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Life without Credit Cards

Why is it every time I mention to someone that I do not have credit cards I get looked at like I have three heads or something.  Is it really that uncommon for someone to live life without credit cards?  I learned my lesson the hard way and vowed to never have another credit card again.  My freshman year of college I signed up for my very first credit card just so I could get a free university blanket at a football game.  My new American Express card quickly arrived in the mail with a $500 limit.  I used the card a few times on small purchases, but always paid the balance off.  By the time I reached my senior year of college they had raised my credit limit to $10,000.  In addition to this card I obtained a Visa my junior year to accompany me on my study abroad trip to Italy for five weeks.  They don’t take American Express everywhere so I needed a backup.  To make a long story short I maxed out my Visa in Italy having fun and racked up my American Express by living off of it during my extra semester in college.

After the experience of trying to pay off the balances with my low paying job outside of college, I figured the best way to not allow this to happen again is to just live life without credit cards.  It is so easy to live beyond your means when you have access to credit.  You just figure you will pay for it later and end up paying more in the long run because of interest.  I will admit my Visa ended up in collections and I paid my American Express off over time by being on a payment plan.  In 2011 I settled my Visa and in 2012 I completely paid off my American Express.  It was a great feeling to have no more credit card debt.  Although I just recently paid off my credit card debt, I have been living without using a credit card since 2008, so again why do people find that so hard to believe.

Recently I had to go into my bank because I left my debit card at home; I needed to buy lunch that day in addition to depositing a check.  The gentleman in the front was very nice and asked me a bunch of questions to verify I was who I said I was.  Of course he has to do his job and up sale products so he started asking me about credit cards.  I quickly explained to him I don’t use credit cards, which opened up a window for more questions.  The main question he asked, “How do you pay for big purchases?”  Duh…I save up for them and don’t try to live beyond my means.  I didn’t say it like that, but that is how it sounded it my head.  Next he asked me about what if I have an emergency and I told him I have an emergency fund for that with my credit union.

Living without a credit card is not as hard as you may think; it’s just hard getting started. The first thing you need to do is establish an emergency fund.  I know it is hard if you do not have a lot of extra income so start small and just start building.  Please do not confuse an emergency fund with your savings; they must remain separate.  You will be better off this way.  If you must choose which one to start funding first, it’s your emergency fund.  Try to build at least one month’s worth of expenses in your emergency fund and keep building from there.   I have depleted my emergency fund twice and now I am in the process of starting over.  This account is in addition to my 401K and my son’s savings account.

The easiest way to get started is by creating a budget if you don’t already have one.  Most people get into the habit of saving what they have leftover at the end of the month and this should not be the case.  Treat your emergency fund as if it is another bill and pay yourself first, essentially that is what the money is for, unexpected bills.  Trust me I know this is hard, but you have to make it a habit.  Another option if your job has direct deposit and the capabilities to split your paycheck, set a certain percentage of your check to go into a separate account (your emergency fund) so you don’t even see it.  Out of sight, out of mind right?  I noticed when I did this little trick I was able to save faster.

Remember you have to begin somewhere so devise a plan and get started now.

“Saving comes too late when you get to the bottom.” Seneca

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