Wow. I’ve gotten a tremendous amount of response to my post about not using a credit card. After reading through the comments, which I suggest that you do, I’ve noticed some reoccurring themes:
- Some view using credit cards (and paying off their monthly balances) as the responsible thing to do.
- Some people claim that they pay off their monthly balances, in full.
- Some people think that by having such an anit-credit card stance, I’m displaying a lack of self-discipline.
- Some people see credit cards as convenient tools for financial transactions.
- Some people argue that credit cards are more secure than cash or debit card
I’ve come to the realization that some people really, really enjoy using their credit cards. And that’s cool. But, the bottom line for ME is:
I don’t borrow money. I don’t borrow money for 2 days, 2 months, 2 years, or 2 decades. I’m totally and completely debt free, and I plan to stay that way. I choose to be different, because I have found real, solid, financial peace for the first time in my life. I worked for 16 years, and I purchased goods and services using various forms of debt. And at the end of that 16 year period, I had almost 12,000 dollars in unsecured debt, no money in the bank, no savings, and no “control” over my finances. (As for the credit card discipline: I never missed a payment, I never had a late-fee, and I always paid my minimums. Still, I always charged just a “little bit” more than I hold told myself that I would, promising myself that I’d pay it off at the end of the month. Trouble was, the end of the month came, and there was always more bill than there was money. And the cycle went on and on, for 16 years.) Now, in the (less than) 2 year period since I quit borrowing money and using credit cards, I’ve saved over TWENTY THOUSAND dollars, paid off over ELEVEN THOUSAND dollars in debt, and put 10 percent of my gross income into retirement savings. I have a budget, I have a plan, I have goals, and I have peace. Now, why in the WORLD would I go back to the “way things were”. I’m sorry, but you can call me “undisciplined” or “out of touch”, but the truth is, credit cards offer easy money, are easily abused, and are easily overused. Plus, and I believe this because I am a Christian, the Bible says, Proverbs 22:7: The rich ruleth over the poor, and the borrower is servant to the lender. I choose to live free. Citi can be somebody else’s master 🙂
Thanks again for all of the comments! Debate rocks!
Not even a mortgage?
Jennifer,
Right now, my employer provides a home as part of my compensation. My goal is to save enough money to pay cash for a home. I realize that this may or may not be possible, but I’m going to try!
I wish this viewpoint would’ve been more prevalent when I was starting out. I was in the same place you were, got there exactly the same way. I can remember all the mainstream finance articles about the benefits of using credit cards to build your credit, use “other people’s money”, blah, blah, blah, blah. I got sold on being “sophisticated” and wound up in debt. Was it my fault, lack of discipline? Absolutely – I should’ve known better and lived on less than I made, but it’s so easy not to. I stumbled on Dave Ramsey’s program and thought “man, you just don’t hear this anymore!” Paid off my credit cards and closed the accounts and haven’t had a regret. Paid off our student loans and cars, working on the home equity line. Are there people out there who can micromanage their finances and pay their balance every month? Absolutely. But I think there are far more people who don’t and wind up to their necks because of it.
I do think that stance is VERY VERY cool. It is the approach that my wife and I are taking, and in the past six months of budgeting, paying with cash, and taking on NO new debt, we have zero credit card debt, a substantial emergency fund, and a solid plan to be debt free (yes, including mortgage) on one income within five years.
We took a budgeting class through our church almost a year ago that advocated a cash-only budget, and taught that people will unconsciously spend considerably more when paying with plastic. It’s the reason casinos give you chips instead of letting you play with cash: You don’t have the same emotional attachment to it and so are more likely to give it away.
NCN, seems like you open up a can of worms.
You site is ” blowing up” over this credit card post.
I still agree with you. Cash is King.
I do not own not one credit card. It’s been that way for about 10 yrs.
And I had no regrets of not having one.
I also wish I would have taken this approach 10 years ago (got my first card then). So now, I’m working on paying off $80,000 worth of NON-HOME debt (cars, student loans, credit card).
It hasn’t been until this past year that I’ve seriously put an effort towards getting rid of debt. I expect to pay off about $17,000 to 20,000 by October of this year, and to be debt-free by mid-2009! Wish me luck!
I just wanted to say that I appreciate your blog because it makes me feel validated in my choices: I’m a recent college graduate, and ever since I turned 18 my father has been pestering me to get a credit card. We’ve actually had big arguments where he insists that I NEED a card for all of those reasons (build good credit rating, etc.) And I have refused because I don’t want to be in any kind of debt.
He finally got so frustrated that he applied for a credit card in my name — but I never touch it.
It’s just weird how people think not using a credit card is insane or unamerican or whatever. I feel like I’m being responsible by living within my means, but people react like I’m defiantly refusing to be a grown up about my finances. Crazy.
I think this is amazing, and GOOD ON YOU — seriously, not many people at all can say they have the discipline to do that (me included!!), and if you’ve managed to live the last 2 years without needing a credit card or any other finance, AND save money as well — then GOOD ON YOU.
Your blog and your No Credit Needed Network is fantastic — it has really inspired and encourage me. I read here every day, thankyou!
(post on my blog coming soon about yours & the network 🙂 )
This is a very unpopular stance but so right. I teach a class that advocates a cash method of money management and it’s offered all over the country, called Financial Peace University. You can find a class in your area at http://www.daveramsey.com
I think using plastic has it’s pro’s and con’s. What works for one person may not work for others. When I was a bit younger I went plastic-crazy because I didn’t understand the pitfalls of just paying the minimum payments as well as accepting all the offers I was given as fresh meat (college freshman.) I did what I did with what I knew then. If I knew then what I know now, my life would be more financially in order. But I’m “paying” for my mistakes and am humbled by the experience.
I truely hope that personal finance finally becomes a required course in intermediate/high school. People need to be taught the reality of debt, credit cards, loans, mortgages, etc early on.
I still use credit cards for electronic purchases because of the buyer protection features. I’m still anal about paying them off. I usually go to my bank and either have a credit on the card or I pay it off before the bill shows up. I also use the credit card at Costco for gasoline. As a matter of fact, gasoline is probably about the only regular purchase that I make. I’ve thought about dropping the card out completely but probably will not ever do that. I (pray to God) will be debt free on 7/4/2010. I’m about $123,569.74 away including my home. (GIve or take a nickle or two) Right on target.
NCN, i know where you are coming from, having been in a worse situation (i.e. over $90k in unsecured debt, which means credit cards and line of credit loans). It was a tough lesson to learn and I was off credit cards until I paid it off (not by bankrupcy) and turned the negative into positive savings ($80k) after 2 and a half years.
with that said, though, it’s hard not to be tempted by getting cashback and earning interest on the grace period of the credit cards. it adds up over time. also, my mentality about finances has changed, too, which is the biggest realization for me.
again, it’s what people have posted, that it is an individual choice. there are pro’s and con’s, especially dependant on what you want to do with your finances in the end.