Living Well With Cash, Leaving Credit, Learning Why Cash is King
Living without credit and getting rich is easy when we change our mindset. What can you do with $10,000 in the bank? You can do a lot more than you can with $10,000 of purchases bought on credit. For people who want to be frugal and build savings, learning to live on cash and save for emergencies puts you in a position of power. In several religions, there are rules about the use of credit and paying interest on things that otherwise could have been cash purchases.
People who are used to living on credit usually spend more money and buy more items they later admit they didn’t need but thought they wanted and justified with when the items are on sale, for example. However, if those same people are at the checkout at a department store and have the option to pay cash instead, many would think twice about the money they are spending.
Ramsey Solutions: Living Without a Credit Score
Some people love using credit cards and they get all kinds of benefits from the bank when they borrow and pay the balance ahead of or on the due date. There are also sensible arguments about doing something to make money with your cash in the bank while buying things on a credit card and if you have all the cash to pay the bill off, and you have the diligence, that is great. Meanwhile, some people are more likely to carry credit card balances and they end up paying unacceptable amounts of interest on things they might not need, and for which they probably overpaid.
Do you swipe the shirt for $50 and eventually pay it off with credit card interest at a much higher rate, or do you pay cash? Now stop and consider paying cash for another shirt that is on sale, or maybe an equally high-quality shirt at a thrift store for a fraction of the price.
Adjusting Your Definitions of Wealth, It Takes Less than You Think
News reports recently commented that it is surprising how few people can afford a surprise $400 vehicle repair. Meanwhile, many of the same people are driving rather expensive financed and leased cars and trucks. Next to a high-income earner with endless bills and no assets to show for their work, someone who makes any amount of money and can build savings, must surely sleep better at night.
Think about people worried about having a new car so they never have to pay for expensive car repairs. But if you have a paid-for car or an affordable used car and you have savings to afford any necessary repairs, you are probably money ahead. When we own our cars and save our money we tend to make decisions to make vehicles last longer and get the most out of every penny we save.
Some people take otherwise high-quality vehicles and trade them in on a new one instead of paying for car repairs they cannot afford, because often they are so behind in debt payments on loans and credit cards, that they never have the money for something like a car repair. If only they had an extra few thousand dollars they’d have their car running forever.
What does wealth look like? Does wealth look like a brand new car with the payment and pricey insurance, or is it the more conservative, likely older quality vehicle, that is owned outright and driven by an owner with money in the bank to fix it? The person able to grow their extra money into wealth and build that wealth may have been able to do so because they bought a reasonable car and drove it until the doors fell off. When we think differently about what it means to build wealth, priorities change.
What Money in Savings Does to Spending Power
When buying a home, car, or any other durable goods, buying something means something different when cash is paid and the item is owned outright. When someone has money in savings they can are not limited to paying retail, for example. When the refrigerator needs to be replaced someone who only uses credit cards is going to pay retail for a brand-new refrigerator. Meanwhile, your thrifty cash-based neighbor found the same thing from a third party on a marketplace website for half the price because they were moving for a job and couldn’t take the two-month-old refrigerator with them. The warranty on that refrigerator might extend to the next owner, so close to new that it might not matter.
Ramsey: Never Worry About Money Again
Cash is king and when it takes you away from the traditional retail store purchase situation, you are avoiding both retail prices and interest charges on a financed item. How much money in interest is paid over years on a financed item like a refrigerator? It could be a lot of money in interest, for the convenience of buying the new item on the store credit card, and probably having free delivery.
Getting a Job and Taking Vacations from Work without Credit Scores and Credit Cards
There are some jobs with specific hiring requirements that include credit scores, however, most jobs and hiring situations are not dependent on someone having a credit score. Remember that credit is a tool for lenders to use and if you are not borrowing money, don’t be so worried about job applications. If credit scores were to arise, address questions with integrity and self-assuredness. While there are not as many people who are staunch about living on cash only, it is something that others can respect when you are a person of purpose and integrity.
With the money you save by not living on credit, take a vacation. Most major banks will let you open an additional savings account you can put money into every payday. That money adds up quickly when you don’t touch it. And while watching the balance grow, imagine the trip. The planning and anticipation of a fun vacation is half the fun. By saving money and living with cash, we can get more out of life.
Renting a car at the airport without a credit card should be no problem. In many cases, the rental agency will accept a provisional deposit to insure against any claims but if you have the cash on a debit card, you don’t need to worry about the credit card.
Buying and Renting Homes Without High Credit Scores
Rent and save money for a down payment on a home. That is the old-fashioned good way to buy a home, and there is no reason not to do it that way. And if you save enough money for a substantial downpayment, you can get manually underwritten mortgages and your savings and other factors are used to approve mortgages. If you make the money you’ll get the loan.
Likewise, renting homes without great credit scores is easy when you have a little extra money to pay additional security deposits or the first and last month’s rent. While there may be some picky rental companies, there are plenty of rental options at all price levels and they are in the business of filling rental spaces and are accustomed to credit questions and answers.
How Many People Enjoy Savings When Proud of Their Savings Accounts
People who learn to live on cash instead of credit, find they need less stuff compared to feeling good about money in their savings accounts. Having that money if you need it is a good feeling because you are never trapped. If there is a family change, a job change, or an unexpected life-changing event, you are prepared to handle it. We know that most of the time life moves along according to plan, but there are plenty of times that emergency cash on hand increases our sense of security.
Living Without Keeping the Banks and Finance Companies in Business
How many hours of our lives do we spend commuting to and from a job every day? Does it make sense to get the most out of the money you earn? Why pay so much of it to banks and stores, in interest payments and retail prices? People who don’t live to feed the banks save a lot of money for other things. People are more likely to have money to go places and do fun things when they keep more of their paycheck instead of all the money going to payments.