We don’t have a single credit card, and don’t plan to every have one again. Why? So many reasons. We cut up our cards over five years ago and haven’t looked back. Today I’m sharing my story with credit cards, how I got in to BIG trouble, got out of it, got in to even BIGGER trouble, got out of it again, and found freedom from the plastic cards that were ruining my life.
My troubles with credit cards started back in college. I applied for my first one freshmen year so I could get a free t-shirt offered at a booth in the student union. I was so proud. I felt like a real adult. For months I paid off the balance on time and never had to pay interest. It felt so great to have money and not have to say no to concerts and dinners out. All of sudden, the balance got too high and I couldn’t pay it all off one month, then another, and then another. No worries, I’ll just apply for a card with an even bigger balance and transfer it all over. Game the system. Earn the points.
One credit card company gave 20 year old me with a minimum wage job a card with a $10,000 limit. I thought I was a rich girl all of a sudden, and started spending like it. My best friends and I decided to take a trip to NYC from our college in Arkansas. Since I had a card with a huge limit, I put all our airfares on my card. They all gave me cash to pay it off immediately, and I pocketed it rather than putting it towards the balance. I paid interest on that trip for the next 8 years.
The debt started to pile up and bad money decisions began to weigh on me. After graduation I took a job I loved with a non-profit, and was barely able to pay the minimum balance every month. A kind mentor helped me get a $15,000 debt consolidation loan to pay off the cards and an ill advised car purchase. After paying off that loan I thought I would never make the same mistakes again. I was so wrong.
I kept my cards, and slowly started to use them again. All of my favorite stores began offering store credit cards that came with big discounts for signing up. I got every single one. Slowly but surely I began to rack up debt all over again. Before I even knew what was happening I was in debt up to my eyeballs again. Over $15,000 in debt AGAIN on a $26,000 a year salary.
Desperate for freedom, I found a Christian company that helped with debt consolidation. While they helped me, I don’t recommend using these companies because many are scams and it is hard to find the good ones. After 3 years and a LOT of hard work I paid off my debts a few months after Jed and I were married. I cut up my cards and swore I would never get another. My husband was a different story…
When Jed and I got married, he was also in a massive pile of debt. He ran up a ton of credit card debt and had some student loans. His parents helped him by consolidating his debt in to a loan from them, but if you’ve ever experienced a family loan you know that comes with issues. He still kept cards around for “emergencies”, but that would soon change.
I’ll go more in depth as to how we paid that off our debt and how everything changed in another post. A fire was lit under us after reading The Total Money Makeover
by Dave Ramsey and completing Financial Peace University. We got rid of our credit cards for good and will never use them again. I’ve turned down at least a dozen paid offers from credit card companies to mention them here on the blog, but I won’t ever do it. If I don’t think something is good for my family, why would I share it with your’s? You’ve heard some of our reasons why we don’t use credit cards in our story, but here are a few more.
When you use credit cards, you spend money you don’t have. It is easy to justify purchases and not limit yourself to what you have. We use cash and debit cards, and only spend what is in our budget.
You don’t feel the pain of purchases with a credit card like you do with cash. Studies have proven that people spend more when using a credit card than when they use cash.
You will never “win” against the credit card companies. Lots of friends tell me they use credit cards for the points or the airline miles. Often purchases are justified to get those points or cash back. What if you saved that extra money instead and just bought the airline tickets? Credit card companies post billions of dollars in profits every year. No one is gaming them or beating them.
We have an emergency fund, so we don’t need a credit card for emergencies. The question I hear the most when I tell people we don’t use a credit card is, “What about emergencies?” We have an emergency fund saved with six month’s worth of expenses set aside. If we have an emergency like our bathroom/closet flood this past weekend, we use it rather than going in to debt.
Debt is not a tool, it is a chain that weighs you down. With no debt other than our house, our money is our own. We plan to pay off our house as soon as we can and be entirely debt free. Our consumer culture tries to convince us that debt is tool that makes us successful, but instead it makes us slaves to our lenders.
Read more about our financial story here. Do you use credit cards? Why or why not?