I could give just one piece of financial advice (although I’ll certainly be giving more) it would be to CUT UP YOUR CREDIT CARDS AND NEVER USE THEM AGAIN!!!!
No seriously…do it…right now! Call your friends over and cut them up together. Bring out chips and salsa (paid for with cash, of course) and make a party of it. Slice them into a million tiny shreds and scream “Take that, Citibank! We’re through! No more lies, no more deception! I’m moving on to something real, something with substance who is honest and reliable. I’m moving on to cash!”
No more taking out credit to save 30% on that sweater. No more free T-shirts and ball caps for filling out that application. These companies want to own you. They feed off the bottom. They want you to make minimum payments, or better yet be late with your minimum payments,for the rest of your life. Isn’t that thought enough to make you want to reach for the scissors? We’re smarter than that, aren’t we?? That $29.99 sweater could end up costing you hundreds of dollars!
“But, but, but what about emergencies?? What if I need new tires or we have an unexpected medical expense?” you might ask. I’m glad you might have asked that. That’s what an emergency fund is for. Dave Ramsey’s baby step número uno: build up a $1000 emergency fund as fast as you possibly can. Sell anything that’s not nailed to the floor, plow someone’s driveway, work a wedding on the weekend- anything to make $1000 super quick. Once you have that money, put it somewhere that won’t be tempting to use, yet is still liquid enough that you can actually get to it, say a real emergency happens. Some people put it under their mattress and forget about it. Dave tells of a woman who framed it and hung it in the back of her closet. Dustin and I are a little more greedy than that so we opted for an ING savings account that can make us a little extra money while it is sitting in there. It takes a few days to withdrawal your money, however it is perfect to suppress those red-faced moments of “lets buy a pop up camper” (which by the way, is NOT an emergency!) Not many people can think of a true emergency that will cost them over $1000. So what qualifies as an emergency? Car repairs, medical expenses, broken water heater, insurance deductibles, you get the gist. What doesn’t qualify? Shopping sprees, kitchen remodels, new furniture, I’m sure you also get the gist.
“But what about the rewards points? I can’t give up my frequent flier miles! I need my cash back!” No, no you don’t. You’re smarter than that. Even if you are the most strategic of planners, shop sales, and keep track of what you spend, I guarantee you will spend more when using plastic. There have been studies done about this very concept. When you pay with cash, it hurts! Those little Abe’s become your friends!! When you swipe a card (even a debit card) you barely feel a thing. There is more temptation just having them in your wallet. From my experience, the opposite is true with cash. I like my wallet to be filled with friends and I feel lonely when they are gone. You’ll think twice before trading in dear Benjamin for that extra value meal. And how many of us actually have used our rewards? How many of us have used our flyer miles? If you have, please share your experiences. I’m really interested to know if any of you are truly beating the system.
“But what about my credit score. If I don’t take out credit cards, won’t I have bad credit?” And I’ll answer your question with another one- “Why do you need a credit score if you want to live debt-free?” Don’t fall for that either. Again, we’re smarter than that.