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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 September 17, 2018

    Why Do I Have Bad Luck? 2 Simple Things to Change Your Destiny

    Why Do I Have Bad Luck? 2 Simple Things to Change Your Destiny

    Are you one of those people who are always suffering setbacks? Does little ever seem to go right for you? Do you sometimes feel that the universe is out to get you? Do you wonder:

    Why do I have bad luck?

    Let me let you into a secret:

    Your luck is no worse—and no better—than anyone else’s. It just feels that way. Better still, there are two simple things you can do which will reverse your feelings of being unlucky.

    1. Stop believing that what happens in your life is down to the vagaries of luck, destiny, supernatural forces, malevolent other people, or anything else outside your self.

    Psychologists call this “external locus of control.” It’s a kind of fatalism, where people believe that they can do little or nothing personally to change their lives.

    Because of this, they either merely hope for the best, focus on trying to change their luck by various kinds of superstition, or submit passively to whatever comes—while complaining that it doesn’t match their hopes.

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    Most successful people take the opposite view. They have “internal locus of control.” They believe that what happens in their life is nearly all down to them; and that even when chance events occur, what is important is not the event itself, but how you respond to it.

    This makes them pro-active, engaged, ready to try new things, and keen to find the means to change whatever in their lives they don’t like.

    They aren’t fatalistic and they don’t blame bad luck for what isn’t right in their world. They look for a way to make things better.

    Are they luckier than the others? Of course not.

    Luck is random—that’s what chance means—so they are just as likely to suffer setbacks as anyone else.

    What’s different is their response. When things go wrong, they quickly look for ways to put them right. They don’t whine, pity themselves, or complain about “bad luck.” They try to learn from what happened to avoid or correct it next time and get on with living their life as best they can.

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    No one is habitually luckier or unluckier than anyone else. It may seem so, over the short term (Random events often come in groups, just as random numbers often lie close together for several instances—which is why gamblers tend to see patterns where none exist).

    When you take a longer perspective, random chance is just . . . random. Yet those who feel that they are less lucky, typically pay far more attention to short-term instances of bad luck, convincing themselves of the correctness of their belief.

    Your locus of control isn’t genetic. You learned it somehow. If it isn’t working for you, change it.

    2. Remember that whatever you pay attention to grows in your mind.

    If you focus on what’s going wrong in your life—especially if you see it as “bad luck” you can do nothing about—it will seem blacker and more malevolent.

    In a short time, you’ll become so convinced that everything is against you that you’ll notice more and more instances where this appears to be true. As a result, you will almost certainly stop trying, convinced that nothing you can do will improve your prospects.

    Fatalism feeds on itself until people become passive “victims” of life’s blows. The “losers” in life are those who are convinced they will fail before they start anything; sure that their “bad luck” will ruin any prospects of success.

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    They rarely notice that the true reasons for their failure are ignorance, laziness, lack of skill, lack of forethought, or just plain foolishness—all of which they could do something to correct, if only they would stop blaming other people or “bad luck” for their personal deficiencies.

    Your attention is under your control. Send it where you want it to go. Starve the negative thoughts until they die.

    To improve your fortune, first decide that what happens is nearly always down to you; then try focusing on what works and what turns out well, not the bad stuff.

    Your “fate” really does depend on the choices that you make. When random events happen, as they always will, do you choose to try to turn them to your advantage or just complain about them?

    Thomas Jefferson is said to have used these words:

    “I’m a great believer in luck and I find the harder I work, the more I have of it.”

    Ralph Waldo Emerson said:

    “Shallow men believe in luck. Strong men believe in cause and effect.”

    Your luck, in the end, is pretty much what you choose it to be.

    Featured photo credit: LoboStudio Hamburg via unsplash.com

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