Living with credit, Rewards, Travel

What our grandparents taught us about credit

Jeff Herman

Grandpa Herman would never have imagined paying for airline tickets with credit card points and a hotel card’s sign-up bonus covering a getaway stay later this year or in 2018.

Julius “Cotton” Herman was a farmer in Florissant, Missouri. He grew pumpkins, corn, strawberries and blackberries, and his and Uncle Johnny’s farms were known all over North St. Louis County.

Grandpa Herman didn’t know much about credit cards, but he knew this about credit: He’d help neighbors and longtime customers through a rough patch by helping them keep food on the table. I also learned from him the value of hard work and long hours.

With Grandparents Day on Sunday, I asked people what they learned about credit from their grandparents.

Shea Drake, 26, a technical and business writer in Salt Lake City, says she learned three things from her grandparents.

A young Jeff Herman, atop a mountain of pumpkins from grandpa Julius “Cotton” Herman’s farm in Florissant, Missouri.

“First and foremost, credit is money I don’t have,” Drake says. “Second, since it’s not mine, it should only be used as a last resort, not the first option.

“Those first two things considered, it’s OK to make certain purchases on a credit card so long as I have the funds to pay it off every month to build credit.”

Richard Arthur Harvey, 50, of North Platte, Nebraska, credits his grandparents with getting him out of debt.

Harvey says his grandparents were “realistic enough to understand that for the purchase of things like homes or new vehicles it is impractical to live by the old saying: If you can’t pay cash for it, you don’t need it.”

That’s often good advice, though, he adds, “as I found myself deep in the hole from unsecured debt.”

Harvey’s grandparents taught him “how to get out of the hole by contacting the creditors directly, canceling cards and agreeing to repayment plans for the balances.

“I then used some rather large tax refund checks, on their advice, to pay off the balances completely rather than purchase new items,” he adds. “I did the same thing to pay off a car loan with an outrageous interest rate.

“Their advice has taken me from near bankruptcy to the purchase of my own home and several new cars,” Harvey says. “Personally, I am beginning to think that I still have a thing or two to learn from them.”

Parenting expert Cherie Corso says the three things she learned about credit from her grandparents are:

1. Your favorite book to read is your bank book showing your deposits.  

2. If you don’t have it, don’t spend it.

3. The output can’t be bigger than the input.

Corso says she has “passed these lessons on to my daughter, plus teaching her financial responsibility at a young age, with the debit card she’s had since she’s been 9.”

Elyssa Respaut, 30, a freelance project manager in New York City, notes that her father’s parents were both born before the Great Depression and that likely helps explain their reluctance to use credit.

“I think the biggest thing they passed down to me was ‘Do not spend what you do not have,’” she says. “While for some things, like a mortgage, it may be necessary to take out credit, but for day-to-day expenses if you can’t pay the bills off when you buy them you shouldn’t be buying them at that time.”

“They, and my parents, believe that cash is king,” she says. “The majority of transactions they did – and my parents still do – is done in cash.

“While I admit that I use my credit card for more day to day transactions, I also know that if needed I could pay off my entire monthly credit bill any day that I needed to,” she says. “I have the funds in my account as a buffer.”

That’s what I do, too. I always make sure I’ve got the money in the bank to cover the everyday spending that I put on my credit cards. The airline tickets and hotel stays earned with credit card rewards are great, but it’s better to be able to sleep at night knowing I can cover all of my expenses.

Oh, and the Herman Farms name, if not the family farming business, continues. Julius “Cotton” Herman’s farmland is now a strip center, and Uncle Johnny’s farm is now a subdivision.

Tom Goeke bought Uncle Johnny’s farm before it was sold to the home builders. The main street of the subdivision is Herman’s Farm Lane.

Goeke now operates a smaller Hermans Farm Orchard in neighboring St. Charles County. I spoke with Goeke early Friday morning, and it’s peak apple season. The pumpkin crop is in the wings.

Goeke knew Cotton Herman and Uncle Johnny well, and he says he often shared beers with my dad at Weidinger’s Tavern in Florissant (where my dad had a tab, no credit cards).

And Goeke added that though most of the people who purchase apples, pumpkins, tomatoes, corn and other produce at Hermans Farm Orchard pay with cash, about 40 percent now pay with credit cards.

See related: Giving credit to Mom for her financial wisdomWhat millennials can teach us about credit9 credit lessons for college students

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