How to Live Without Credit

It's a bold choice to make--cut up your credit cards, stop applying for loans and just live on the salary you make. Many people turn to this step after a nasty or near experience with bankruptcy or the end of a relationship that has left credit ratings plummeting. But, for some people, choosing to live without credit is just a way of life. A way to acknowledge that in order to live a good life, you don't have to live beyond your means.

Difficulty: Moderate

Instructions

1. 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 by slowly reducing your debt while not taking out any more credit.

2. Determine why you want to live without credit. Many people just don't believe in buying things they can't afford, while others are reacting to a bad experience with credit. There's still another group of people who are trying to simplify their lives and the lives of the people around them by going back to a simpler life, based on a cash and barter system.

3. Create a budget and stick to it. Take a close look at your bills and your income to make sure you actually make enough money to pay your basic living expenses. If you're "upside-down" (your bills exceed your income), you'll need to make a list of necessities versus luxuries and start cutting down. When you really start looking at it, it's amazing how few "things" you need to live your life.

4. Cut coupons, shop sales and never leave home without a list. Know what you need and how much you are willing to pay for it 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 than you're bound to find it at another for less money. 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 whole lot of money that 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 whether they will be willing to use a credit card for you in case of an emergency, carefully defining what constitutes an emergency. That way you can pay that person back on a schedule instead of paying interest to a credit card company. If you don't have anybody willing to help out, then you'll 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. They can be used the same way as a credit card, but you won't spend money you don't have.

[jtizzle]

on 3/7/2008 This is a great article!!! For other readers, if you have never read "The Total Money Makeover" by Dave Ramsey, you NEED to. It'll change your life forever.

[guitarguy]

on 2/27/2008 This is one of the biggest problems in the US. Most people don't even realize thier ability to live within thier means. It means sacrificing a little, but the reward is great.

[guitarguy]

on 2/27/2008 This is one of the biggest problems in the US. Most people don't even realize thier ability to live within thier means. It means sacrificing a little, but the reward is great.