Life Without Credit Cards
When I was younger, the concept of credit and credit cards were alien to us. All of us went about our lives just spending the money that we earned. If we wanted something and we have spent all our cash, we would just wait until next month. Sometimes, we'd borrow a couple of dollars from our friends near the end of the month to tide us through until payday, but that was about all the credit that we had or know about.
But times have changed. In these days of instant gratification, it is no longer about how much money we have, but more about how much credit we have. Banks and financial institutions are falling over themselves to offer us the lifestyle of our choice before we can really afford it, and gleefully clap their hands when we repay only the minimum sum each month.
So, for some of us, all we know is credit card and paying off the credit card debt. Have you ever wondered what life would be like without a credit card, and the accompanying credit card debt? Well, as I have been self-employed the whole of my life, no banks have had the confidence to lend me a cent of their money. So, let me enlighten you on what a life without credit cards really is like.
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. And splurging on that expensive dinner to be paid for with next month's pay will be but a fond memory.
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 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.
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.
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?
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. :)