I saw this post over at My Money Tree blog and it got me thinking. Yes I can definitely live without debt or credit….but I don’t want to. Now that I am free of credit card debt I actually take joy in putting my purchases on my credit card, knowing that I earn 1%-3% interest on every purchase.
The writer says that people who purchase with credit cards are generally sending their money over to pay interest on those purchases…but this is not always the case and it certainly is not the case in my circumstances. I pay off my credit in card in full every month so I NEVER pay the credit card company any interest. I earn cash back on my purchases which I can get back
- as a credit on my statement or
- as a check which I deposit into my ING account earn some more interest on that.
Another point I found that the writer made is that “A credit card will make you spend money you don’t have“. This is an utter fallacy as a credit card cannot MAKE you do anything. Some people may tend to spend what they do not have because they have a credit card but there are also those of us who spend what we have based on our BUDGETS and stay within our limits. I have been using credit cards exclusively to pay for everything for months now and I am always under my budget for the month (as chronicled in my Monthly Financial Updates.)
I have found that I actually spend less when I use my cards because I cannot easily pull out some cash and drop on a vending machine…or the person who comes around selling things at the office….or the guy on the street with ‘handmade’ necklaces or the poor girl scouts who knocked on my door (sorry about that last one).
I look at what is in my zero based budget and if I have the money for it then I get it…if not the card stays in my wallet. I don’t go out and buy things just because I can swipe a card. I still have the mindset that I have to pay for it….I treat my credit card like a debit card!
So while it certainly it possible for me to live without credit I choose to live with RESPONSIBLE credit and
earn cash back for my purchases,
have easy access to receipts and
have easy tracking of my spending
I won’t have any more debt after paying off the last of that personal loan in December of this year and I am currently saving money for a future car. I can live without Debt and Credit…..but I choose not to.
Another reason I love debt is that in a reverse situation it actually works for me. I currently loan money on Lending Club and earn interest off the repayments of the loans…so someone’s debt becomes income for me. If they don’t pay back the money then I stand to lose it but when they do make the payments the little bit of side income is very nice.
What about you?
We can definitely live without them but it’ll be hard.. it’s about discipline on how not get yourself drown in debt..
Of course can, but it will be hard. Unless you are earning a lot every month or if you struck a lottery.
It’s all about opportunity costs and returns. Debt isn’t evil, and there’s a balance for everyone where you get the most benefits for the least costs. If I can pay off my balance before interest is due, then why not?
I do think as a society we are in far too much debt, and if the credit taps were tightened up a bit, we might not need to rely on debt as much to purchase homes and things like that, as the prices would come down with less credit circulating. This would be good for younger people who would subsequently not be forced to go into as much debt to buy their first home.
I think that anyone can live without credit cards if they try hard enough, however, they can be useful in improving your credit score when used wisely.
I can easily live without debt and/or a credit card but i see others struggle and feel uncomfortable if they don’t have a credit card as ‘back up’. Also, as you say, all debt isn’t bad, especially when there are benefits at the end, for example, to own your own home is well worth being in debt for a (long :)) period of time.
I could live without debt, but I rarely carry cash on me, so having the convenience of a credit card is great and as long as I pay it off before it accumulates interest then I would be happy! I think we have taken the term credit from what it used to be and have gone crazy with it!