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4 Tips for Living Without Credit Cards

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Credit cards can be good financial tools for the responsible consumer. In this day and age they can also feel absolutely essential since some stores, vendors and even airlines require plastic (though you can use a debit card too). But credit card spending can also lead to debt if not done responsibly. Switching to a cash-only life can help avoid this. Even going credit-free for a month or two can help you make sure you are living within your means. Check out these tips for living without plastic.

1. Keep Track of Spending

Without the convenience of monthly statements, it’s important to track purchases on your own. To learn how much you are spending in each area of your life (groceries, entertainment, etc.) you will have to keep a diligent list and/or spreadsheet. Of course, once you’ve run out of your cash for the month, there will be nothing left to spend.

It’s a good idea to create a budget that marks your income and keep up with outgoing cash by saving receipts. The better grasp you have on where your money is going, the better you can plan ahead for needs and evaluate which ‘wants’ you can really afford.

2. Balance Your Payment Schedule

While creating your spreadsheet, take a careful look at when you get paid and which bills are due when. If, for example, all of your bills are due at one time this may leave you with very little cash to get you to the next paycheck (especially when you are first freeing yourself from credit cards). You can change some of your payment times around so that some bills are due at the beginning of the month while some are due in the middle of the month. On the other hand, if you like getting all your payments out of the way at once, you may like having the due dates at the same time.

3. Use Alternate Payment Options

Debit cards can be a smart tool for those wary of regular credit cards. You are limited as to how much you can spend by the money you actually have either in your account. You can try using online payment service like PayPal when buying online if you do not want to give any card information (be aware of fees if this is the route you choose).

4. Have an Emergency Fund

Many people turn to credit cards when they run into emergencies, so without credit cards it’s important to be extra prepared with an emergency fund. It’s a good idea to keep some money tucked away so you won’t be stuck in case something happens. Many experts recommend three to nine months’ worth of expenses in an emergency fund.

Though credit cards themselves are not to blame for debt problems, they can make easy to overspend. Living without them forces you to live within your means and recognize the cost of every purchase you make. Without using a credit card, you may have to find other ways to ensure you have a credit score good enough for you to access credit if you should need it, to finance a big purchase, such as a home or car. (You can check two of your credit scores for free every month on Credit.com.) But going card-free may make it easier to live in the “financial present.”

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  • http://www.Credit.com/ Gerri Detweiler

    Never using it again may have been the problem. Scoring models rely on recent information to predict future information and without the activity the score didn’t have any information to make those predictions. Could you use it like a debit card from time to time and just pay it off in full?

    • sportsfan58

      I use a debit card associated with my bank account. By paying off that credit card, I relieved myself of the risk of not being able to make that extra monthly payment, therefore I consider myself responsible with my limited income (I’m self-employed) and my current expenses. I know and stay within my limitations, and I’m being punished for that. (Thank you for your reply, Gerri!)

      • http://www.Credit.com/ Gerri Detweiler

        You’re welcome. There are some efforts to include non-traditional data like utility payments in credit reports so those who don’t use credit like you can be scored.

        • sportsfan58

          That’s the best news I’ve heard in a long time. That would be a blessing and a relief for those of us who have a sterling utility (and other) payment history. You just gave me a little bit of hope.

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