. The only exceptions are a few stores that don't accept credit but do debit and a few bills I don't want to do auto pay with the credit card just yet. We pay it off twice a month when I pay other bills. We don't spend any more by using it and we get rewards. We could probably get a card that gives us better rewards but we're happy with our card through our regular bank so I don't think we'll switch any time soon. The rewards have paid for Christmas gifts for relatives a few years now, the cuisinart food processor I have and my fitness tracker that I love. I've also used them to get my husband a Christmas present one year as well. I'm sure if I let them build up for more than one year we'd be able to get some higher value rewards, but we're happy with what we've used the rewards for thus far. I definitely wouldn't recommend it for everyone and certainly wouldn't have done it this way when I was younger and WAS more prone to spending more just because it was a card. Of course I also had balances from month to month on my credit cards (yes, multiple cards!) when I was younger. You live and you learn I guess! Now we use the one card almost exclusively and I've closed the other accounts.
It never hurts to have the help of a third party get the boys over their anxiety for driving. This person may have some resources, statistics, and professional insight that could get them over it. It sounds like it could be more mentally driven rather than lazy. I wouldn't think mom would need to shoulder this entire burden herself. Even a religious professional could help!
I was not interested in driving when the time came, but I played 3 sports during the year and my parents told me that if I wanted to keep playing sports I'd have to start driving. That was enough motivation for me! I wasn't willing to give up sports due to my lack of desire to drive. Perhaps your sons have some sort of motivating factor in their lives like that. I liked Kristen's suggestions, too.
I use my CC for everything and pay it off every month as well. I get rewards in the form of gift cards that I use for birthday/Christmas gifts.
I hate driving and always did. I got into an argument the first day my instructor and I got into the car. I'm 50 years old now and refuse to drive highways/bridges. I've seen way too many accidents and some missed me by seconds.
My youngest refuses to drive. My BFF hasn't driven since graduating high school. Going to a job and surviving can be done without a license, believe it or not. Just get a job nearby and take public transportation. Live in an area that has both and you're set. Or, live at home and all pitch in to help with transportation.
I never wanted to drive and did not get a license until I was forced to, at 28. I am now in my 60s and still hate driving. I can do it, but I avoid it whenever possible. Maybe your kids just need to learn in their own sweet time, without feeling parental pressure.
We use our credit card for everything. I don't carry any cash at all. We pay the balance off each month, the rewards are worth it. I use the rewards as statement credits. Oh I do carry an Aldi quarter. I was so happy when Aldi switched to taking credit cards as now I don't carry a debit card either. I don't spend a lot anyway.
My oldest two were also reluctant drivers. I didn't push it at all. I knew that eventually they would want their freedom. They rode with friends or their bikes whenever they wanted to go somewhere until they graduated then it became important to them to have their own transportation. After a few months of practice, they both go their licenses at 18 and enjoy their freedom. I have a 17 year old that is following in their footsteps. He isn't interested, but I know in the next year especially once he graduates he will want to drive.I say to just give them time and perhaps have them practice driving you on errands. I don't think there is a rush unless the child needs to.
We are approaching the teen driving scenario and my 14 year old son isn't excited about it, so I appreciate everyone's suggestions. In Michigan, you can start learning to drive at 14 years 9 months ... I don't feel the need to push him this early, but if he is still resistant a year from now, I will have to. We live in an area where driving is a necessity. Kristen, your comment about going to a parking lot made me smile--my dad took me to my grandfather's lumpy, bumpy farm field--a parking lot is a much better choice!
IMHO the trick with credit cards is to set them up for autopay, so the full bill is automatically deducted from your checking or savings account each month. Much less temptation to go wild with them that way. And I, too, pay everything on a card whenever possible. I have an Amazon card that gives me 5% cash back on all Amazon purchases - so I always use it there, as well as for other online purchases. I have another cash back card that I use for local in person stuff. In addition to the cash back reward, I find the monthly "day of reckoning" to be very helpful in terms of keeping my spending in check. I sometimes play little games to see how low I can make each bill.
In terms of driving, I can't really wrap my brain around a kid who doesn't want to learn - though my older brother was that way. He was always very timid and not very social, so I don't think he learned to drive until after he finished graduate school! Me, on the other hand... I couldn't wait to get my permit and license. Not sure if this will mean much to people in other parts of the world, but my crazy mother took me up to Red Rocks (think steep, narrow roads on the side of a mountain with no guard rails) to teach me how to drive. Not sure if she was just being sadistic or if she wanted to put the fear of God into me. Either way, it worked, and I turned out to be a much more cautious driver than I might otherwise have been! 🙂
The credit card life is the life for meeee! Once we paid off our credit card debt a few years ago, we were afraid to use them ever again. That is, until we realized we could rake in hundreds of "free dollars" every year through credit card rewards.
We only recently started traveling, so maybe an airline rewards card will make sense in the future. For us, I prefer to use a 2.5% cashback card with USAA. We hoard our rewards throughout the year and then use them to buy Christmas presents. I love that we can be more generous with gift-giving and don't have to worry so much about the bills come January 1.
This is my daughter's situation. Never ever wanted to drive. She was scared of the car, her ability, other drivers, etc...I never forced her but other family members did. She took the bus or Uber. She's 22 and just got her license last year. I told her how proud I was for her overcoming her fears. Other family members said "finally." She still hates driving...won't do it and is contemplating moving to New York or San Francisco to be with other "like minded" people. I support her because to each their own.
We have chosen not to use credit cards(we closed our Southwest account) because we don't feel they save us money for a few reasons. 1. We spend more using a credit card rather than cash or having the money come straight from our bank account: Swipe at Starbucks, swipe at Target, swipe at the grocery store, click "purchase" on Amazon, click "purchase" on Wayfair. You are not really tracking every dollar but know you will have the money when the bill comes. 2. You forget to pay the bill(more than once) and before you know it your yearly "fee" is closer to $100. 3. It may take you 2 years to save enough points for an airline ticket-by then YOU have paid $140(or more depending on the annual fee) toward that "free" ticket. 4. You have a life change or an emergency, now you are one of the majority who cannot pay their bill that month or the next, or the next.
After we thought about it we realized we did spend more on purchases when we used credit. We guessed probably 10%. Our credit card average per year was $10,000-10% of that is $1,000. Wow! We could purchase 3 tickets in one year with no yearly fees, no stress of possibly forgetting a payment, and no surprises on a credit card bill. We stopped using our Southwest card and sure enough we have saved thousands of dollars since.
I use a cash rewards credit card and pay it off several times each month. It's when I have cash that I overspend. And I've had other friends admit the same. Find what works best for your family.
My 18 yr old does not drive. He has a learners permit, for the second time, but it expires soon. His not driving has been a bit of an issue between my husband and me. Husband cannot fathom him not feeling comfortable driving. Son has an eye issue that requires wearing a very specific kind of contact lens in order to see well and he has trouble with it. The eye issue really progressed right around the time he was getting his first learners permit and he just doesn't feel safe driving, though he can see well enough with the contact. In my opinion, I would rather not have a scared driver behind the wheel. I think he will change his mind in the next few years or he will need to eventually live in a city with public transportation, which interests him anyway I think. Either way, I just don't see it as a big deal.
We use a credit card in our house, but mostly out of convenience and we pay it off in full every month.
I have a rewards card, but honestly it doesn't give back much. I'm tempted to just get rid of it, but it is convenient for online purchases.
Maybe time to do some read watch to find a better rewards card. Hmm...
As for driving, I would be completely happy to take public transportation if I could, but with living in a smaller city with three small kids, it's just not possible.
I never was too keen on the actual driving, but the independence thing was HUGE. Being able to be in charge of where I was going when and to be able to do that by myself was enough for me to learn how to drive and get my practice in.
If you have a bank card you can use it for online purchases just like a credit card. You can do that at any "store" and chose "credit" so you receive all the advantages and protections of a credit card.
I use card for as many things possible as I was dismal at keeping track of where my money was going using cash - especially for food, - all I would have is a whole lot of cash withdrawal amounts on an account statement. I have a budget for each spending category & stick to it. I have added up my entire budget, divided it by the number of paychecks I get in a year & every pay transfer that amount to a separate bills account & transfer the funds from that account to pay my cc off in full each pay. I keep a running total on a budget spreadsheet that I fill out after shopping/paying bills & at the end of every 3mths I write the -ve o +ve balance for each category & reassign funds as needed. For example, I have spent $30per wk less on groceries than I budgeted for but have needed to buy other things I was not expecting. I have reallocated entertainment funds to cover the extra bills & transferred the grocery savings to longterm savings. I find my bills account is growing all the time increasing my emergency fund which I am thankful for. To me a cc is just the method I use to spend my income
I just priced adding my almost 16 year old to our car insurance - our premiums will go up by $860 every six months!!!
Now I’m rethinking whether it is worthwile to encourage her to drive so young....
We're having our kids pay half of their car insurance, which helps make it more affordable, and also helps them value the privilege of driving.
It might be worth it to shop around for car insurance too...some companies are more affordable for young drivers than others!
Absolutely Kristen! Credit cards are for those who can handle their spending responsibly. I make sure that I pay off my credit card bill every month in full. Procrastinating credit card payments can cost big and can even lead to financial disaster. I have a Chase Southwest Rapid Rewards which helps us to earn free flights. I probably got 40,000 point bonus for opening an account and meeting the minimum spending requirement which is worth about $850 in airfare. Till now I am quite happy.