How to Live Without Credit

Living without credit is doable but requires adjustments.

It's a bold choice to make — cutting up your credit cards, no longer applying for loans and just living on your salary alone. Many people turn to this step after a nasty or near experience with bankruptcy or at the end of a relationship that has left credit ratings plummeting. For others, choosing to live without credit is just a way of life — a way to acknowledge that you do not have to live beyond your means to enjoy a good life.

Instructions

1. Take a self-assessment, determining why you want to live without credit. Many just don't believe in buying things they cannot afford, while others are reacting to a bad experience with credit. Still others merely want to simplify their lives and return to a cash-and-barter system.

2. Make a commitment to changing your life. If, up until now, you've relied heavily on credit lines, credit cards and loans to purchase the things you want and need, then this will be a rude wake-up call at first. It may be best to begin slowly reducing your debt while not taking out any more credit.

3. Create a budget and stick to it. Take a close look at your bills and income to make sure you actually make enough money to pay your basic living expenses. If your bills exceed your income, you will need to make a list of necessities versus luxuries and start cutting back. When you really start looking at it, it's amazing how little you truly need to live.

4. Cut coupons, shop sales and never leave home without a list. Know what you need and how much you are willing to pay before you leave your house. Today's marketplace is extremely competitive. If you can't find what you want at a reasonable price at one store, you are likely find it at another for less. Don't be afraid to say no and to shop around.

5. Cook your own meals and, if possible, grow some of your own vegetables. Not only will you save a lot of money you would have spent eating out but you'll be healthier and perhaps even discover a new talent. There's something very satisfying about knowing you can provide for yourself.

6. Ask a friend or family member if you use a credit card in the event of emergency, carefully defining what constitutes an emergency. That way, you can repay that person on a schedule instead of paying interest to a credit card company. If you don't have anybody willing to help out, then you will need to start an emergency fund.

Tips & Warnings

• We live in a world in which many places won't make reservations without a credit card number. Just because you don't have a credit card doesn't mean you can't participate. Get a debit or check card. You can use either the same as a credit card, but you won't spend money you don't have.

References

• CreditCards: Some Live Without Credit Cards -- Could You?