My credit card company just sent me a check! That’s right. I don’t pay them; they pay me… and they’ll pay you too if you’re willing to dance.
During the Great Depression some women moonlighted as dance partners to earn money. Commonly called “taxi dancers,” or “dime-a-dance girls,” they worked in large dance halls where a ten cent ticket would buy a patron one dance and a few minutes of company. In that climate of extreme economic scarcity the privilege of a few minutes of affordable entertainment was in high demand, and the women soon found themselves earning more in a few hours of dancing than they would at a full time factory or retail job. In today’s climate of economic hardship I’ve been doing a little dancing for money, myself. Oh, no, no… I’m not talking about striptease. I’m afraid I don’t have quite the ambition (or the abs) for that kind of thing. I’ve been dancing with snakes.
A couple of years ago, when my oldest son was in kindergarten, we had him in a charter school in Hollywood which meant we had about an hour and a half of commuting time each day between the school and our home near downtown LA. I took to listening to the car radio to pass the time, where I ran across Dave Ramsey’s financial advice show. You may be familiar with his work already as he is quite well known, but it was the first time I’d heard of him. He has a very interesting and unusual take on the subject of personal finance. As a born again Christian, he bases his advice on the teachings of the Bible.
The rich rules over the poor, and the borrower is servant to the lender.
Ramsey’s number one piece of advice is to get out of debt. To carry credit card debt is to be enslaved, he explains. He advises us to save and spend within our means, rather than resort to borrowing. He asks that we cut up and throw out all our credit cards. Where Suze Orman focuses on the importance of FICO score building, Dave Ramsey asks us to give up our FICO scores and get off the credit grid entirely. Cash is king. He calls the credit card companies “snakes,” and warns that if we play with them we will get bit. But then, I can’t help but think of the Pentecostals of Appalachia who handle venomous snakes in service of their commitment to their Christian faith.
Behold, I give unto you power to tread on serpents and scorpions, and over all the power of the enemy: and nothing shall by any means hurt you.
I suppose I enjoy just a bit of risk in my financial ventures. Perhaps it is not for everyone. I have taken out not one, but two, dividend paying credit cards. These are credit cards that pay a small percentage back to me for every purchase made. Ten cents a dance, so to speak. Those funds collect over time, and when a minimum limit is reached may be requested in the form of a rebate check. The trick to dancing with snakes is to remain aware and attentive at all times. Never carry a balance, so as to never pay interest. The interest is where the card companies make their money, and it is usually set at an intolerably high rate. Believe me, I learned the hard way on that front and paid through the nose for several years to get rid of the debt I ran up on my cards during college. Now I charge only what I know I will be able to pay off immediately when the bill comes due. By doing this I build my FICO score and collect the dividend points I will later be able to retrieve as a check.
One obvious danger of the dividend credit card account is that it presents an incentive to run up more charges than you can afford to pay off immediately, because you earn more back more quickly with increased use of the card. I have on occasion, especially for larger purchases, deposited the funds I’ll need to pay off the card balance in a savings account until the bill comes. That way I am not caught off guard without enough. We have come to think of credit cards as a simple way of getting hold of quick cash so we can indulge our drive for immediate gratification. This is where the trouble starts. If we think of credit cards only as a tool to build a strong credit history and reap dividend dollars, we can actually profit from their use instead of ending up slaves to debt.
I like to use my cards for purchases I’d make anyway, like groceries and gas. If I have a larger purchase coming up that I know I can pay off right away I’ll throw that on the card too. I just charged a hotel room, for example, and before that amassed a good chunk toward my dividend refund by charging some dental work for my son I knew would eventually be covered by insurance. I started off small and worked up to bigger items as I became more familiar with the debt burden I’d be able to handle.
Other dangers are of the usual credit card variety, like forgetting to pay on time so that you are fined or your interest rate is jacked up. That would defeat the purpose of the dividend card pretty quickly. I use a computer calendar in conjunction with an online checking account to send myself e-mail reminders when bills are coming due. This makes it easy to never miss a payment. It perhaps sounds like a lot to go through, but once the system is set up there’s very little time needed to maintain it and get your bills paid perfectly. A good organizational system saves time, effort and money in the long run.
Dishonest money dwindles away, but he who gathers money little by little makes it grow.
So I’m heading out now for that hotel room I booked with my dividend card for a weekend of sun and fun on the So Cal coast… and now I’ve got a little bit of extra spending money in the bank too! Thanks, dividend card! Hmmm… maybe I’ll invest it in some proper dance lessons and make a business for myself. I might even buy my very own snake.
Wikipedia: Snake Handling