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Frugal Friday: How to Live Without Credit Cards
Posted By Jessica Fisher On June 24, 2010 @ 7:32 pm In Frugal Friday | 62 Comments
Once upon a time I thought it was impossible to live without credit cards. Even if I had the funds “to pay it off every month,” it was the convenience I couldn’t live without.
Or so I thought.
Our month went like this: spend, spend, spend. Get the bill. Pay it with our monthly income, wiping out most of our cash on hand. Start all over again.
Sure, we “used credit cards responsibly.” We paid off our balance every month and tried to be frugal. But we were spending funds we didn’t yet have, counting on having enough at the end of the month. This worked fine for us until we hit a slick patch of unexpected unemployment and then it was a slippery slope into debt. Cutting out our credit cards  was the first and major step to getting out of debt.
A friend called the other day with some burning questions about credit cards. They have a great income and plentiful savings, but she felt that she was paying three mortgages when it came time to pay the credit card bills. They “use credit cards responsibly,” but she realized that she was enslaved by them.
There must be a better way?
1. We don’t carry any. There’s plenty of plastic in my wallet, but it’s my debit card and a store discount cards and gift cards that now weigh me down. You can’t spend what you don’t have. And if you don’t have a credit card in your wallet, you generally can’t use it.
2. We closed all our accounts. Yes, yes, we did. The accounts are paid in full and closed. If we were to go back to our old credit card ways, we would have to apply for a new account.
3. We use our Visa debit card or Paypal for online transactions. There’s no excuse that you have to use credit cards to shop online. It just isn’t so. I pay almost all our bills online without a standard credit card. Either I write an electronic check from our bank account or use our debit card. Visa debit cards have all the same securities and protections as a regular credit card, but the funds come directly from your bank account, bypassing a bill and a life of credit.
4. If we are buying something big, we pay for it with cash. It is rare that we make large purchases on a whim. We tend to research and think about the purchase ahead of time. This helps us make sure we really want it as well as to secure the funds in cash or check to pay for the item.
5. We use cash, check, or debit card to pay for things. When money was super tight and we were aggressively fighting debt, we pulled cash from the bank and divvied it up into different envelopes. Since we paid off all our debts, we’ve gotten a little more relaxed about the envelopes, but are working our way back to a more dedicated use of envelopes to keep track of how we are allotting our funds.
6. We spend less by not using credit cards. Feel free to disagree, but the proof is in the pudding. Statistics show as does my experience that we are more likely to overspend when the money is not instantly removed from our possession. Using a credit card gives on the false sense of having more than we really do.
7. We are going to save for the Big Kahuna. College, retirement, and a house purchase are all big expenses, experiences that tempt people toward borrowing money and living on credit. We desire to avoid those temptations.
While we still own a rental property in Kansas City, we do not own the home we live in. Our philosophy? Until we get a big enough down payment and home costs are low enough, buying a home (and the ensuing mortgage) would be “renting money.” And renting is renting. In the meantime, we’re going to squirrel away extra money so that when the FishKids head to college or we really do find the right house, we’ll be in a good position to pay cash or a huge down payment for those things.
Are we worried about a good credit score? We have one. We’ve paid off our debts. And we plan to put huge down payments on anything that might involve a look at credit scores. Read this perspective on credit scores for more information.
Living without credit cards may seem radical. But, it is very doable. And it will save you money.
Share your favorite money-saving ideas today. Leave a link to a post that shares some frugal wisdom. (Please no giveaways or deals posts. Teach us how to fish!)
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 this perspective on credit scores : http://www.daveramsey.com/article/the-truth-about-your-credit-score/lifeandmoney_creditcards/?ectid=cnl.extra.061610.final_05
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