People are often quite surprised to find out I’ve never had a credit card. In fact, sometimes, they have to ask three times just to be sure they heard me correctly:
“So you’ve never had a credit card?” they ask incredulously.
“Nope,” I respond.
“Right, never,” I reiterate.
“Not even when you were younger—ten years ago or something?” They continue to quiz.
“No, really and truly, I’ve never had a credit card,” I reply, again.
Usually people just end up looking at me aghast like I’m from some other planet or something. That’s okay, I’ve gotten used to the fact that I’m weird.
But you know what I’ve also never had? Credit card debt.
Yes, it’s true. There’s a brilliant and guaranteed way to avoid credit card debt: just don’t get a credit card in the first place. It works—every single time!
I’ve never had to worry about how I’m going to pay off the credit card bill that’s coming due. I’ve never had to hassle with being harassed by credit card companies because my payment was late. And I’ve never had to dread opening up a credit card bill to see how large it was.
We have a policy at our house: if we can’t pay cash for it, we don’t buy it. It’s a plain and simple policy, but it’s saved us a boatload of debt, fights over money, and stress about our finances.
Sure, it has meant we’ve gone without a lot of different things we wanted over the years because we didn’t have money to pay for it. But truthfully, I’ll take the peace and freedom that comes from living without credit card debt over all the bling and stuff. It’s worth more than money can buy, anyway.
Do I think credit cards are evil? Well, I wouldn’t go so far to say they are wrong or immoral, but I would say that I’d strongly encourage anyone who is currently swiping plastic on a regular basis to step back and consider a few things:
1. Using cash keeps you from over-spending.
Yes, cash can burn a hole in your pocket and you can blow it. But here’s the thing: if you only use cash, when the money’s gone, it’s gone.
You either learn to pace yourself and your spending so that you have enough money to buy groceries at the end of the month, or you go without buying groceries. I promise that if you don’t have any grocery money to spend the last week of the month, you’ll probably think a lot more carefully the next month when you’re tempted to spend all your grocery cash during the first few weeks of the month.
2. Using cash forces you to evaluate your purchases.
When you use cash, you can’t mindlessly swipe a card—you have to pull green bills out and hand them over. It doesn’t take a month for the purchase to show up on your credit card bill; the pain of purchase is immediate.
This direct correlation can give you a much better grasp on your finances and on where your money is going. And it will probably also cause you to step back and carefully evaluate each purchase.
Photo by seanfx
3. Using cash prevents you from betting on the future.
So many people say, “I treat my credit card like cash and always pay off my credit card bill in full at the end of each month.” That sounds great—in theory. But very few people are truly treating their credit card like cash.
Unless, before you make a purchase, you set aside the full amount of money to cover the purchase in a separate account and never touch that money until you pay your credit card bill, you are not truly treating your credit cards like cash. If you don’t have the money set aside for the full credit card bill, what happens if you lose your job tomorrow or you have a major financial crisis that puts you in a big bind?
By using the bank’s money or store credit to pay for your purchases, you are presuming that you are going to have enough money to pay the bill when it comes. And if you don’t, you could end up getting hit with high interest payments on top of the money you owe.
4. Using cash guarantees you never have to pay anyone back.
When you pay with cash, you can’t buy something unless you have enough money to pay for it. This often means you have to work hard, scrimp, and save up to make a purchase. This process of scrimping and saving can be grueling, but the satisfaction of exercising self-discipline and waiting to buy something with your own hard-earned money is every bit worth it in the long run.
And you know the best part about paying with cash? You never have to worry about paying anyone back. When you buy something, it’s yours—free and clear!
Want to learn more about living a plastic-free life? Check out chapter 4 of my book, The Money Saving Mom®’s Budget, where I tackle the common arguments as to why credit cards trump cash, and challenge you to at least try the three-month cash-only challenge. If it doesn’t work for you, you can always go back to the cards. But it just might completely revolutionize your life and finances in radical ways.
This giveaway is now closed.
Crystal is giving away ten copies of her book to Simple Mom readers! Here’s how to win a copy:
1. Leave a comment on this post, telling me what you’d do with a $100 bill that mysteriously appears in your pocket. (If you’re reading this via email, you must click over to the post to comment.)
2. For an additional entry, tweet about this giveaway, mentioning both @simplemom and @moneysavingmom, and including a link to this post. Your tweet could look something like this:
Head over to @simplemom to win a copy of @moneysavingmom’s new book! #giveaway http://lvsm.pl/wP3gsj
Then come back here and leave an additional comment telling me you tweeted.
3. For another additional entry, “like” both Simple Mom and Money Saving Mom on Facebook, then come back here and leave a comment telling me you did so. (You don’t have to mention the giveaway on Facbeook, but you’re certainly welcome to!)
This giveaway will end Saturday night (tomorrow), and I’ll announce the winner soon after. I hope you win!