Good Morning DINKS. We recently received an email from one of our long time readers named Mike from Silicon Valley. His story was so intriguing that I just felt the need to share. Mike works in Silicon Valley California and he recently experienced something that made him wonder if his spending habits are old school or just out of touch. Think about yesterday when you bought your morning cup of coffee. How did you pay for it?
Did you use cash or credit to purchase your morning cup of coffee?
One morning Mike was in line ordering his daily cup of coffee on the Stanford University campus when he noticed a girl in line pay for her coffee with her American Express Blue Card. Mike stood there for a minute looking for his $2 in change to pay for his cup of coffee, and he noticed that another client paid for his $2 coffee with a Visa Black Card.
Mike’s first and only thought was “Really?” Mike wondered if he is so out of touch with society today that the norm has become to charge a cup of coffee on our credit cards. Mike wondered if he is the only person left in the world who is still paying for his morning cup of coffee with cash.
Mike was not sure if paying for a cup of coffee had become the norm everywhere or if it was just a Stanford University trend. He also wondered why people choose to pay for a $2 cup of coffee with a credit card. Maybe men think that if they pay for a cup of coffee with a credit card that requires a minimum credit limit of at least $100.000 women are going to come running towards them. Maybe paying for our daily cup of coffee with a credit card is an easy way to track our daily spending while earning rewards points at the same time. Maybe some people just like the convenience of swiping their credit card on the go, or maybe paying for a $2 cup of coffee with a credit card is a big red flag that we need some serious financial help.
Mike admits that even though he gets a regular pay check every week from Stanford University he will never use a credit card to purchase a measly cup of coffee. I absolutely understand Mike’s point of view, and deciding whether to live on cash or credit budget has been a long standing debate among financial professionals.
I definitely feel that the “budget question” is a personal decision. Living on a cash budget helps control our spending, but we cannot keep track of where or how we spend our money. Living on a credit budget helps us track our spending and earn some rewards points at the same time. However it can also lead to excessive spending and expensive interest charges if we can’t afford to pay off our monthly credit card balance.
I personally don’t spend $100,000 a year on all of my personal spending combined, even if I included my rent and groceries. Therefore I guess that if I had to maintain a required minimum spending limit I would also charge everything on my credit card, including a cup of coffee. Or maybe an easier solution would be to just get rid of the credit card that has a required minimum spending limit.
Photo by Nina Matthews