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How to Survive Without Credit
If you’re in the midst of challenging financial circumstances you might have to survive without access to credit.
Gasp! Shock! Horror!
Keep gasping - we don't have a credit card. We don't have any loans. We don’t borrow money. We survive without credit.
It hasn't always been so. We had credit cards, and then a mortgage. And then Disaster Struck and we had no income and a mountain of debt in our mortgage.
Here's the thing though: when you owe money, you own nothing.
We made a conscious decision to stop using our credit cards, because tempting though it was to buy what we needed on credit, we knew we wouldn't always be able to make even the minimum payments.
I'm the first to admit that it can appear that life is certainly easier when you have a credit card and access to loans. You can have the things you want immediately - the problem lies in having to pay for them by the due date.
Living without credit requires a higher degree of creativity, but there is almost always a workable option; one that doesn't charge you exorbitant interest. One where you truly own everything you buy!
If disaster strikes you, remember:
You probably do have access to credit, but it’s more expensive.
There are so many people with poor credit that an entire industry has been developed to address their needs. There are plenty of businesses willing to sell you a car, house, or provide a loan with very low credit requirements and VERY high interest rates.
The prices and interest you’ll pay are high, but there is often credit available, provided you have a job.
You can find a place to live.
If you are renting, you may need to change your attitude and accept a smaller home in a cheaper area with a cheaper rent. If you are buying, you may need to think about downsizing to a smaller mortgage.
You can buy a car.
Most cars today can reach 300,000 kilometres without a lot of drama. A $1,000 car with 350,000 kilometres on it could last another 4+ years with minimal expense. It’s a gamble, but the odds are in your favour.
Many independent car lots will sell a used car on weekly payments. The payments are relatively high, and the price of the car is high. Of course, the interest rate is high, too. But it is an option.
Ideally you'll walk or use public transport until you can save the cash to buy a car. Keep saving, even after you've bought it, so you can upgrade with cash in a year or two. You'll be able to afford a slightly better vehicle because you'll sell your current car and use that money to help with the new purchase.
It's more important than ever to start an emergency fund. Many people rely on a credit card for financial emergencies. You may not have that option, not that it's a good one. Begin building a savings account to handle the inevitable financial hiccups that occur. Even if it's just $5 a week you're saving to start, it will soon add up.
There’s not much you can’t do, even with poor credit. However, your options are limited and frequently more expensive.
But credit isn’t necessary for survival. Be creative and assertive. Stop spending on things that aren't essential, and start saving for what you need and want. It may take a while to save up, but cash is king. You have negotiating power with cash and can haggle for a better deal and get one!
When you save for something, you’ll be able to find what you need, paid for in cash, and you'll owe no one anything.
And truly, once saving for what you need and want becomes a habit, you'll wonder why you ever used credit.
Gasp! Shock! Horror!
Keep gasping - we don't have a credit card. We don't have any loans. We don’t borrow money. We survive without credit.
It hasn't always been so. We had credit cards, and then a mortgage. And then Disaster Struck and we had no income and a mountain of debt in our mortgage.
Here's the thing though: when you owe money, you own nothing.
We made a conscious decision to stop using our credit cards, because tempting though it was to buy what we needed on credit, we knew we wouldn't always be able to make even the minimum payments.
I'm the first to admit that it can appear that life is certainly easier when you have a credit card and access to loans. You can have the things you want immediately - the problem lies in having to pay for them by the due date.
Living without credit requires a higher degree of creativity, but there is almost always a workable option; one that doesn't charge you exorbitant interest. One where you truly own everything you buy!
If disaster strikes you, remember:
You probably do have access to credit, but it’s more expensive.
There are so many people with poor credit that an entire industry has been developed to address their needs. There are plenty of businesses willing to sell you a car, house, or provide a loan with very low credit requirements and VERY high interest rates.
The prices and interest you’ll pay are high, but there is often credit available, provided you have a job.
You can find a place to live.
If you are renting, you may need to change your attitude and accept a smaller home in a cheaper area with a cheaper rent. If you are buying, you may need to think about downsizing to a smaller mortgage.
You can buy a car.
Most cars today can reach 300,000 kilometres without a lot of drama. A $1,000 car with 350,000 kilometres on it could last another 4+ years with minimal expense. It’s a gamble, but the odds are in your favour.
Many independent car lots will sell a used car on weekly payments. The payments are relatively high, and the price of the car is high. Of course, the interest rate is high, too. But it is an option.
Ideally you'll walk or use public transport until you can save the cash to buy a car. Keep saving, even after you've bought it, so you can upgrade with cash in a year or two. You'll be able to afford a slightly better vehicle because you'll sell your current car and use that money to help with the new purchase.
It's more important than ever to start an emergency fund. Many people rely on a credit card for financial emergencies. You may not have that option, not that it's a good one. Begin building a savings account to handle the inevitable financial hiccups that occur. Even if it's just $5 a week you're saving to start, it will soon add up.
There’s not much you can’t do, even with poor credit. However, your options are limited and frequently more expensive.
But credit isn’t necessary for survival. Be creative and assertive. Stop spending on things that aren't essential, and start saving for what you need and want. It may take a while to save up, but cash is king. You have negotiating power with cash and can haggle for a better deal and get one!
When you save for something, you’ll be able to find what you need, paid for in cash, and you'll owe no one anything.
And truly, once saving for what you need and want becomes a habit, you'll wonder why you ever used credit.