Preparing For Life Without A Credit Card
I made a decision two years ago to stop using my credit card. Here’s how I prepared for life without a credit card.
I established a $1000 emergency fund. Instead of using my credit card to pay for unexpected expenses, I use my emergency fund funds. I needed to remove the “need” to use credit card. If I have an emergency fund, I have removed a ready “excuse” for using my credit card.
I opened a secondary checking account, funded it with about $500 dollars, and I use the debit card associated with this account to make online purchases. The secondary checking account does not allow for over-drafts. I realize that debit cards do NOT have the same built-in protections as credit cards have, so this is my self-designed debit card protection method. If some gains access to my debit card information, the most (hopefully) that they can take me for is about $500. I hope that, in the future, all debit cards will be afforded the same protection as credit cards already have.
I designed a personalized envelope system. In the beginning, I used PHYSICAL envelopes, allocating cash amounts to the various envelopes, and carrying those envelopes with me where ever I went. Now, I have my budget memorized, so I simply carry a week’s worth of cash with me, wherever I go. Again, this means that I keep about $200 to $400 “on me” at all times. Worried about “safety”? I’d simply carry a day’s worth of cash.
I had to learn how to PLAN for the week, and not just stumble blindly from expense to expense. Personally, I use YNAB Personal Budget to manage my personal finances. (Site Sponsor) Basically, unless you are thinking about your expenses, you WILL find yourself in a situation where you will “need” a credit card. Running low on gas? Charge it! Out of milk? Charge it! Hungry? Hit the drive thru… No cash? Charge it! I not only create a MONTHLY budget, I create a WEEKLY spending plan.