Is it Possible to Live a Life with No Credit?

October 15th, 2008 • Related • Filed Under • by tisha

In today’s society, we are inundated with commercials showing us how great life can be if only we bought this kind of car, had this type of appliances in the kitchen, or the thousands of other products on the market we probably just do not need. Most of the “must-have” items consumers will purchase do so by using credit. Think about the last person you know who bought a new car without financing. Notice when you go to the department store or the grocery store how many people pay with credit cards. It is more commonplace now for people to use credit cards than planning with cash.

But can a person live without credit?

Credit cards are convenient but not one of life’s necessities, despite what you may think. It takes a lot of commitment to do it though but in the long run, it can change your life and the way you manage your money. Therefore, it is more likely you will get out of debt and stay out of debt. Shopping for anything is one of the biggest challenges. For people who are choosing to live without credit cards or for those people who have no choice and can not get a credit card, shopping with cash is the alternative. It makes sense to spend only what you have and manage your money to perfection in order to get rid of the need for credit. When you go shopping, it is important to remember to ask yourself “Do I really need this or do I simply want this?” Forcing yourself into thinking about your every buying decision you make, will forced you to be more accountable for your cash. It can also help you learn to wait for what you want. You will learn to wait for the great sales and discounts that will eventually come along in order to afford the item in line with your budget.

There are other ways to keep credit out of your life.

Buy A Used Car – The ads may lead us to believe that unless we have a top of the line automobile, we aren’t living the life we deserve. Not true. It makes more sense to purchase a car that is reliable and still has a lot of life left than it does to purchase a new vehicle on credit and shell out thousands in interest payments through financing. Saving cash with a goal of buying outright can be a huge inspiration and an excellent lesson on money management.

Buying A Home – While it may not be possible for many people to buy a house outright with cash, there are some things you can do to ensure you only borrow the amount of money that is absolutely necessary. The first thing you can do is save up the maximum amount of cash possible for the longest possible amount of time in order to put down a sizeable chunk of money toward a down payment. The more money you put down on a home, the less you need to finance. When you do take out the mortgage on the remaining amount, take it out for a shorter period of time and put extra money towards the principle amount each month to pay off your home as quickly as possible. If you do not have other debts to pay down, it will much easier to have the extra cash for the supplementary payments.

Going To School – Many kids going off to college just take for granted their tuition will be taken care of through student loans but many more are left uneducated about what happens 4 years later, when the loans come due and you have to pay them off for the next 15-20 years, with or without a job. Students going off to college and their parents should consider other alternatives to student lending. Kids still in high school should stay knowledgeable about the number of grants and scholarships available for school. They need to understand that their hard work now will pay off in the future. There are also many programs in schools of higher education that offer tuition reimbursement through work/study programs. Grabbing a part time job to work through college is also a good way to afford books and spending money without relying on credit and getting into debt will still a teenager.