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Living Without Credit

Living Without Credit
Living Without Credit

    Picture this: I’m 18, going to college, living 3,000 miles away from home. I stop in at a music store and fiddle around with one of the keyboards there. It’s nice. I strike up a conversation with one of the salespeople. He’s nice. He asks if I’d like to buy the keyboard I’m playing. I tell him I couldn’t possibly, since it’s a good $2000 out of my range. He introduces me to store credit. A couple hours later, I’m setting up this glorious keyboard in my dorm room.

    When I went home for winter break, I took the keyboard with me. And almost got the whipping of my life when my dad found out what I’d done: over $100 a month for 24 months — and me a college student without a job. He made me put an ad in the paper, and I was lucky enough to sell the keyboard for about what I still owed on it.

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    You’d think I’d have learned my lesson then, but you’d be wrong. A few years later, I was planning a year abroad, just out of college. For emergency use, I got a secured credit card, one of those deals where you put $200 in an account and get a $300 credit limit.

    That wasn’t a bad move, really — during my year in Europe, it gave me a great deal of security, and I had arranged with my mother to make the $10 minimum payments until I got back. And when I got back I paid it off.

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    Problem is, I didn’t cancel it once I’d paid it off, and pretty soon started getting more offers for “better” credit cards. $1000 limit. $2500 limit. Gold card. Platinum card. I was living in New York by then and traveling a lot and making pretty good money and before I knew it I had racked up $20,000 in credit card debt.

    Then I got laid off. And suddenly the $500 a month I was paying in minimum payments wasn’t feasible. I fell behind. Then I fell really behind. Accounts were canceled, and charged off, and sent to collection agencies. It was a mess.

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    I’ve spent years dealing with that mess, and to be honest I’m still working on it. I don’t have an advice to offer on debt recovery — it’s a slow, painful, messy process, and frankly I’m not that good at it. One thing I have become good at since my credit score plummeted is living without credit.

    It seems impossible, in this online era with cash becoming rarer and rarer, but it’s not impossible. In fact, there are a lot of good reasons to live without credit:

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    • It forces you to live within your means. When I had charge cards, I could always rationalize a big purchase. “$400? That’s only $12 a month!” Twelve dollars doesn’t seem like a lot of money, does it? Or else, I’d tell myself I’d pay it off next month — and next month, there was always some pressing cost that kept me from paying off my balance. Without credit, I simply can’t do that — there’s nothing to spend when my bank account balance reaches zero. There’s no way to push costs into the future — I can only spend what I have, when I have it.
    • Things cost what they cost. That $400 purchase I just mentioned? Taking into account interest and annual fees, it could easily cost $1000, $2000, or even more, making only minimum monthly payments. These costs get buried in the sum total of charges — you pay off a little and charge a little more, pay off a little and charge a little more, and pretty soon you have no idea what you’re paying for or how much you’re paying for it. Without credit, I walk in to the store, pay $400 cash, and that’s it: $400, period. Or, more often, I don’t pay $400, because I can’t afford it.
    • It forces you to discipline your spending. When you have $10,000 in available credit, it’s easy to get carried away. Living without credit means weighing every purchase, every expenditure, against your available cash. $400 seems like a lot more when it comes out of my monthly paycheck than when it comes out of a revolving line of credit with thousands of dollars to go before I max out. If there’s something I want, I have to work for it — either by finding a way to offset the expense or by saving up over time until I can afford it. Either way, impulse spending becomes impossible.
    • You can’t default on cash. Cash doesn’t call you at work, send threatening letters, or track you down through your references. You pay and that’s it.

    My biggest regret is that I didn’t realize all this at the time, and that I didn’t take steps to live without credit when it would have been a choice, rather than a forced exile. But I wouldn’t go back; if I somehow woke up with perfect credit tomorrow, I’d still keep to my credit-free lifestyle, for the reasons listed above.

    There are some inconveniences, of course. If you want to buy a house someday, you’ll probably want to have some credit history, although records of on-time utility payments and rent payments are often adequate (though who knows what the mortgage lending field will look like by the time the current meltdown works itself out?) Likewise, buying a car can be tricky.

    But that’s about it. Between my debit card and my PayPal account, I have no problems ordering online — PayPal even offers virtual credit cards for online ordering. Likewise, you can almost always use a debit card to make travel reservations or for rentals (sometimes they charge a deposit to your account which is then charged back when you pay the final bill, so you need to be able to cover both the deposit and the payment).

    It’s been six years since I made my last charge to a revolving account, and to this day I don’t miss it. I’ve found myself running short a couple of times, but to be honest, tightening my belt for a week or two doesn’t seem so bad next to the prospect of spending 20 years paying off the balance on a credit card. And while I’m still getting my house in order today, in ten years I’ll be in much better shape than I would be if I’d never screwed up and still held a pocket full of plastic.

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    Last Updated on March 13, 2019

    How to Get out of a Rut: 12 Useful Ways to Get Unstuck

    How to Get out of a Rut: 12 Useful Ways to Get Unstuck

    Have you gotten into a rut before? Or are you in a rut right now?

    You know you’re in a rut when you run out of ideas and inspiration. I personally see a rut as a productivity vacuum. It might very well be a reason why you aren’t getting results. Even as you spend more time on your work, you can’t seem to get anything constructive done. While I’m normally productive, I get into occasional ruts (especially when I’ve been working back-to-back without rest). During those times, I can spend an entire day in front of the computer and get nothing done. It can be quite frustrating.

    Over time, I have tried and found several methods that are helpful to pull me out of a rut. If you experience ruts too, whether as a working professional, a writer, a blogger, a student or other work, you will find these useful. Here are 12 of my personal tips to get out of ruts:

    1. Work on the small tasks.

    When you are in a rut, tackle it by starting small. Clear away your smaller tasks which have been piling up. Reply to your emails, organize your documents, declutter your work space, and reply to private messages.

    Whenever I finish doing that, I generate a positive momentum which I bring forward to my work.

    2. Take a break from your work desk.

    Get yourself away from your desk and go take a walk. Go to the washroom, walk around the office, go out and get a snack.

    Your mind is too bogged down and needs some airing. Sometimes I get new ideas right after I walk away from my computer.

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    3. Upgrade yourself

    Take the down time to upgrade yourself. Go to a seminar. Read up on new materials (#7). Pick up a new language. Or any of the 42 ways here to improve yourself.

    The modern computer uses different typefaces because Steve Jobs dropped in on a calligraphy class back in college. How’s that for inspiration?

    4. Talk to a friend.

    Talk to someone and get your mind off work for a while.

    Talk about anything, from casual chatting to a deep conversation about something you really care about. You will be surprised at how the short encounter can be rejuvenating in its own way.

    5. Forget about trying to be perfect.

    If you are in a rut, the last thing you want to do is step on your own toes with perfectionist tendencies.

    Just start small. Do what you can, at your own pace. Let yourself make mistakes.

    Soon, a little trickle of inspiration will come. And then it’ll build up with more trickles. Before you know it, you have a whole stream of ideas.

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    6. Paint a vision to work towards.

    If you are continuously getting in a rut with your work, maybe there’s no vision inspiring you to move forward.

    Think about why you are doing this, and what you are doing it for. What is the end vision in mind?

    Make it as vivid as possible. Make sure it’s a vision that inspires you and use that to trigger you to action.

    7. Read a book (or blog).

    The things we read are like food to our brain. If you are out of ideas, it’s time to feed your brain with great materials.

    Here’s a list of 40 books you can start off with. Stock your browser with only the feeds of high quality blogs, such as Lifehack.org, DumbLittleMan, Seth Godin’s Blog, Tim Ferris’ Blog, Zen Habits or The Personal Excellence Blog.

    Check out the best selling books; those are generally packed with great wisdom.

    8. Have a quick nap.

    If you are at home, take a quick nap for about 20-30 minutes. This clears up your mind and gives you a quick boost. Nothing quite like starting off on a fresh start after catching up on sleep.

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    9. Remember why you are doing this.

    Sometimes we lose sight of why we do what we do, and after a while we become jaded. A quick refresher on why you even started on this project will help.

    What were you thinking when you thought of doing this? Retrace your thoughts back to that moment. Recall why you are doing this. Then reconnect with your muse.

    10. Find some competition.

    Nothing quite like healthy competition to spur us forward. If you are out of ideas, then check up on what people are doing in your space.

    Colleagues at work, competitors in the industry, competitors’ products and websites, networking conventions.. you get the drill.

    11. Go exercise.

    Since you are not making headway at work, might as well spend the time shaping yourself up.

    Sometimes we work so much that we neglect our health and fitness. Go jog, swim, cycle, whichever exercise you prefer.

    As you improve your physical health, your mental health will improve, too. The different facets of ourselves are all interlinked.

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    Here’re 15 Tips to Restart the Exercise Habit (and How to Keep It).

    12. Take a good break.

    Ruts are usually signs that you have been working too long and too hard. It’s time to get a break.

    Beyond the quick tips above, arrange for a 1-day or 2-days of break from your work. Don’t check your (work) emails or do anything work-related. Relax and do your favorite activities. You will return to your work recharged and ready to start.

    Contrary to popular belief, the world will not end from taking a break from your work. In fact, you will be much more ready to make an impact after proper rest. My best ideas and inspiration always hit me whenever I’m away from my work.

    Take a look at this to learn the importance of rest: The Importance of Scheduling Downtime

    More Resources About Getting out of a Rut

    Featured photo credit: Joshua Earle via unsplash.com

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