We are not normal here in the Fearon house.
In early 2013, after reading The Total Money Makeover * by Dave Ramsey, we decided to start our journey towards being 100% debt free. My hubs was totally on board with paying off our credit cards because those were “stupid debt” but he was unsure of the “never having them again” part of the debt-free equation.
Eventually I convinced my hubs that we did not need a credit card to keep “in case of an emergency” if we managed our money and built up our emergency fund. It has been almost two years to the day since we paid off and closed the last credit card and we still do not have any nor use any credit cards.
After our adventure where my hubs’ doctor stole our money a couple of weeks ago and we were in a panic (okay, it was just me that was panicking….) we started hearing things like “you need to have a credit card for emergencies” and “why didn’t you use your credit card”?
Pat and I both were a little confused as to why others thought a credit card was an emergency fund, but then we had to realize that we are no longer normal. We no longer carry the mentality that debt is okay and that we need to owe someone else money in order for us to survive.
“The rich rules over the poor, and the borrower is the slave of the lender.” Proverbs 22:7
Even all those years ago, when Proverbs was written they knew debt was bad. Instead of having to pay back someone else in a time of an emergency, we just take money from ourselves and pay ourselves back the money, interest free.
[clickToTweet tweet=”We no longer carry the mentality that debt is ok & that we need to owe someone else money in order for us to survive.” quote=”We no longer carry the mentality that debt is ok & that we need to owe someone else money in order for us to survive.”]
There is no stress wondering how we are going to afford to pay off the debt, there is just a sense of peace that we do not owe anyone but ourselves the money.
Was I stressed and scared when my hubs’ doctor stole so much money out of our checking account? You bet, but here is the thing, we never touched the money in our emergency fund. There is still plenty of money in there, enough that if my husband lost his job we would be fine for months with no income flow to our home.
Our first line of defense, our slush fund is where the money came from until the doctor finally refunded us our money. Then, we simply just paid ourselves back. You see, there is something strange that happens when you take money from yourself, you actually want to pay yourself back. I found that even when I had a credit card for “emergencies” that I was never very quick to pay back the money that was owed because, well it was money that was spent and technically the money I spent was not mine so, who cares when I pay it back so long as I pay the minimum by the due date?
However, when you are dealing strictly with your own cash money, you feel a sense of urgency to get the money back to yourself because you worked so hard to put it there in the first place. When it is all over and done with, there is true peace that comes from not worrying over a looming credit card bill in the mail.
Of course, becoming debt-free is up to you and if you decide that you love having a credit card for emergencies then you are simply a normal person. Most people keep a credit card for that very reason, but I would like to encourage you to become abnormal and live differently. Carry cash, use cash, save cash, and pay yourself instead of relying on someone else (the bank) to bail you out of an emergency. Rely on yourself.
Are you abnormal? Do you use cash only and do not keep a credit card?
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We follow most of Dave Ramsey but do still continue using credit cards. However, we always pay them off every month and track our budget carefully on paper. For us, it’s a simple matter of knowing where our money is going and being disciplined. I really admire you for doing away with credit cards! I think the slush fund, as you said again, is a really important part of a budget so you don’t have to dip into your emergency fund unless truly an emergency. I’m thankful we have both of those as well!
Yes! We don’t have a personal credit card either. It’s not an emergency fund, it’s a brick that you add to the backpack of bricks that is debt!
We treat credit cards differently. I am able to salary package on to mine. That means that a percentage of my salary goes automatically on to my credit card. The benefit of this is that I’m not taxed on that money, so using a credit card brings down my overall tax bill by several thousand dollars. So yes, we have a credit card, and at the moment it has a balance, but I’m not worried because the balance will be paid off entirely in about two weeks, and then we’ll have money owing us. We owe money roughly half the time; we have money owing us roughly have the time. I tend to put our bigger bills on to the credit card so that way our bank balance doesn’t take the hit; if I know a big bill is coming, I don’t use the card for a couple of months so that I know the money will be there. At the moment there’s a balance because I put a rather large donation to the Nepalese earthquake relief fund on there before I’d fully paid off our last holiday; and we used the card more than we normally would on the last holiday because we thought our bank account had been fraudulently accessed so we moved almost all the money out of there into another account.
We always use the platinum card to pay for holidays, because it comes with free travel insurance. We pay that one off as soon as we get the statement (it’s not salary packaged); but putting plane tickets and rental cars on that one saves us several hundred dollars a year.
I think having credit cards can be dangerous, but it depends on who you are. I’m pretty sure, given how far you’ve come, that if you were to get a credit card now, you’d treat it differently, because your attitude and relationship with money has changed. My husband and I are debt free (other than a small balance on the credit card which will be paid off in a fortnight), we have quite a healthy savings account, we just don’t spend money frivolously. I know we won’t get into trouble with credit cards, because it’s just not the way we are.
Hmm, I guess I’m halfway between normal and abnormal. Both my husband and I used to charge EVERYTHING, but we started using cash a good bit as our credit card balances spiraled out of control. After we cleared all of our credit card debt with our home equity loan, we started using cards sometimes, but paying them off monthly. We pay cash most of the time for smaller purchases, say anything under $40, but do use cards for larger purchases.
I do still use a credit card, but that’s mostly for budgeting ease. I pay it off every two weeks…not even letting the charges hit the end of my billing cycle.