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How much do you spend on Lego? Tips on buying?
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Comments
Fixed that for you.
You're saying it's better to pay with a debit card or cash at Target, rather than save 5% off everything there.
You're saying it's better to pay with a debit card or cash than to use one of the no-fee credit cards that gives 1-2% cash back on your statement.
It looks to me like you're throwing actual money away. Judicious use of credit cards can save you lots of money. (That money comes from the retailers who jack up prices to compensate: but until the payment card industry's racket is broken and retailers can push transaction fees onto customers more transparently, people who don't use credit cards with rewards are losing out).
The younger one doesn't get it but the older (5 next month) keeps them in a piggy bank with his coins and saves until he has enough. Sometimes he even saves for ice cream! Hopefully this will help them but who knows...
Even monkeys in captivity have been found to save rewards for later use so there must be an innate component to it that just needs the right stimulus.
I'm saying it's good for kids to learn plastic via debit cards first, because with them you're spending real money in your account, not future money. Of course, you also have to avoid potential debit card fees. Target's 5% is great, if again, you have the knowledge to use credit wisely. It's all a huge game that the banks usually win, because people either don't get educated, don't educate themselves or for some reason can't be educated.
On credit cards - I would say it's useful for young people kids to get a credit card to understand how they work and what they are good for. It's part of managing money in a modern age. It's also good for building up a good credit rating.
I charge my cc just shy of 2K every month and pay in full when the bill comes. Rewards are awesome. They just bought me a Modular this week. As someone else mentioned - it's the easiest way to make money.
This system works for me b/c I know for a fact that I will be able to pay that credit card off next month. I have full time employment, savings, investments, marketable skills, etc. - I have much more control over my destiny than most 18 year olds. Even if I lost my job, my house, and my dog right now - I would still be able to pay that credit card off at the end of the month. I could not have the same thing when is was in high school / college. All it took in those days was a week of crappy hours at work or an issue with my car and my house of cards would tumble. And they often did. Over and over again.
My honest advice for the op is this: Go into a planned dark age and enjoy it. Use what money you have doing all the great things that young adults do. Date. Date More. Put Gas in your car. Eat greasy food from places with multiple health code violations. Buy skinny jeans and go to concerts. Whatever. Just do those things and enjoy the hell out of it. Work hard (you're young - you can work and play hard at the same time) and establish yourself. Once that has happened then come back to us. Lego will still be here.
sounds like what I have is a debit card but we call it a credit card.
and btw, there is no real money in your account, it is a debt your bank owes you. (and can't even really guarantee, due to guarantee funds covering like only 1% of all deposits)
on another note, I have more trust in Lego bricks keeping value in the future than money...
* By need I of course mean want, as very few kids really need stuff.
Remember a lot of this stems from this statement "Telling a stundent to use a credit card is simply idiotic imo, no matter how good with money they may be."
If someone is good with money, then they know how to budget and how to make money and their purchases work for them. I would never suggest a credit card to someone who thinks it is free money. However, I would to someone that understands the concept of paying interest if the balance is not paid off but the rewards if you do. With online banking it is easy enough to either pay the credit card bill at the same time as making a purchase using the card, or shifting the money that you will use to pay the bill into a second account so it is not tempting to spend it again.
Not to take this in an entirely different direction, but if you are good with money and, more important, self control, there is a distinct benefit to using a credit card over a debit card...
If the card is compromised, you will get your money back in either case. HOWEVER, if it's your debit card, the thief is using money in your account. BUT, if it's your credit card, the thief is using the bank's money. Like I said, we live in the modern world where virtually every card, both debit and credit, have zero liability, so you'll get refunded for charges you personally didn't make, but in the sense of a credit card, you don't have to worry about being out your own money while your financial institution is going through the refund process.
Just two cents from someone who was a banker, is currently in the financial services industry, and has had his card compromised several times.
Also, as others have mentioned...the rewards. Many debit cards these days have rewards programs too, but the ones on credit cards are typically better. I have exchanged my points for Home Depot gift cards for over 10 years now. It's also been that long since I've spent a dime of my own money at Home Depot.
To partially answer the original poster's question, you don't want to know how much I spend. My wife doesn't either. But it's not an apples to apples question because we're all in very different stages of life and situations, etc., etc., etc. The way I think of it is as part of my entertainment budget. LEGO is an entertainment tool to me. Just recently, it slightly transitioned to an investment tool as well, but I'm talking all of $20-30 here and there. Just the occasional small set I think might be something to hold on to. Otherwise, 99% of my purchases are for my entertainment, so I budget accordingly and stick to it. And that's the important part, STICKING TO IT. I could "loan" myself money from next month to go on a binge, but I'm far too OCD about budgeting to do that and I consider that a good thing. That and I also have kids, a mortgage, a mortgage on a rental property, etc., so as much as I'd like get the Detective's Office AND the Ferris Wheel AND more Ninjago right now, I can wait.
Unless you lack discipline with regards to paying off your cards on time. If that's the case, then yes. Treat credit cards the way a recovering alcoholic treats alcohol: avoid. But if you pay off your cards on time you significantly financially better. For someone trying to maximize their finances, a credit card used properly can literally help you save money. It is, in fact, the one of the ONLY reasons I'd recommend credit cards. The other reason is that you sometimes need a credit card for online purchases.
The OP wanted tips on how to buy Lego effectively. Free money from credit card companies seems like it's at least worth considering. But as everyone advocating credit card use has said: only if you can pay it off on time! That can't be stressed enough! However, if you can pay it off on time, using a credit card is financially equivalent to using a debit card.
A student leaving high school to become an adult has many financial challenges ahead. Paying for education, or rent, or both, along with clothes, food, etc, is difficult. Proper saving for later, both short-term later and retirement, is important and should not be discounted. Budgeting so that you know how much money you can spend each month on entertainment is important. But don't forget the other side of it: sometimes you need to also look for ways to stretch those dollars. Save on utilities, cell phones. Buy cheaper clothes. Prevent food waste, eat at home as often as you can. Buy stuff on sale for later. And learn the ways businesses give you stuff for free so you can exploit it.
If someone insisted that I shouldn't have applied for one because I was a student and didn't have much income, it wouldn't have made any difference. Those things simply don't matter if you only ever intend to buy things you can already afford.
Today I still wonder why people even use debit cards when you could use a credit card instead. There are a few things that you can only use a debit card for, but 95% of my spending goes on the credit card because it's stupid not to put as much as you can on it (providing you can pay it off, of course).
Technically, it's not the bank's money in both cases. Your money in your account that your debit card is linked to is your money. You have rights to it and that's why in the U.S. at least things like the FDIC and NCUA exist. On the other hand, a credit card is essentially a loan you've been given by the bank that they can close, amend, etc. at any time. They can technically close your checking account at any time to, but then they have to give you your money back (unless of course you owe them for something else, but that's a different store and not important here).
Here's how it's better...
Someone steals your credit card and charges $500 to it. A $500 charge appears on your credit card statement as the bank researches it and refunds it. You have $500 less of your limit to spend until it is fixed. Not your money though. You will never have to pay the bank that $500 because you didn't charge it.
Someone steals your debit card and charges $500 to it. $500 temporarily disappears from your checking account that's linked to the debit card as the bank researches it and refunds it. Your checking account balance is $500 lower meaning $500 of your money that you put in the bank is missing until it is fixed.
In today's world, banks typically refund fraudulent charges VERY quickly, but in one case it's just a number on an account (basically less access to the money the bank is loaning you, that's all a credit card is...a revolving loan). But in the case of the debit card, even if it's just a short period of time, your money is gone.
If you are a victim of debit card fraud, the money comes out of your account and you have to fight (sometimes quite hard) to try and get it put back. In the meantime, you may end up suffering from other problems, like going overdrawns and having outgoing payments fail. It can be a nightmare, even if things do eventually get put right.
Conversely, if you are a victim of credit card fraud, you don't lose any money, not even temporarily. You don't have to pay for the fraudulent transactions at the end of the month, as you are not liable to pay for them. It's much less hassle, and the main reason why I would never use a debit card to pay for anything if I can avoid it.
You can say it's not a straw man, but that doesn't change the fact that it is a straw man. I suggested that kids should use a debit card. You then made the leap as if I said debit cards are always better than credit cards for everyone.
The fact remains, that kids don't have the cash flow to make any points or rewards system worthwhile, much less offset the incredibly damaging risk that a credit card could do to their future credit and finances as a whole. Most things you state later in your note there are true for knowledgeable adults, but it just doesn't apply to most kids; that includes those in their last year of high school.
otherwise, yeah, the difference is subtle, sounds like 2nd case is more annoying if your account balance is low, especially if you go below 0 and have to pay additionnal fees.
Anyone buying just a few lego sets can make it worthwhile using a points based card. If you can get $5 worth of rewards on a $100 lego set, then it is as good as the VIP program.
There are also sometimes introductory things like "5% points for the first 60 days," but those can be even more dangerous to credit, because opening up lots of credit lines only to take advantage of those introductory rates (and never using the card again) will ding your credit.
Average mortgage debt: $155,361
Average student loan debt: $31,946
An increase of 1.7% from last year
$890.9 billion in credit card debt
$8.17 trillion in mortgages
$1.19 trillion in student loans
An increase of 7.1% from last year
Fun Facts:
So, according to these statistics, on average, younger people are racking up more credit card debt than older people.
Why bother getting a Credit Card that gives you 5% off purchases or 1-2% cash back if your balance is subject to 11-21% interest that you can't pay off every month?
I'm not suggesting anyone do this, just pointing out that not everyone with credit card debt goes to bed at night thinking "how do I get myself out of this?" Some sleep very nicely in their Egyptian cotton sheets they're paying 18.9% interest on.
$3,300 median household debt
$7,768 average household debt
$17,630 average household debt for those in debt
From the article:
"Note that the average American household owed far more than the median, and also that the average indebted household owed far more than the average household overall. Such large discrepancies indicate that a relatively small number of households were deeply underwater."
It catches up with everyone eventually. At some point they will have to pay the piper.
And a reverse mortgage.
but there are also "some" redneck ADHD devils!
These schemes are normally designed to fool the less financially savvy to spend more with the illusion of saving money. I know I've watched a few friends over the years slowly spend their way into serious debt, proclaiming how many hundreds or thousand of dollars they're saving by not doing the dumb things I was doing (I did try to warn them).
Credit cards aren't all bad, as long as you pay attention to what you're doing, but I would never advocate that people need to get one to use the rewards schemes...
Credit cards aren't in and of them selves evil. But I would argue that most people are not financially sound enough to use them correctly.
I make around 150€ - 200€ per month from my job. And I get cash as gift for Christmas and birthdays from relatives. I can't say how much I spend each month because it changes. I usually plan at the beginning of the year how much I spend each month and save money for the biggest purchases in October/November. I rarely buy sets for normal price, because of my Grandma's former job I can get the sets with at least 23,5% off. I wait until they are on sale and then the price is great.
LEGO is my only interest. I don't go clubbing or any other activity that needs money. I rarely buy clothes or other things.
(I don't need to pay for other bills*, so those 150-200€ are money I can spend without worrying about anything.)
*Yes I'm grateful for that, I know that I'm privileged but if you ask me, I would rather work a normal job and pay bills and what not. Edited to add that I'm 24, turning 25 in January.
^ I suddenly became very concerned that my wife is also tracking my LEGO spending and if she is I'm going to have some seriously explaining to do.
But I would estimate it's probably around 1% of my monthly net pay. But it fluctuates dramatically. I went WAY, WAY, WAY over that in October, but didn't spend a dime in August or September.