How to Live Without Credit Cards

All across the country, people buy items on credit on a daily basis.  Although the recession has reduced the number of unsolicited credit card offers that the ordinary person gets, people still are able to obtain credit and charge the things that they want.  Credit cards almost seem like an ordinary part of life.  Some may wonder if you can live without a credit card.  I know from experience that you can.

I've lived without credit cards for several years now.  While I am not out of debt yet, I have learned that credit cards are not necessary and are best to be avoided.  If you're wondering how to get by without debt, I can tell you how we do it.

I had a credit card at one point. Unfortunately, I discovered the hard way how credit can be a slow trap, and how unexpected changes can put a huge dent in your finances.

In 2003, I was an officer in the Navy with 10 years of experience. We lived a very comfortable life. If I wanted something, I paid for it. We didn't use credit cards very often, but we had a manageable amount of debt. We bought a furniture set on credit and took a year to pay it off. We had a car payment. I had my student loan payment. We bought a few things at the Navy Exchange with my Navy Exchange card.

Then I left the Navy. Our comfortable finances no longer existed. I wanted to be a stay-at-home mom; my husband took over the job as the main breadwinner, but it wasn't possible for him to match my previous income. Our income was cut by approximately 70%.

It had been easy to pay off all our debts at our previous income.  When we started making less, it was much harder to pay all of our debts.  Our bills took almost all of our income.

I ended up working at a day care center for a couple of years in order to help pay the bills.  I didn't want to be away from my daughter, but since we were in the same building, it was the next best thing to being home with her.  It helped to pay the bills, but we weren't living the same comfortable existence that we once were.

Around that time, I discovered Dave Ramsey.  He hosts a daily radio show, writes books, and teaches a class about how to get out of debt.  I learned a lot from listening to his show, and I'm where I am today because of his influence.

Listening to his show made me want to get out of debt.  The biggest problem for us was that our income was so small.  We chose not to get into any more debt.  Eventually, we were able to get rid of most of the debts.  I was so happy when I finally was able to get rid of my student loan payment.  We still have a car payment, but that was because we needed a car (the engine and transmission went out on the car we had) and didn't have any cash, so we had to take out a loan.  We hope to pay off the car soon with our income tax return.

When I had my son, I decided to stop working at the day care.  It was about the time my daughter started school, and I was going to be a homeschool teacher.  My husband had received raises and our income was up, so we were managing things.  Then came 2007; although it wasn't officially the recession, we started to feel its effects.  My husband lost job after job.  Then in 2008 our house caught on fire and we had to move.  It was a very depressing time in my life.

One day, while listening to Dave Ramsey, he said that if you want to be rich, you have to act like a rich person.  If you want to be poor, you have to act like a poor person.  I had heard this before, but at the time, we were not doing so well.  That year, our income taxes reflected $6500 in income (fortunately, we had the insurance check that helped pay our bills).  I hated living off such a low wage.  I decided to do something about it.  That's when I did some research on work at home jobs, and discovered that you could actually get paid to write.  It's not going to buy us a mansion any time soon, but it pays for my kids to go to gymnastics, and my income keeps going up.  I see the light at the end of the tunnel.

When I think about credit cards, I figure that I can't afford to have one.  After all, credit cards have to be paid off.  If you can barely pay the bills, how are you going to pay for a credit card bill on top of all your other bills?

Now that we don't have credit cards, we have to pay cash for everything. Usually, that's not hard. My bank gives me a debit card, and I use that everywhere, just like someone would use a credit card. Some of the companies I write for pay me via PayPal, and if I haven't transferred the money from PayPal to my bank account yet, I'll pay for that with things.

This usually is not a problem. I usually don't even have a problem renting cars. I have only had one difficult experience:

My husband and I took the kids to Disneyland after our fire. We wanted to rent a van for the trip. Most of the places that we have used to rent cars never give us a problem, but our local Enterprise Rent-a-Car did give us problems. They wanted a credit card. We had to have it in our possession (technically, my mother-in-law has a credit card account where my husband is on the account, but we don't have the card in our possession). We had to leave the place and rent the car somewhere else. Enterprise Rent-a-Car policies can vary by region; each region is run differently, and some areas will accept debit cards. The silly thing was, the insurance company had just given us all our money from the fire. We could have put down a deposit of several thousand dollars, but that wasn't good enough. I think we rented from Avis. It's Enterprise's loss.

We had another little snag on that trip. Our bank didn't realize that we were going on vacation, and they decided to cut off my husband's access to his debit card account. Mine worked though. We had to make several phone calls, and it took a few days for the bank to realize that my husband actually was on vacation and his debit card hadn't been stolen. I suppose that credit cards could have the same problem, if the bank thought that someone had absconded with it; they could cut off credit card access.

I have never had a problem with a hotel not accepting a debit card, although many times they will want to put a hold on some of the funds in my bank account.  I plan ahead for this now, and make sure that there is extra money in the bank account if I need to go somewhere and stay in a hotel.  If I don't have a cushion in there for them to put on hold, I can't afford to go.

We have a couple of bank accounts, which does help for the times when we have trouble with one of the bank accounts. My earnings usually go into one account, and I usually pay for the kid's gymnastics and a couple of other small things with it. My husband's earnings go into the other account, and he pays most of the bills with that. I usually let my husband know if I'm going to touch that account.

Some people might wonder, "if you don't have a credit card, how do you pay for emergencies?"

The ideal way to pay for emergencies would be to have an emergency fund.  In a way, we do have an emergency fund, of sorts.  We have a couple of coins that we could sell in an absolute emergency.  We did have some silver a while back, that we had to sell to pay our rent payment.

Normally, we try not to touch this emergency fund.  Most people try to keep an emergency fund in cash, in the bank account.  Since we have trouble paying the bills as it is, I think that we'd end up spending the money if we had it in the bank account.  This way, it's harder to touch.

When something comes up, we try to work our budget around it.  We'll pay one bill late if we have to.  If we can, we'll postpone paying for the emergency.  There are a couple of things that our car is going to need that we've been putting off until we get some more money.

A while back, we needed to replace the right wheel bearing on our car.  It was getting to the point where it would be dangerous to drive the car.  We know the owner of the shop (he goes to our church), and he let us give him a post-dated check for later on in the week, when we were getting paid.

We try not to ever ask for things from friends or family members, but if it was a life or death situation, I'm sure that they could help us out.

It is possible to live life without credit cards.  I don't really even want one, although when I plan a trip, I sometimes worry about the car rental thing.