Money Magazine: No Credit Cards and a $5,700 PC

by Kevin on June 26, 2008

A recent article in Money magazine highlighted a group of families that had recently given up credit cards. The slideshow is titled “They cut up their credit cards.”

Let me reiterate what JD Roth at Get Rich Slowly says a lot — do what works for you. Make progress, make good decisions, but do what works for you. If credit cards work for you (as they do for me), then use them. If you fear credit cards or know you can’t handle them then by all means eliminate them from your life.

But I’ve got to protest something mentioned in the 2nd family’s profile in Money magazine. Matt and Gina Hutter. They completely removed credit cards from their lives, relying instead on cash and debit cards. Okay, no problems thus far. Then this gem pops up:

The Glitches: When Matt tried to buy a $5,700 PC online with a debit card, he ran into his $2,000-a-day spending limit. Because he has good credit, his bank lifted it.

Come again? W-w-what?

A $5,700 PC? Are – you – out – of – your – mind? Thats 5 to 10 times greater cost than your average computer. I did a quick search of Alienware.com (they make ultra highend gaming PCs). Most of them ranged from $999 to $2,000. They did have one model, the Area-51 ALX Extreme Gaming Desktop, that starts at $4,599; more than double any of the other computers offered. And Alienware computers are what I would regard the most expensive PCs on the market! Add $1,200 to that high starting cost to get what this guy paid for a computer.

Maybe he got an Apple? The Mac Pro starts at $2,799 and can easily be configured to go much higher — into the $5000-6,000 range. But you’d better be doing quantum physics modeling or full on professional video editing that requires that kind of power or you’re just wasting money.

A $5,700 computer? Are you kidding me? Granted, Money does not mention how much the Hutters earn each year. But I think we can all agree that unless you are pulling in the salary of CEO at a large firm (that is, the point where money isn’t a concern ever again), then a $5,700 PC is a bit much. Yes, that’s an understatement.

Credit Cards Are NOT the Problem!

This goes back to some main points I’ve made on here in the past. Credit cards are not evil. They are a tool. You can misuse the tool, or use it wisely.

The issue is how to control your spending. It doesn’t matter if you pay by cash, check, credit card, debit card, pesos, dollars, or euros. If you’re spending money foolishly — on a $5,700 computer, a Gucci handbag, or a Ferrari — you’re spending it foolishly. It’s not the method of spending that matters. It’s the spending.

(Yes, I will reiterate this point on this blog until the end of time if I have to.)

I know, I know. “Credit cards encourage you to spend.” I’ve heard it all and I don’t buy it. Get some self control, sit down and think before making a purchase. They can encourage me all they want. Good for them.

Look at your credit card like a debit card and see if anything changes. Honestly folks, if your credit card was really just a debit card, would you run out of money very quickly? The type of card you hold in your hand shouldn’t really matter. Just because it says American Express or Visa on the side doesn’t make it any more special than a debit card.

Still having problems? Maybe your spending habits are to blame rather than the credit card company.

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Momma @ Tales From The Road Less Traveled June 26, 2008 at 9:20 am

I have to agree with you wholeheartedly here. We carry no credit card debt from month to month. I’ve never paid interest on a credit card balance. We put our monthly spending on the card and pay it in full when the bill is due. The result? $100 in free travel for every $7500 we pay through the card.

As for the computer… the server in our office didn’t cost that much! My husband has spec’d out the ultimate gaming machine with all of the bells and whistles for his “daydream” money, and that priced out at $2500. What are they thinking?

Jeff June 26, 2008 at 10:11 am

I think you have the right idea. It’s not the credit card to blame, its the loose frame of mind that believes that “I can pay just $20 more per month and have that nice new TV”. I use my credit cards responsibly and don’t have problems with them anymore.

As for the PC, an enthusiast bragging rights box can go much higher. I quickly found an enthusiast box from a quality site that cost just under $13k without any extra configuration from me. (Falcon NW) I’m not the type to live on the bleeding edge, so I wouldnt ever buy a PC that would cost so much and depreciate so fast.

Fiscal Musings June 26, 2008 at 11:46 am

I completely agree. People are always looking to blame something external for their financial woes when they’re really the problem themselves.

NtJS June 30, 2008 at 12:24 pm

I don’t know much about Mr. Hutter, but I will agree that a $5700 PC sounds quite crazy. At first. Once again, I don’t know what he does for a living (the article says broadly “Engineer”, but that could mean lots of things), but if he’s doing animation or large 3D data crunching, then a system with a high-end professional graphics card (can be a few thousand alone), a ton of ram (some machines can take 64GB), multiple processors (another grand or so), and large LCD monitor(s) would not be unheard of. Then again, maybe he’s big into first-person-shooters. I dunno. Gaming rigs can get quite pricey too. But when you’re debt-free, you can do what you want. If you’ve got the cash, then go for it.

As for the daily limit, I really hate that they claim to have been able to lift it because he “has good credit”. Credit? Why on Earth would that matter?? It’s a DEBIT card! The bank will temporarily lift it just by you requesting it. They don’t need to check your credit, just your account balance, if they’ll even do that (which I doubt). I’ve had to do this before. It’s a pain if you don’t know about it. Just something you have to be aware of going forward. Really not a big deal.

Livingalmostlarge July 2, 2008 at 11:29 am

Who spends $5700 on a COMPUTER? My BIL is an engineer working with lasers and defense and yet his computers for work are like $2-3k. Updated regularly yes but this is over the top.

No wonder the guy got into debt. Sheesh.

Justin July 4, 2008 at 5:44 am

Id spend that kind of money on a computer, if i had it. Some people like to fish, some people like to take photos, some people like to go dancing. I like computers. Oh, I also work with lasers and the computers we use dont come near to costing $2-3k. That company should change their supplier 😛

I totally agree with the article though. My dad is actually of the same opinion and he’s been preaching that to me for years. He pays his bill upfront every month and never gets charged interest. Up until about 6 months ago i had terrible credit card debt and was paying off loads of money in interest. It was working out at about €20 per month in interest but it was always justifiable.. Well, back then it was justifiable. I wish i had all those €20’s back…

Alison @ This Wasn't In The Plan July 5, 2008 at 4:44 pm

I agree that credit cards are not the problem. I use a credit card for nearly all of my purchases and pay it off each month. I’m never really tempted to go crazy spending because I follow a budget and I find that that really keeps my credit card use in check.

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