LIVING WITHOUT CREDIT IN A CREDIT OBSESSED CULTURE
Be on your guard against all kinds of greed; a man’s life does not consist in the abundance of his possessions.”
Earlier we discussed the importance of establishing a game plan to help you handle money on the outside, including how to avoid businesses that are known to take advantage of people. Now we’ll look at another important aspect of your post-prison financial game plan: how to live without relying on credit.
A GROWING PROBLEM FOR AMERICANS
It’s been more than 50 years since Diners Club issued the first credit card. Over the years, what was initially seen as simply a more convenient and safer way to pay for purchases became an important part of life. Today the average credit card-using family has accumulated more than $8,000 in credit card debt. Savings rates are at historic lows with the average family saving only about 1 percent of its income. Americans are using credit cards to buy things they have no way of paying for with cash. Down the road that can lead to financial problems.
It takes a disciplined person to live a credit free life. Adopting this disciplined lifestyle and learning to live without credit is key to avoiding the misery of debt and the temptation to solve that problem with questionable shortcuts. Ex-prisoners may have fewer opportunities to obtain a credit card, making the challenge a little easier.
It is going to take determination and planning to get along without credit. One of the first steps to take is to see the difference between things you need and those that you simply want. This will help you understand and adopt healthy attitudes toward spending—so you don’t fall into the destructive habit of using credit cards. Consider the items in the following list. Which are “needs” and which are “wants”? Designer Jeans, New Car, Cable TV, Shoes, Coat, Lottery Tickets.
Lottery tickets, designer jeans, and cable TV are wants. Shoes and a coat are necessities. If you opt for a designer coat or expensive trendy shoes, your purchase slips into the want or luxury category. Transportation is a necessity, but a new car is a want. Even a
used car may not be a necessity if there are other, less-costly ways you can get around.
Understanding these differences can help you cut expenses, reduce impulse spending, and save money. It is almost impossible to live without credit unless you adjust your thinking to pay cash for needs first. To cut impulse spending, it is wise to give yourself a 24-hour cooling off period before you make any purchase of $100 or more.
PREPARE FOR CHALLENGES
Credit card purchasing has not only affected the American family. It has also altered businesses’ expectations of their customers—some businesses simply require a credit card. If you have a checking account and a debit card, you can often use it in place of a credit card. Nonetheless, pursuing a credit-free lifestyle has some barriers that are more difficult to get over. If you do not have a credit card, consider the following:
- Rental Cars—To rent a car without a credit card is impossible with some agencies. They just won’t allow it at any price. However, call ahead, and you will find that if you answer a questionnaire, give a hefty, refundable deposit, and provide proof of residency (such as a utility bill), a few rental car agencies will allow you to rent a car without a credit card.
- Hotel Bookings—Most hotels require that you provide a credit card when you checkin so that purchases you make while staying at the hotel can be applied to your account. If you do not have a credit card, some hotels allow you to make a money order or cash deposit that is refunded if it is not used on services during your stay.
- Small Businesses—Occasionally you will encounter merchants, such as doctors’ offices, that are not equipped to handle cash. Sometimes they don’t have adequate funds in their cash drawers. It’s wise to check the payment policy at these types of businesses when you make an appointment.
- Buying Online—You can buy just about anything from a computer with an Internet connection—even pay your bills and save that stamp—and it can be a way to save money. Without a credit card, you’ll have to take an extra step. You can easily create a “PayPal account” (visit www.paypal.com), which allows people to make purchases online using funds taken directly from a bank checking or savings account. But be careful. Internet buying can also lead you into impulse buying.
ESTABLISH A MONTHLY BUDGET
One of the best ways to successfully live without credit is to establish a monthly budget and stick to it. If you are married, do this with your spouse. First, list all your sources of income. On a separate sheet of paper, write down all your bills and expenses (electricity, water, rent, food, insurance, gas, medicine, savings, etc.). Setting aside money in savings for emergencies is essential when you are trying to avoid using credit cards. Subtract the total expenses from the total income. The money left over (if any) is available to spend or for additional savings.
For purchases made at the grocery store, consider paying with cash instead of a check. It’s easier to keep a tight rein on money when dealing with cash. People tend to be more careful about what they toss into the shopping cart when they’re concerned about having enough money to pay at the register. Many people who pay with cash actually reduce their purchases at the grocery store instead of adding impulse items, which is common for those who pay with checks and credit cards.
ADOPT AN ATTITUDE OF CONTENTMENT
In our consumer-driven society, it’s easy to get caught up in the lust for possessions. Don’t allow yourself to think thoughts like, If only I had a better car, better clothes, or a bigger apartment. There will always be people richer than you. Comparing leads to discontent, greed, and jealousy. You can live a good and contented life without credit. These ideas will help you get started.