You don't need a credit card. Really.

It's true, right? You need a credit card for modern middle-class life. You can't get along without it. Even an astute friend, one who doesn't follow trends for trends' sake, was caught up in this lie. She posted a Facebook link about how to properly use a credit card. If a credit card had a single redeeming quality, it would be a great link.

But no, there's no reason to have a credit card. Many real-world financial counselors will tell you why:

Say you use your cards responsibly. You pay the whole balance every month, you have no annual fees. You get 2% back and even free tools and perfume every year if you spend enough. You're the shining example of good credit card user, the one who takes advantage of the credit card company and makes money on the bargain. No: you're still a loser according to research - or "a sucker" according to the Boston Globe. You're spending more money thanks to impulse buys. Switch to cash and you can truly come out ahead. More money left over at the end of the month to save, or maybe spend on something more carefully considered.

There are three more common objections, to which I found some answers:

Q: "But not everyone takes cash!"
A: When necessary, use a debit card. You can use them online or anywhere credit cards are accepted. Still use cash when you can, like at the restaurant, or your bill will be magically larger when you're done ordering.

Q: "I need to build my credit!"

A: "Debt is dumb" says Dave Ramsey - never borrow money. OK, just for a house you probably can't buy it any other way. But always buy a house with a large down payment and just a 15-year loan (if you can't, face the fact that you probably can't afford the house). With a good down payment your credit matters a lot less. Is it worth spending years maintaining just the right amount of debt, shining up your credit rating but losing money (see above), for a slightly lower interest rate?

Q: "But what about emergencies?"

A: Plan for them. Build an emergency fund. Save 3-6 months income in a savings or money-market account. Buy insurance (home, car, health, long-term disability, life, liability) as needed. If you're already in a financial emergency, there's other advice and encouragement, but for the rest of us: Cut up your cards, and start building your emergency fund today.

edited 2/27/09 for tone & wording.

Prison population reduction

One percent of adult Americans are in jail or prison. The problem is worse in Michigan, which spends nearly two billion a year on the 11th-highest per-capita prison population. Lots of people are upset, but misconceptions of the problem will get in the way of fixing it, says John Pfaff. Read his Five Myths About Prison Growth, which concludes:

We need to stop admitting many minor offenders, even if they're serving only short sentences. We need to focus less on high-profile drug statutes and more on the ways small-fry drug convictions cause later crimes to result in longer sentences. Once we start admitting fewer people to prison, we should shift money from prisons to police. If this seems like tinkering, rather than a sweeping fix, that's because it is. See Myth No. 4: Reformers shouldn't waste their breath trying to turn us into Europe.

Governor Granholm wants to cut the prison population as a key part of balancing Michigan's budget.

The truth hurts

Matthew DeBord says that GM is finally painting an honest picture of its future. Key to their restructuring is a realignment of their brands: GM knows it must leave its tiered-branding strategy ("When you outgrew your Chevy, you graduated to Pontiac. Then Olds. Then Buick. Finally, you arrived at the glistening pinnacle, Cadillac.").

[W]hen forced to tell the truth about its destiny, GM doesn't see itself any longer as the postwar colossus that delivered a car for "every purse and purpose" but, instead, a leaner outfit with, for all practical purposes, two major brands: Chevy for volume sales and trucks, and Cadillac for luxury rides. (It's worth noting that Ford, which has declined bailout funds so far, is also saddled with redundant brands and may be following GM down this road in the future.)

Savvy observers will recognize that this is how the domestic carmakers' Japanese rivals do business. Toyota is ... Toyota and Lexus. Honda is ... Honda and Acura. (Toyota also has its Scion youth brand, but the vehicles it sells actually mirror many of the cars GM badges as Chevys.) The emergence of a North American vehicle monoculture, with Detroit's output more closely resembling that of the Asian-American transplants, signals a much more practical, less emotional future for U.S. drivers.

He also says GM won't be able to pay back its debts until well after 2012, when it will be a markedly different company. It's time for everyone in Michigan to realize the old monolith isn't coming back.

In Touchstone Magazine, Emily Stimpson discusses the importance of food - good food, good meals - as part of a good life.

hat tip to Anna W.

Make your own bread.

My friend Stewart Lundy explains why making your own food is full of advantages and nearly free of disadvantages.

Among the advantages:

• Far cheaper

• Far healthier

• Far better tasting

• Frees you from relying on others for your food

• And the chicks dig it.

Kritik Magazine: "Reclaim the Kitchen"

More spending does not help the economy

The united States' president and congress are running scared of an economic recession, and are trying to redistribute wealth to encourage spending. They think that giving everyone, except the rich, artificial money will encourage spending, which will raise key "economic indicators" and help them win reelection.

Economists today discuss the economy in terms of consumer spending. Is that all we are - a machine of 300 million spenders stuck in an endless cycle of creating often things and consuming them? We heard the call for more spending after 9/11, when Bush called on Americans to go shopping as a civic duty to help the economy, as if buying something you don't need will benefit us. Those who call for more spending have a flawed view of the economy.

A healthy economy is characterized by voluntary productivity and free exchange. An economy that relies on everyone spending and buying more than they want or need is not a healthy economy. Efforts to prop it up by artificially encouraging spending just makes the economy more unbalanced. If we do buy things we don't really need, we are forced to work harder (making more useless things?) to earn more and support our spending. Advice to spend more is not making us more productive, it's just making us busier.

We need to stop obsessing with growth in corporate income, personal wages and the economy as a whole. An individual can be perfectly happy without an increase in income each year, especially if he would have to do more for that increase in income. In a free economy, growth will come with innovation and population growth, but it isn't something you can force from the top. With pressure from factors like high oil prices, economic activity may even shrink. This is normal and temporary. Let's not make it worse by calling for artificial spending.

Weekly food expenditures

This page gives photo examples of weekly food expenditures for families all over the world, including the $500 German food bill and food for eleven Egyptians at under $70.