Can it be done? Can someone really live without credit cards? I mean, you need one to build credit right? What about when you’re in an emergency?
Let me start by telling you that credit cards are not your friend. Even though we ALWAYS paid them off on time and never paid interest, we decided not to keep them around. When I was in high school I got a credit card with a small limit to pay for gas and other stuff. It was to “build credit”. Then before my wife and I got married, we got another credit card to earn cash back on all of our big purchases we were going to have for the wedding. I remember that we used it to buy our rings.
So in 2007, our eyes were opened and we learned that we could live life without credit cards. We decided that we were going to pay off all of our debt and there really was no reason to have the plastic there as a temptation. So we ended up calling up the credit card companies and cancelled both of the cards that we had. They really turned on the charm with the cash back card. “Why do you want to cancel when you’re making money off of us since you always pay it off on time?” The truth is, you tend to spend a bit more when you use a credit card, and we had occasionally fell into the we can pay it off with our next paycheck routine. Yeah, well what if an emergency pops up that we need to use that next paycheck for.
I guess it’s probably a good idea to dispel some of the rumors that fly around about why you NEED a credit card.
- It will help you build credit. Credit is only necessary if you plan on going into debt for things. You can get a mortgage without every having a credit score.
- What about refinancing my home to get a better rate? We refinanced our house twice since canceling both cards. I think the bank liked the fact that we had money in the bank, jobs, and no late payments on our credit report more than anything.
- The discounts are just too good to pass up. Seriously? I already told you that you’ll spend more on a credit card because you don’t feel it the same way when it doesn’t affect you at that moment. When the cashier checks you out next time and asks you if you’d like to save more money by signing up with a credit card, try telling them that you don’t believe in credit cards but you’d like to know if you could still get the discount anyhow. It may not always work, but their reaction is sometimes priceless.
- Some bills like car insurance give me a better deal because of my good credit. Hmmm, we pay about $650 a year for our car insurance for two cars. Yep, I said for the whole year. If a place you do business with does check credit to get you a better deal, chances are they are looking for late payments more than anything.
- Yeah, but your credit score was already high from having a credit card. True, because we did the responsible thing and always paid our bills on time. However, our credit score has dropped from being in the 700’s to being somewhere in the 600’s since we’ve closed the cards, and honestly, we don’t care.
- How will I pay for stuff? If you decide not to use a credit card, then you’ll know that anything you buy, you can afford. If you don’t have the money for it, you can’t buy it. It’s pretty simple. I know there are some people who are in a cycle of using credit cards and then paying them off and they may not have the money at the beginning of the month to make the transition. If that’s you, you may have to make the transition over the course of a few months. As you can, try to purchase less so you’ve got some extra cash at the end of the month and can put even less on the card the next month.
- What if I have an emergency? Using a credit card in an emergency is like chopping your finger off to take care of a paper cut. You solve the immediate problem and exchange it for another one later on down the road. If you didn’t have the money for the emergency in the first place, when you’re bill comes you probably won’t have the money then either. Then you’re paying interest on it for who knows how long. Getting rid of your credit cards causes two things to happen. First, you save money for emergencies. Second, if you don’t have the money, you come up with creative solutions you wouldn’t have thought of if you had the credit card as a crutch.
Let’s say that you do want to try life without credit cards, but you’re not ready to chop them up yet. I’ve got just the plan for you. Take a plastic cup, fill it with water, drop the cards in, and then put it in the freezer overnight. Your credit cards will not longer be available for easy access. When you see that “gotta have” item at the store, you’ll have to run home, and thaw the cards. Hopefully, in the time it takes for them to thaw, even under hot water, you can really think the purchase over before you buy something you don’t need or can’t afford.
Have we regretted getting rid of our credit cards? Not in the least.
Finally, I want to leave you with this classic Saturday Night Live video. It’s always been a favorite of mine.
I have to wonder how many people watched this on a TV they were making monthly payments on, while sitting on their 90 days same as cash couch.
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