personal Finance Story

Dave Ramsey is an inspiring financial guru.  While I do not agree 100% with all of his work I recognize that he can have a positive impact on the financial lives of many people who hear his message and follow through with his baby steps.

So whats the endgame for the Dave Ramsey strategy?

If everyone stops buying lattes, Starbucks will close stores.  This one is true enough.  Starbucks is on the ropes and is making cutbacks to support future viability.  600 or so store have been shuttered so far and counting.

Without credit cards, many people tied to the manufacture and support of credit card transactions will be out of jobs.

Is frugal living going to bankrupt the country?  Is not spending money going to usher in the collapse of our capitalist system as a whole?

Well, no.  That would be silly.  Lets look at a scenario or two and examine it not within the convenient vacuum of fear.

No More Lattes is Bad News for Starbucks

Welcome to the new economy where there are many different options for people to purchase their morning coffee.  Even if everyone in the entire country stops going to Starbucks and the company tanks, the US economy will move on.  Starbucks is simply is not a large enough influence on our ecomony to materially matter.

Starbucks’ loss is the gain of Dunkin Donuts and McDonalds everywhere.  They have both moved in to fulfill a need for lower cost without sacrificing quality of product.  Increased competetion for low cost premium cup of joe is capitalism in action.  I will not shed a tear for Starbucks.

No Credit Cards Means Bad News for Plastics and Support Personnel

Dave Ramsey may view credit cards as a horrible financial tool but debit cards are fine.  So if everone uses them, the plastic manufacturers will have to make due.  Demand will drop and with it prices.  Once again capitalism in action.

How about all of those support people?  Someone has to answer the phones and manage the servers.  Well, debit cards need all of that too.  And last I had to call my credit card company, it seemed they were all to eager to fulfill my needs without any actual human being answering my call anyways.

When you follow the Dave Ramsey way, you are going to eventually be saving a whole lot more money than you ever put away while racking up your credit card balances.  That money doesn’t just get stuff under mattresses across the country.  It gets invested.  What would you think is needed to process and support all of those new investors?

You got it, lots of support personnel, fancy servers, computer administrators and more.

Whats in the Dave Ramsey endgame?  Certainly not financial calamity.  You have to look at the bigger picture to avoid missing the forest through all the trees.

It must be hard being a bank these days. Bear Stearns is already gone, a victim of it’s own greed. Lehman Brothers is fighting off the same fate, erasing eight years of gains in a single quarter of losses. Meanwhile, a more mainstream bank like JP Morgan Chase is struggling as well. The stock is down more than 15% from it’s highs. A quick look at the it’s chart reveals a roller coaster of a ride.

I use Chase for my credit card, simply because they offer the best and most flexible reward plan I could find. It seems to me that Chase is getting a bit desperate to raise their cash flow in these troubling times. Case and point, the offer I received in the mail a few days ago.

That card you see is not an image. It is the real deal. They are attempting to bribe me with $15 of electronics goods in exchange for enrolling in their credit and ID protection plan.

To Chase’s credit, at least they are more forthcoming than other offers I have received. There happens to be a sticker on the gift card itself announcing the requirement to join the Chase ID Protection plan at a cost of $11.99 per month.

It is still a raw deal. The plan promises a lot.

• Monitoring of your Credit Files
• Daily Alerts
• Quarterly Summary of Activity
• 800# to Credit Specialists
• Identity Recovery Assistance
• $25,000 of ID Theft Insurance

On the back of the mailer, there is a bunch of fine print where it tells you, in legal speak, that everything on the front of the page is crap.

Chase ID Protection is not a credit counseling service and does not promise to help you obtain a loan or improve your credit record, history or rating. Neither Chase nor First Advantage bear any responsibility for the content, accuracy or completeness of the credit report.

If they are not going to be responsible for the accuracy of my credit report, then how are they supposed to do anything for me when my ID is stolen or there is a mistake I see in my quarterly report?

$15 is a nice treat for someone gulible enough to accept it. I for one, am not fool enough to bite. It would take only 2 months for Chase to recover their money from this kind of bribe. For me at least, they have instead wasted the postage.

I’ll keep using Chase for my credit card for as long as their rewards program gives me what I need. The moment that ceases to be, I will kick them to the curb and find another credit card to do my everyday purchases with.