ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Does Credit Equal Debt?

Updated on December 30, 2020

What is Wealth?

A simple equation to determine how wealthy you really are is by taking the amount of money you own, and subtract your debts from that. A lot of people think that the amount of money they take home in a month (or in a certain time frame) determines their wealth, but it really doesn’t. You can be making $10,000 a month and spend that $10,000 in a month without saving anything. You'd end up with virtually nothing later in life. Or you can make $3,000 a month and save $1,000 a month, and become wealthier over the years. The amount of money you have stored away determines your wealth, not by how much you make.

Fame Doesn't Always Equal Fortune

If you think that business owners, singers, actors, models, and lottery winners are more likely to stay wealthier than the average worker throughout their lifetime, think again. Did you know that 1 in 3 lottery winners become bankrupt within five years? And how many times have you’ve seen an article about a famous someone in the hole? It doesn’t happen because they all of the sudden stopped making money, it happens because of the way the money was used.

What’s the first thing that a lot of people do when they get a large sum of money? A lot of times you hear how they buy luxury houses, cars, jewelry, and go on lavish vacations. You rarely hear about them putting away any money, in fact a lot of times they finance things.

Credit Develops Debt

Spending excessively is a way that wealth is drained, but credit is the only way debt is developed. People credit and finance many things in their life that they think they need now, but they cannot afford. This leads to developing debt, and not only that, but developing a growing debt over time. With high interest rates, high monthly bills, and all the years it takes to pay it off, is credit really worth it? Why not live as credit free as possible and have the choice on how you want to spend your paychecks? If you really want something why not save up for it (the natural way) and buy what you want when you have the money? Over the course of your life, you’ll be wealthier and not have the stress of bills that keep rising just for existing because of interest. Why not pay-as-you-go in life and know that at any moment you can’t afford something you can let it go and find something more within your budget? Think about houses and cars (two of the biggest debt developers), why not rent where you live if you don’t have the money to purchase a home up front? Why not wait to get that car that you’ve always wanted until you have the funds to buy it and not lease it? Therefore, you pay only for what it’s worth, and you’re not stuck paying more for it with the thousands of dollars in interest.

Think twice before borrowing money. Having many debts to pay can make you feel like a prisoner in your own life.
Think twice before borrowing money. Having many debts to pay can make you feel like a prisoner in your own life.

Credit Cards Make Saving Hard

Credit cards are the worst debt builders because they have higher interest rates than most other loans. It’s also not meant to be paid off, but to be used over and over again. Think about all of the free money you’re giving away over the years just by having a credit card. You can always pay for online purchases with your bank debit card, or any other purchase if you prefer not to carry around cash.

People say you need to use credit in order to build your credit, but the question is - do I really want credit at all? Instead of giving away your hard earned money to credit and loan companies, put that money in your bank account and towards your wealth.

Easier Said Than Done?

It might be easier said than done to live completely credit free, but it is possible. Deciding to spend within your means is a great start. If you must own a credit card make sure you pay the statement balance off monthly, and think twice before financing something just to 'build your credit.' A great step in becoming debt free and wealthy is refusing to take on debt in the first place.

Ways to Live Without Credit

  • Use your bank debit card for online purchases.
  • Have a small savings account set aside for financial emergencies.
  • Think twice before buying something that you don't really need.
  • Save up money for a major purchase.
  • Pay for everything up front, avoid financing.
  • Borrow money from a close friend or relative in an emergency (make sure to pay it back!).
  • Keep track of your monthly spending, and adjust where necessary.
  • Give yourself an allowance of what you can spend every month.
  • Put money aside in case you unexpectedly lose your job.
  • Get a small side job or another means of making cash on the side.
  • Refuse to use a credit card.

Do you currently own a credit card?

See results

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2013 Michelle V


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)