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Tuesday, August 4, 2020

Yes, You Can Live Debt Free

Posted by PattiM on

Sometimes fear can just paralyze us from taking action we need to take. I’ve met with many people who desperately need to deal with the debt situation but are just terrified of taking action. What is the major fear? They are terrified that taking action to restructure their debts will mean they wont have access to credit. It doesn’t seem to matter they don’t currently have access to credit, they are terrified of having to rebuild a credit rating.

Believe it or not, living without credit can be a liberating experience. I’ve had clients over the years who come into my office for their counseling appointments on cloud nine. They have embraced the credit free lifestyle and are very proud of themselves for having done so.

Benefits of Living Without Credit

  • You never have to worry about answering the phone. Your cash wont be calling you to find out when you are going to make your payment.
  • You don’t pay extra when making a purchase. When you buy on credit, you have the cost of the article, service charges (if applicable) and most importantly the interest to pay. Sometimes that would mean the article actually cost you double or triple its original cost.
  • You can ask for discounts when paying cash. When you pay cash, stores aren’t paying the surcharge on handling your debit or credit card. Sometimes they will give you a discount if you pay cash.
  • You never have to worry about repossession or foreclosure.
  • You don’t have to wait on credit approval.
  • When you sell an asset the money is yours, not dispersed to a creditor first.
  • You never have to worry about where the money for payments will come from

Unless you are truly determined to have the peace that no credit brings, it is likely you will carry at least a mortgage. With determination and fiscal discipline, you can make that disappear in the shortest time possible. If you want to chase the dream of owning a home, you really do need to clear up your existing credit obligations and implement a savings program. The more disciplined about it you are, the greater your success will be.

One of the biggest challenges we face when it comes to handling money and in particular credit is learning how to manage ourselves. Many of us have come out of generations where it seems the willingness of our parents and grandparents to save and do without in order to get what they really wanted has gone by the wayside. We’ve been brought up to believe that we have an entitlement to the biggest and the best just because others can.

Going on a credit diet (no using credit allowed)

  • You learn to discern between wants, needs and necessities
  • You will experience less stress and worry
  • You are forced to live within your means — if you don’t have the cash, you don’t buy
  • You will become more price conscious — studies have shown we are less aware and more extravagant when using plastic
  • You will have an opportunity to learn and strengthen skills at budgeting and timely bill payment
  • You will get in touch with your feelings — credit cards have less emotion attached than physically letting go of your cold hard cash

Once You Are Debt Free

  • You can put away an emergency fund to provide you with the safety net credit cards used to. Start with $1000 and build up to 3-6 months worth of expenses
  • Save for your goals
  • You will earn interest instead of paying it.
  • Buy a car for cash instead of on credit as the value on cars drop faster than a loan
  • You will be able to invest for retirement with confidence
  • Use Paypal or other debit systems which take the money from your account when purchasing online

Once you have learned greater fiscal discipline you will be able to take credit on with greater caution and respect for the dangers of using it. The objective is to only purchase on credit something which will increase in value like your home.

Is being without credit a frightening prospect? What frightens you most? Have you lived debt free? Share the feeling with others.

disclaimer: The contents of this post is based on circumstances current at the time of the post and are intended for general knowledge. For more specific answers to your questions about your own circumstances use our contact form or post a comment below. NOTE: For a FREE, confidential analysis of your situation click here.

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