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The average person owes thousands of dollars in credit card debt. There are those people who choose to live their lives without using credit. This decision can come about for many reasons, including bankruptcy, poverty, or just not wanting to go into debt. There are many challenges that come with living without the use of credit, but you can learn to make the most of it if you find yourself in that situation.
If you already have bad credit, it can be hard to reestablish your credit. Many people choose not to, but most of the people that choose not to end up falling into the category of alternative financing. This hurts them even further. Of course, you can rebuild your credit, and so you have both paths to choose still. It may take awhile, but it could end up being less hassle than living without credit due to having bad credit.
You have to remember that you will have to do things like pay deposits in order to turn on utilities. This can prove rather costly. However, this doesn’t happen often, especially if you are one that doesn’t move around too much. Still, there are other things that you would have to pay deposits for as well, so this is one thing you would have to live with. Of course, some people living without credit find that they are able to save more money and have a better net worth, which means they can afford to pay deposits. It all depends on how disciplined you are.
It is sometimes a hassle trying to rent without credit history. You might not be able to get into certain places, and no one likes to have to settle for where they live. Of course buying a house is a cash issue if you choose not to use credit. However, with enough cash on hand, you don’t have to worry about anything without credit.
It isn’t so hard getting a job without credit history, but some of the much higher paying positions might be hard to land. The employers really have to be very meticulous and paying attention to some pretty minor details to really use your credit history alone to deny you employment. However, it is definitely much harder finding a job without credit history, so you can look at it both ways.
Without credit, you need to have more funds set aside for an emergency. The typical starter emergency fund is 1,000 dollars, but you are supposed to build it up to three to six months worth of living expenses. Without credit as a backup plan or assistance, you need to have more than that saved back.
Most financial institutions check your credit in today’s world in order to set up an account for you. Anything from renting an apartment to landing a job without credit can be extremely difficult, but there are certain things you can do to help you get around this issue. If you do these things, You can definitely get a better understanding of how to live without using credit.
When you use credit cards, they can help you have a healthy financial picture. Your personal finances can be kept in order with credit cards; you just have to be smart about the ways you use them. You need to be wise with them, and here are some wise ways to handle your credit cards.
1. Think about how many credit cards you need. Don’t get all the credit cards you can just for the sake of having credit cards. Think carefully about which cards you absolutely need. Maybe you need a card for emergencies, and maybe you would like a card with rewards. Try to keep one to three cards; that should be enough for most people. Once you determine how many cards you need, close the accounts of the other cards.
2. Try to pay as much as you can of your credit card balance each month. If you find yourself struggling every month to pay your credit card bills, you need to think seriously about your need for credit cards in the first place. Never pay one card with a cash advance from another card; the fees you pay on the cash advance aren’t worth it.
3. Think about how you use your cards. Are you using your credit cards every time you want to make a big purchase that you can’t afford in cash? Think seriously about every purchase you make. If you want a big ticket item, take 24 to 48 hours before buying it. Think about whether you want to pay for it for months to come, think about whether you want to pay interest on it, think about whether you want to refuse yourself other items to buy this one thing. Then and only then should you make that purchase.
5. Monitor your feelings about your credit card bills. Do you get nervous when you see the envelopes in the mail? Are you stressed out every time you see the bills? Do you feel overwhelmed with how high the bills are? If this is the case, stop using the card for purchases and start thinking about how you can best pay off the cards. Stress can be damaging to your mental and physical health, so don’t give yourself more stress by running up credit bills.
6. Consider whether you can afford the credit cards you have. If your income is not going up, but you find that your credit bills are getting higher, try to cut spending before it gets out of control. Most people keep thinking that things will turn around in the future, but if things are not changing and you find yourself depending on your credit cards more and more, stop using them or find other ways to bring in more income.
As long as you keep these tips in mind, you will be able to better handle your credit cards. Just monitor your spending habits and patterns, and you will be able to make sound decisions about your credit cards and the rest of your personal finances.