It’s been approximately five years since I last owned a credit card. Looking back over that time, do I now regret the decision to ditch credit? Not in the least. In fact, rejecting credit cards was probably one of the best financial moves I ever made. I know, I know, that’s a bold statement. But stick with me, and I’ll explain why – it’s for more reasons than you think.
My Position on Credit Cards
Obviously, I don’t personally use them. If you do, I’ll still be your friend – I promise.
The main reason I don’t use credit cards is because of their intended purpose: to lure me into debt. Sure, I could probably “beat the system” and get some nice cash back rewards. But remember, credit card companies aren’t in the game to help you out, they’re in the game to take your money.
Honestly, I don’t think there’s anything morally wrong with using a credit card, or even issuing them to customers, but it’s just not for me. I have an alternative budgeting system set up that allows me to bypass the use of credit cards and still earn some pretty sweet rewards (thanks PerkStreet).
I should mention that if I was in a pinch, and didn’t have my emergency fund, I might turn to credit cards. But other than that, I stay away from them. You might even want to switch to a different credit card to get a better interest rate if you’re in debt, but certainly don’t put more debt on them.
How Rejecting Credit Cards Improved My Finances
Okay, so this is the cool part. Still with me? Good.
Remember that I rejected credit cards because of their intended purpose (to lure me into debt), but over the past few years, I’ve noticed a few unintended but welcome consequences of my credit card boycott:
1. My income shot up.
Yeah, weird, right? I attribute a lot of my income increase to not having a credit card to fall back on. The mere absence of credit cards causes me to continually realize that in order to stick to my plan and pay cash for everything, I’ll have to get my income up.
In other words, I’ll have to actually live beneath my means, something many of those with credit cards seem to have a hard time doing. And because we’re living on what I’d consider to be a tight budget, that only leaves one side of the equation to work on: my income.
2. I got out of debt.
Except for my mortgage, that is – but that’ll come later . . . .
Still, this is a nice little achievement, and again, gaining a distaste for credit helped me blast debt out of the water.
3. I built an emergency fund.
Not having lines of credit to depend on forced me to create an emergency fund. What if something happened and we needed money? Turning to credit cards would break our debt-free streak, so I built an emergency fund.
I should mention that all of these things I did together with my wife, who played an awesome and major role in reaching our goals. Without her, it wouldn’t have happened. Even though I wrote this article with “I’s,” it was the “We’s” that really won the day. (Thanks honey! We make a great team!)
What About You?
So, what about you? Are you using credit cards and feel the itch to get out of a cycle of debt?
Start by destroying your credit cards. Then, consider opening a PerkStreet account to get some cash back on your debit card purchases.
You can do it. If you’re a bit extreme, like I am, you have what it takes to live without credit. Try it out . . . you can always go back to the credit cards if you miss them.
Are you living without credit cards? If not, how do you use credit cards? Have you always been responsible with credit cards? Leave a comment!