I have been working on my own for most of my life. My official employment status is either self-employed or unemployed. The banks consider me a bad credit risk, so I have never been able to get a credit card. It was actually a blessing a disguise.

I can imagine a younger version of me, let loose on the material world with a piece of plastic. While I might not have gone crazy, I would probably have had an overly optimistic view of my future earning capability and spent accordingly. I would probably have gotten into a lot of financial trouble.

Anyway, for the whole of my life, no banks have had the confidence to lend me a cent of their money and I am the better for it. So, what is a life without credit all about?

Bank Interest

Bank interest is the money that the bank pays you for keeping your money with them. For those of you who are living on credit, I know that it's a revolutionary concept. All you know is that every month, you seem to owe the bank even more money. :(

Take my word for it - if you have money in the bank, the bank will give you even more money. Just for the satisfaction of getting money from the bank, instead of giving it, isn't it worth paying off that credit card debt?

Living Within Your Means

What this means is that there will be no more waving your credit card and charging everything in sight. It means that there will be no more keeping up with the Jones, even though they are in a completely different tax bracket from you.

You have to earn every dollar that you spend. There are no limits to the amount that you can spend, but you must earn every single dollar first. Rather quaint idea, I know, but isn't this the way it's supposed to be?

Fiscal Responsibility

Fiscal responsibility is about managing your limited resource, in this case, your money. It is about learning what your needs and your wants are and striking a balance. When your spending is limited by the amount that you earn, you learn the value of money and how to use it effectively.

Investment

When you don't have the "unlimited" money offered by the banks, and the limited amount that you earn is, well, rather limited, you start to seriously educate yourself about investments and take action on growing the limited amount that you have.

Early Retirement

Without a credit card, you will be spending prudently, not paying exorbitant interest rates, and investing wisely. Certainly sounds like you are going to retire early, right?

Conclusion

Credit cards have their function and they are very useful in many situations, but more often than not, we forget that credit is not free money but borrowed money - money that has to be repaid, with interest, at some time in the future.

Many of us do know of the pitfalls of credit cards, but when an emergency happens or desire strikes, and that piece of plastic is the easiest answer, we use it. And we promise ourselves to settle the balance within 6 months. Before the 6 months is up, something else happens. It's a matter of time before that initial tiny hole in your pocket becomes a gaping chasm.

My personal opinion? Get yourself a debit card. You get all the functions of a credit card and you spend only what you have. You get all the convenience of a credit card and none of the problems. And you sleep better at night. :)