How to Live Without Credit Cards
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Wondering how to live without credit cards? It’s totally possible. And you’ll feel so much better knowing things are paid for.
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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 to pay the bill.
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 our getting out of debt and learning to live within our means.
If you’re struggling to get out of debt, you have to get off the ferris wheel. You can’t keep acquiring new debt and expect to wipe it all out. This book is also a good one to read.
A friend called one 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, right?
Photo Source: Dplanet
Live without credit cards? How? We’ve done it now for eight years. We live better now than we did before, so I have zero regrets.
Here’s how we make it work:
How to Live Without Credit Cards
1. We don’t carry any credit cards.
There’s plenty of plastic in my wallet, but it’s my debit card, 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. That’s easy.
Some people freeze their credit cards in a glass of water and store it in the freezer. That makes it hard to get to. Some banks will allow you to turn the card on or off in your account.
2. We closed all our credit card accounts.
Yes, yes, we did. Once the accounts were paid in full, we closed them. We made it as difficult as possible for ourselves to go back to our old credit-spending ways.
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 VISA 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.
When I swipe the card, I know that I’m paying with my own money and not the credit card company’s.
Photo Source: mangpages
4. If we buy 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.
We saved our pennies for two years in order to fund our trip to Europe. Rather than spend money we didn’t have, we knew that everything was paid for. This made the trip so much more enjoyable than coming home to a stack of bills!
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. I know from experience, the envelope system works.
Since we paid off all our debts, we’ve gotten a little more relaxed about the envelope system. We have a budget and keep our spending in check.
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 one a false sense of having more than we really do.
7. We are saving 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.
Currently, 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’ve been squirreling away extra money so that as the FishKids head to college or we really do find the right house, we are 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.
One instance when a credit card can be a good idea: International Travel
When we went to Europe, we needed to be able to access our bank account from abroad. We certainly weren’t going to carry thousands of dollars in cash, and traveler’s checks are a thing of the past.
While we did use our VISA debit cards overseas, those transactions were subject to fees. Prior to our departure, we opened a travel credit card account that was only for the trip. We paid for our on the ground travel expenses with a combination of cash (pulled from the French or English bank via our debit cards) or credit card. Since then, the card has sat in the safe, awaiting our next trip overseas.
In anticipation of our next trip, we’re looking into a Charles Schwab Checking Account that provides fee-free international transactions.
To live without credit cards may seem radical. But, it is very doable. And it can save you money.
Do YOU live without credit cards?
*This post was originally posted June 24, 2010 and has been updated.
Great post! We are now living with zero credit card debt 🙂 Our only debt is our house which the plan is a 15 year payoff.
I use cash for everything-have my lovely envelopes and I also just carry a debit card and store loyalty cards. We do have a credit card that we use on vacation. I know it sounds silly, but I feel that if it’s lost or stolen on vacation I’d rather someone steal from my CC and not have to deal with utility bills bouncing. I know I’m weird but it makes me feel better.
I love this post. I have only owned one credit card and the account was closed due to “inactivity”. I only used it twice and paid off the balance with the bill was due. My husband has a credit card that is used for traveling out of the country and renting cars. We save for whatever big expense we want. I recently began carrying cash to the grocery store and I am so pleased with it that I am going to continue with this. I only buy what I need and I am not near as tempted to grab things that are not on my list off the shelf. We both have debit cards that we use to buy gas and such, but it is nice to know that we are not creating more debt. Alot of our friends are constantly going out and stuff, and it is hard to say no to many of the events, but we know they are in debt while we are not. However, we have the best vacations because we actually save up for the vacations while our friends complain about their cheap vacations! Our friends actually think we are “well off”, but that is not so true, as we are “not in debt”. We only have a mortgage and a small student loan. This is done by God’s help and grace as we are both scared of going in debt, and we also want to be available to use more of our money for the Lord’s service.
Great post! Hubby and I are in a ton of debt right now and I’m thinking of somehow managing to start a savings account. He’s also planning on closing our accounts. I’m a huge shopaholic so struggling now with not having a credit card (we’re doing debt consolidation) is such a challenge. But a very good lesson that I know I have to learn!
I hope to one day not be dependent on credit cards!
When we first got married amost 10 years ago, I had 2 credit cards that I used responsibly. (Only balance was wedding dress and 1st set of groceries, other was not activated) I then lost my job and shortly after my husband lost his. We activated the other card for “necessities.” We became out of control with our spending. We found ourselves buying things we didn’t need such as a paintball gun with all the accessories (for hubby), a pool stick with case, etc. It didn’t take long for us to become buried in debt. By the grace of God, we have always had what we need but it took years for us to recover. We haven’t had a credit card for a long time and our lives have improved dramatically. We don’t buy large items without much thought, research, and prayer. We don’t always have what we want when we want it but it means so much more when we get it because we worked for it. Now we are in the process of saving money and couponing to build an emergency fund. It hasn’t always been easy but it has been worth it. Right now we are not living like everyone else so we don’t have to live like everyone else.
I appreciate this post, but have to disagree with a point you made: Visa debit cards do not have protections that Visa credit cards have–by law they are not required to offer the same protections that the credit card companies do. Any protections offered are provided by the issuing bank, so it’s important to make sure that your issuing bank does offer that protection. Also, if your card is compromised, you still may be on the hook for up to $50.
More importantly, if your debit card is compromised, the money is coming straight out of your bank account. If someone hacks your card, they could potentially wipe out your REAL cash, and it could take you up to a week or more to get it back (if you get it back at all). If you don’t have any credit cards either, you could be in a very serious situation.
I agree that it is possible to live without credit cards, but if you’re buying online, Paypal is definitely the way to go.
Great post. We have not used credit cards for a 1 1/2 years and think it is the way to go!
I would agree with others that cash is even better when possible. I notice I tend to spend a little more with my debit card than with hard cash.
Still working on paying off some of our credit cards, can’t wait to be debt free!
I use a credit card like a debit card – always paying it off. I know that isn’t the Dave Ramsey way but it works for us. I linked about finding Farmer’s Markets in weird places.
Great post! I just posted about using the envelope system today and how it works for us.
The only thing we would potentially want to get a credit card for is for car rentals. Some do not take debit cards and many will check your credit if they do accept debit, which could affect one’s credit score if it’s checked too often. Or so we’ve heard.
They will take a debit card but they put a hold on the funds in your checking account and you can’t spend those funds until the hold is released.
I guess it depends on what “responsible use” means. I agree with all of your points, but I really don’t think that it’s possible to be credit card free in this day in age. We travel frequently and budget for it. However, car rentals and hotel reservations often do not take debit cards. Some used to do deposits but many are moving away from even that, although most only require the reservation to be on a credit card and the payment can be debit. I prefer to just keep my cards at home stored away and not to use them except in such an instance or a true emergency. Debt is such a slippery slope and it’s so easy to slide down it. The problem isn’t the credit cards, but our attitude and the sin that causes us to want things that we can not have. For many, getting rid of the temptation all together is the easiest thing to do.
@twyla, I love this line in your post, “The problem isn’t the credit cards, but our attitude and the sin that causes us to want things that we can not have.”
I am probably in the great minority here, but after 20 years of marriage and adult life experience, my husband I have come to the realization that we spend MORE when we have cash! I have much better self-control when using a card then when paying cash. I know that is hard to believe and that many of you will strongly disagree, but I know it works for us. We live well below our means and part of that is because for our first 4 years of marriage we were living well below the poverty level (husband in grad school, me unable to get a full time teaching position in the area where he was in school) and had to budget for every cent. I am able to stay in or under budget for everything now even with the use of CCs. When either of us has cash on hand we’re much more easily “nickeled and dimed,” even using an envelope system. Just as there are different love languages, learning styles, etc. I believe there are different styes of money management. For us, avoiding a big CC bill every month (which we pay in full), is motivation not to charge it. I’ll buy something impulsively for less than $5 if I have the cash, but I wouldn’t put that amount on my CC.
I hope this post isn’t offensive, it isn’t meant to be! I just wanted to share what works (and doesn’t) for us.
I JUST paid off one of my credit cards today! I am so giddy I can barely work! It’s as if there were invisible shackles on me that are now demolished!
I don’t normally use credit cards, but I unfortunately had to pay for a medical expense. Some things are worth the debt!
Ladies, I would encourage you all to follow Jessica’s advice. I never want to be in that bondage again!