I was sifting through some old paperwork today, and I stumbled across an old letter from our bank.  It was dated September 8, 2005.  I was pleased to see that it was a notice from our bank, informing us that our car loan had been paid-in-full.  I smiled as I put the letter back in its place and then I went searching through the No Credit Needed Archives – for a quick trip down memory lane.

On August 29, 2005, I sent the final payment to our bank and paid off our car loan.  It’s hard to believe, but it’s been four years since we’ve had a car payment.  And to think, I used to be one of those folks who assumed that I would “always have a car payment.”

Instead of making car payments, I now make payments to myself.  Each month, I put an amount equal to a car payment in our savings account.  When and if we need to buy a newer car, we’ll do so out of our savings.  Instead of going in to debt, and paying interest, we are able to remain debt free, and earn interest as we save.

A couple of years ago, we used this technique and purchased a new-to-us automobile, with cash.  While it hurt to write a single check for such a substantial amount, it felt good to feel “in charge” of the car-buying experience.  I didn’t have to worry about payments or interest rates.  Instead, I was able to focus on price.  As a cash buyer, I didn’t have to worry about being approved for a loan.  I was able to find the car I wanted, negotiate from a position of strength, and rest assured, knowing that I had enough money to complete the deal.

Right now, I’m saving up to replace my old truck and my eight year old Honda.  As I work toward these goals, I’m in no hurry.  In fact, a mechanic buddy has my truck, right now, and is giving it a good tune up.  Since I only use it to carry off the trash and do work around the yard, it might be another decade before it needs to be replaced.  I keep the Honda serviced, and I’m hoping it will last me several more years, as well.

It is impossible to explain how good it feels to live without automobile payments.  Sure, our cars are a little older and we have to be proactive in our planning, but all of our efforts are so worth it.

For those interested, you can click here to read about our debt reduction journey.

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Four Years Without A Car Payment

My wife and I have been debt free for more than three years.  Here’s how we turned our lives around and changed our family’s financial future.

We began to spend less than we earned.

Brilliant, no?  It sounds so simple, but the reality is, many Americans spend more each month than they earn.

We put our credit cards in our wallets – and just left them there.

We stopped using our credit cards.  We didn’t cut them up or freeze them in a bowl of water – we simply made a decision to stop using them.  This might have been the single most important thing we have ever done.

We began to live on a budget.

Following a zero-based budget, we were able to control our spending and maximize our savings.

We began to dream of a debt-free future.

Within the first week of our financial turn-around, we were already convinced that, one day, we would be debt free.  This confidence, though tested by circumstances, never changed.

We created a system for organizing our financial documents.

Organization is so important.  In the past, we might forget to pay a bill or we might lose an important document.  Now, we have a system for organizing our documents, scheduling payments, and balancing our accounts.

We worked together.

I am the nerd and I like spreadsheets and calculations.  My wife is practical and she specializes in household management.  We combined our strengths, encouraged one another, and refused to argue, ever again, about money.

We created a specific goal.

Our first goal?  We wanted to be debt-free.  Having this specific goal, something to aim for, really motivated us.  We gave ourselves a specific goal, and a specific date to achieve it.  Surprisingly, even though we missed our original goal date, instead of being discouraged, we were further motivated.  The goal itself, the dream of being debt free, really kept us going.

We began to think long-term.

This was key.  Instead of living month-to-month, we decided that we wanted to live decade-to-decade.  Making the decision to be forward-thinking, we were able to give up temporary wants, and focus on long-term plans.  We matured, you might say.

We read.

We read, and continue to read, all that we can about personal finance.  Inspired by the success of others, we press forward.  We are not where we want to be, but we are confident that we are headed in the right direction.  Even surrounded by the negative news of the day, we have great hope for our future.

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How We Changed Our Family’s Financial Future

Site Redesign -

I have made a few changes to the look and feel of No Credit Needed.  I hope these changes improve the sites usability.  If you subscribe to No Credit Needed via RSS or email, you can click here to view the new look of the site.

From my other sites -

No. Calories Needed - Hit My First Stall But I Am Still Going!

No Credit Needed Network – Debt Reduction Celebration

From around the web -

Bible Money Matters – How The Emergency Fund Makes For A Better Life

Blunt Money – Tries To Define Financial Independence

Tough Money Love – Killed Those Mortgage Payments

Five Cent Nickel – How To Choose An Online Savings Account

Chief Family Officer – Cooking With The Toaster Oven

About the Midnight Meanderings -

The Midnight Meanderings are published two or three times a month and highlight articles I like from across the web as well as the most recent articles from my other sites.

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Midnight Meanderings – Slight Site Redesign

In April of 2005, I had an ‘ah ha’ moment.  As I sat staring at the paltry amount of money in my checking account, it occurred to me that I had been working for more than half of my life, and yet, I was broke, in debt, and I had no plan for my financial future.  I had less than $1000 to my name.  I had worked, hard, for more than fifteen years, and yet I had no savings, no emergency fund, and no idea for how I could ever retire or pay for my kids’ college.

Scared, and more than a little frustrated, I made up my mind, then and there, to do SOMETHING about my situation.  I took out a piece of paper – actually, the back of an envelope – and I began to list my creditors.  I then went online and found out just how much money I owed.  The total?  I owed a little more than $11,500.  Now, since that time, I’ve met a number of people who owe much more and and a number who owe much less than $11,500, but, three years ago,$11,500 was a LOT of money.  Remember, I had never lived on a budget, I had always depended on credit cards to get by, and I was used to living paycheck-to-paycheck.

Now, in 2008, my life is completely different.  I am debt free.  I have a fully-funded emergency fund, and I’m working hard, along with my wife, to ensure that we adequately fund our retirement and education savings accounts.

I didn’t type the above paragraphs so that I could “toot my own horn.”  After writing about debt reduction for more than three years, I’ve met people who’s stories make mine pale in comparison.  No, I shared my story for one reason:

You.  Can.

You can get out of debt.  You can save for your future.  You can live on a budget.  You can retire with security.  You can live a more peaceful life.  You can be and do and see and know more than you ever thought possible.

Three years ago, I had the back of an envelope, a desire to get out of debt, a borrowed copy of one of Dave Ramsey’s books, and a silly little blog – but, I also had two more things – the two most important things.  I had determination and I had a plan.

I lined my debts up on another piece of paper – a proper sheet of college ruled, if memory serves – and I began to plan.  I narrowed my focus, I stopped worrying about what other people thought, and I began to work as hard as I could to rid myself of debt.  Even when my son got sick, and was hospitalized for a week, and we used up our entire emergency fund, I would not give up.  Even when my original goal date zoomed by and I was still in debt, I would not give up.  For some reason, whatever fire that was lit in April of 2005 refused to go out, no matter what the situation and no matter what the setback.

I don’t know anything about you.  When you read this article, you might find it inspiring, or corny, or even off putting.  I can’t do anything about your reaction.  All I know is, I’m looking around at a world filled with people who look like they’ve lost hope.  My goal, and it has become the singular goal of my site, is to let people know:  If a dude like me can, anyone can. I’m serious.  There’s nothing special about me.  I’m the most average guy on the planet.  I want my kids to grow up and be happy and healthy.  I want to spend a long, blessed life with my wife.  And, I want to be able to leave a little behind when I pass on.

What is special, however, is what happens when you couple your plan with your determination.  So, if you are where I was, and you’re feeling discouraged or down or depressed, maybe this post will serve as a “pick-me-up”.

Now, go to your kitchen table and sort though that stack of bills.  Take out an old envelope, flip it over, and get to work.  Tomorrow, you change your life.

You. Can.

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You. Can.

I want to once again thank those of you who arrived here via this Money Magazine article about families who are living without credit cards.

If this is your first visit to my site, welcome.  I hope you will take a few minutes to read a bit more about me and about how and why I live without credit cards.  Now, today’s post:

Creating My List Of Financial Priorities:

It is vitaly important, to me, that I:

Live On A Budget – No matter how much money I have (or don’t have), I will always use a written budget to manage my finances.  Over the course of the last 3 years, I’ve used very complex and very simple budgeting techniques, but my goal has always been to crate a clear picture of how money flows into and out of my life.  My budget – which is my financial road-map – keeps me on track.  (I’ve written several articles on budgeting, including this popular one about budgeting when you have irregular income.)

Purchase Adequate Insurance – I have health, life, dental, disability, and property (renter’s) insurance.  Once a year (or more often, if the need arises), I reassess my financial situation and purchase insurance accordingly.  (For those new to my site, when you read the word “I”, feel free to insert the word “we”.  Whatever I do for myself, I do for my wife and our three kids.)

Maintain Adequate Cash Reserves (Emergency Fund) To Cover Six Months Worth Of Expenses – I keep enough money, in my savings account, to cover the cost of food, shelter, clothing, and utilities, for six months.  In the past, I was more willing than I am now to dip into my emergency fund.  But now, especially with the state of the economy, maintaining a fully-funded emergency fund has become a very high priority.  (If you haven’t done so, consider adding your input to this poll I’m conducting about emergency funds.  In a few days, I plan to summarize the feedback and write and article about the poll results.  It should be interesting.)

It is very important, to me, that I:

Fully-Fund Our Retirement Accounts – Currently, I am fully-funding my 403(b) and my Roth IRA.  My wife is fully-funding her Roth IRA and her pension plan.  We plan to fully-fund these accounts, year after year, until we retire.  By fully-funding my 403(b)  – (similar to a 401(k), but for non-profit organizations) – I reduce my annual tax bill and save for the future.  Roth IRAs provide an opportunity for tax-free growth.

Fully-Fund Three Education Savings Accounts – I have three small children, ages 8, 4 and 2 months.  I plan to fully-fund ESAs for each of them.  My goal is to assist them when it comes time for them to go to college.  I will expect for them to work, while in college, but I do plan to pay their tuition (and living) costs.

It is important, to me, that I:

Continue To Live Without Borrowing Money – So far, I have managed to live more than three years without borrowing money.  During that time, I’ve purchase a newer automobile and several furniture pieces for our house.  But, if I plan to continue to live without going into debt, I must be sure that I -

Save For Future, Major Purchases -  Currently, I live in a house provided by my employer (as part of my compensation).  In the future (near or distant), I plan to purchase a house.  I would love to be able to do so without borrowing any money.  This may, or may not, be possible, but I am going to try.  Even if I am unable to purchase a house without borrowing money, I do plan to save up for a substantial down-payment.

It is cool, to me, that I:

Live Without Using Credit Cards – While it might come as a shock for some to read, living without a credit card is pretty easy, once you get used to it.  When I want to purchase something online, I simply use a debit card (which is associated with a separate checking account, dedicated for debit card purchases).  I also use a debit card for groceries or gasoline.  For most other purchases, I carry cash.  But, No Credit Needed isn’t, primarily, an anti-credit cards site! While I do like to write about my life without credit cards, I realize that most people will use them.  I want my readers to know, my primary goals isn’t to convince you of the ‘evils’ of credit cards.  No.  My primary goal (for the site) – is to promote the idea that credit does not have to be the default option.  You can save up enough money to purchase an automobile.  You can pay cash for a new television set.  You can go to college without accumulating massive loads of debt.  You can live debt free.

I realize that most people will borrow money when they purchase an automobile or buy a house.  And, I realize that many people use their credit cards ‘responsibly’ – and pay them off at the end of the month.  But, there are millions and millions of people who are over-their-heads, who continue to borrow money, always putting of tomorrow what needs to be dealt with today.

Credit, like anything else, is just a tool, to be wielded by its owner’s hand.  For me, I choose not to use credit cards, because I just don’t like dealing with credit card companies.  But, credit isn’t’ the real issue -  personal responsibility is!  Each one of us must look inside ourselves and determine those things that really matter.  So, today, I’ve listed what matters (in the financial realm) to me.

As you read my blog, please don’t get hung up on the ‘He doesn’t use credit cards” bit.  That’s such a small part of what I’m trying to do.  I’m trying to shape my financial destiny, and the destiny of my children and their grandchildren.  My ultimate, long term goal (for my life), is to be a blessing to other people – financially, emotionally, and spiritually.  Not using credit cards is just one ’small tree’ in the very ‘big forest’ that is my financial life.

Thanks again for stopping by, and if you have not already done so, please consider subscribing to No Credit Needed via RSS or via Daily Email.

Edit:  If you like this post, please consider stumbling it.  If you haven’t checked out Stumble Upon, click here to view my profile and consider creating one of your own.  It’s a great resource for sharing links and finding interesting content.

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Creating My List Of Financial Priorities

I want to thank those of you who have clicked over from Money Magazine. Author Donna Rosato interviewed me a few weeks ago and yesterday, her article, Life Without Plastic, was published on the Money Magazine website. My family and I are profiled on page 6 of the article. The print version of the article will be in the July issue of Money Magazine – on newsstands this week.

(If you missed it, please click here to read my original welcome message, written yesterday when the article was first posted on the Money Magazine site. You’ll find tons of general information about me and my websites.)

Since so many of you are new to my site, I thought you might like a little background information.

Thee years ago, in April of 2005, I sat down at my computer. I was depressed and worried. I had two kids and a great wife, but our finances were a mess. We had less than $500 in our savings account, I was barely funding my retirement, and we were almost $12,000 in debt. Feeling frustrated, I decided that I was tired of being broke – and I determined to do something about our situation.

For months, I had been listening to Dave Ramsey talk about debt reduction. I decided to follow his ‘Baby Steps’. But, I didn’t really know anyone else who seemed interested in talking about debt reduction and I really wanted a way to connect with like-minded people. So, I found a site where I could start a ‘blog’ for free – and No Credit Needed was born.

Since that day at my computer, my life has changed, dramatically. I managed to pay off all of my debts, build up a decent emergency fund, fully-fund several retirement accounts, purchase a newer automobile with cash, and live without using my credit cards. Now, instead of living life worried about bills and paperwork, I look forward to planning for my future and managing my finances.

No Credit Needed is more than a blog. It’s an experiment. Can a modern family of (now) 5 live without borrowing money? And, my honest answer is, I don’t know. But, for more than three years, I’ve managed to not only live without debt, I’ve managed to thrive without it. So, until further notice, I’m still rocking on, No Credit Needed!

I’ve written several articles about credit cards and why I don’t use them, including -

I Do Not Use Credit Cards

Preparing For Life Without Credit Cards

Philosophical Reasons For Not Borrowing Money

How I Live Without Credit Cards

For those of you considering this way of life, let me assure you of two things – it can be done and it does take a lot of work. I strongly recommend that you live on a written budget. My preferred budgeting software is published by the good folks over at You Need A Budget.

I’ll remind you that I am not a financial professional. Instead, I’m very much just a regular guy. I have an awesome wife, three great kids, a job, bills to pay, and a future to plan for. No Credit Needed is my attempt to share my own story. And, hopefully, from time to time, it will inspire or encourage someone else.

Thanks again for stopping by, and if you have not already done so, please consider subscribing to No Credit Needed via RSS or via Daily Email.

For those of you who arrived here via StumbleUpon, thanks for visiting!  Before you leave, please consider stumbling this post.  Thanks!  For those who have never heard of StumbleUpon, click here to view my profile and consider signing up.

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Life Without Credit Cards And The No Credit Needed Experiment

Many popular personal finance ‘gurus’ suggest maintaining an emergency fund with enough money to cover 6 months worth of expenses. I thought it might be interesting to see what my readers thought about this advice. If you are reading this post in a feed-reader, you will need to click through in order to leave a comment and vote in the poll.

Now that you’ve voted, a few questions -

Question 1: Where do you keep you emergency fund? In a savings account, money market, checking account, or under the mattress?

Question 2: What about six months worth of expenses? Is this too much… or too little?

Question 3: Would you sacrifice a fully-funded emergency fund in order to fully-fund a Roth IRA (or other retirement / education savings account)?

Question 4: What is the smallest emergency fund with which you wold be comfortable?

Thank you for your participation. Your answers will help me write a future post. If you are a blogger and you write a post about this subject, click the contact button at the top of this page and let me know about it. I’ll be more than happy to link to your post.

Related Posts -
Building An Emergency Fund – Where Do I Keep It?
Reader Poll – Short Term Savings
Updating My Non-Retirement Savings Chart

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Reader Poll – Just How Much Is 6 Months Worth Of Expenses?

It’s hard to believe. I have been completely debt-free for two years!

In April of 2005 I created No Credit Needed.

My purpose? To track my debt reduction and share my story with the world.

In less than 10 months, I paid off more than $11,500, and on February 6, 2006, I was able celebrate my ‘freedom’ from debt.

Click here to read the post I wrote, 2 years ago, about becoming debt-free.

I cannot express how important this site has become to me. I am thankful for the (ever increasing) number of readers, visitors, and subscribers. You motivate me. You challenge me. You push me to research, defend, and consider my positions and my ideas.

Along the way, numerous other bloggers have helped me, linked to me, informed me, encouraged me, and inspired me. Many of them are listed in my blogroll – and I dare not attempt to single any of them out by name, for fear that I’ll fail to include all of those who have been so good to me and the site.

I would like to thank all of my fellow bloggers, who have taken the time to link to my site. By referencing my site, you have helped grow my traffic, you have connected me with new readers, and you have helped to build my online reputation. I will be forever grateful.

If you are new to my site – I want thank you for stopping by – and I encourage you to stick around.

Here are five of my favorite posts from the past 5 years -

(Almost) Everything I Know About Debt Reduction

What I Like About Being Debt-Free

How I Plan To Stay Out Of Debt

Welcome Clark Howard Fans And WSB TV Viewers

$10 A Day Equals 3/4 Of A Million Dollars

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I Have Been A Debt-Free Blogger For Two Years

Click here to read all of the 33 Days And 33 Ways To Save Money And Reduce Debt posts.

I’m a pretty independent guy. I don’t mind being by myself and I could pretty easily spend a few weeks “right by myself”. But, when I decided to get out of debt, I wanted a forum where I could share my story. So, I created No Credit Needed. I wanted a place where I could be open, honest, and real. (To read about my debt reduction journey, click here.)

Today’s tip: Share Your Story

Find a friend, a relative, a group of people at church, an online community – find someone and share your story with them. I found that blogging about my debt reduction kept me motivated and honest. If I failed to update, one of my readers would email or comment, asking about my lack of posts. Even when I missed my goal-date, readers continued to push me forward. If you are uncomfortable with “blogging”, share your story “offline”. Be sure to talk with your spouse, if you have one. Maybe call your sister or brother. I believe in the power of accountability. It is so important to have someone to talk to – someone to celebrate with – and I cannot overstate how important “sharing my story” has been to me. Without this outlet, I might still be in debt! Note: I’m not encouraging you to start a personal finance blog, but I am encouraging you to FIND someone who will listen to you, encourage you, call your bluff, and cheer you on.

(If you are looking for an already established network of folks trying to get out of debt and save money, consider joining us over at the NCN Network. Upload your goals, and in a few days, I’ll have a chart up and running, just for you!)

Have you found someone to share your story with?. Leave a comment and let us know. If you are a blogger, write a post about why you blog about your finances and contact me. I’ll be more than happy to link to your post.Click here to read all of the 33 Days And 33 Ways To Save Money And Reduce Debt posts

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Day 6 Of 33 Days And 33 Ways To Save Money And Reduce Debt : Share Your Story

In an effort to better organize my financial documents, I’ve been going through a box of old bills. I was somewhat surprised to see just how many of those bills were from store-branded credit cards. I found old bills from Belk, JC Penney, and Sears. The bills were dated January 2003 – December 2004. As I was flipping through the bills, I noticed the following::

1. I made purchases at one or more of these stores, every month, for the two year period starting January 2003 and ending December 2004. That’s right. I shopped at Belk and/or JC Penney and/or Sears consistently for two years. I was a loyal and dedicated customer. I returned, again and again, like a horse to a trough.
2. I never once, despite repeated promises to the contrary, paid a balance “in full”. I paid interest on every purchase. I did manage to pay (at times) more than minimums, but I never took a balance all the way to “zero”.
3. The lowest interest rate for any of these cards appears to have been about 19.99%.

Wow. Those bills represent only a small portion of the store-branded credit card bills I’ve received over the course of my adult life. I hate to think about the amount interest I’ve paid over the last decade and a half. But, more important than the amount of interest paid, is the fact that I continued to shop at the same stores, over and over, despite the fact that I already owed them more than I could afford pay back. Why? Why in the world did I continue to shop at these stores?

Now, let’s take a quick look back over the two year period from April 2005 until April 2007. Remember, it was in April of 2005 that I decided to stop using credit cards and to get out of debt. So, I put all of my store-branded credit cards in a drawer and “forgot about them”. In March of 2007, I had transferred the balances from all of my store-branded credit cards to a single Visa card. I had a “clean slate”. I was no longer receiving monthly bills from the above mentioned companies and I was working hard to pay off the Visa card. Let’s take a look at my “new relationship” with these same companies:

1. During the two year period from April 2005 until April 2007, I made one purchase from Sears, four purchases from JC Penney, and six purchases from Belk. I used cash.
2. I never received a bill, so I never had to worry about paying interest, and I never had to worry about “minimums”.
3. I never paid interest on a single purchase, because I paid cash.

After making the decision to no longer use credit cards, not only did my interest payments go to “zero” but my spending went down. Dramatically. I broke a cycle. I am no longer “store loyal” or “brand loyal”. I do not feel “privileged” to have a store-branded credit card.

Now, before someone leaves a comment suggesting that I was irresponsible, let me be the first to agree! I was also foolish, ignorant, and naive. I believed that I would “one day” make enough money so that I could pay off all of my debts. I believed that I “knew what I was doing”. I made promise after promise. But, nothing ever happened until I put the store-branded credit cards away and forced those stores to EARN my business. If you want me to shop at your store, you better offer low prices, good customer service, an easy-to-understand return policy, and friendly cashiers. I’m no longer impressed by the name on your door. It’s no big deal to me where my clothes come from or how much they cost. Plus, I’m not longer enticed by “save 10% when you use your store-branded credit card” deals. Why? Because, I know that I am saving MUCH more than 10% because I take the time to compare prices and I go to the store with the best deal, not the store with the easiest financing options!

Recognizing that some of you will think I’m crazy, I challenge you to do the following. Put your credit cards, all of them, in the back of your dresser drawer, and live without them for three months. Then, examine your spending habits. I’m not much on “guarantees”, but I’d (almost) guarantee you that you’ll spend less money, you’ll be less “brand-loyal”, and you’ll find newer, less expensive places to shop. I dare you!

(If this post suffers from grammatical inconsistencies, I apologize. As I type this, my son and daughter are running laps around me, playing freeze-tag. I am, to say the least, a little distracted!)

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Store-Branded Credit Cards: A Shocking Look Back