Wow. It's been two years since we had our credit cards, and we're still alive. We made it two years without borrowing! But was that the best financial decision?
My Credit History
I remember my very first credit card. It was a Chase card. Oh, how I thought I was special when I received it in the mail. I was ready to enter into the realm of fiscal responsibility, become an adult, and pay off my credit card in full every month.
And I did. I always paid my credit card on time, every time.
In preparation for marriage, my soon-to-be wife and I sat down with a Wells Fargo representative and was sold on the idea of getting another credit card. This time, it was for “overdraft protection” so that anything we overspent in our checking account would be transferred to our credit card. This was intended to save us overdraft fees, of course. Or was it?
That's about the time I read Dave Ramsey's 7 Baby Steps.
A New Beginning – Without Credit Cards
Everything changed. All of the sudden I saw money in a whole new light, and started understanding the dangers of credit.
Although I had never gone into any credit card debt (besides what I owed each month), I identified two ways having credit cards was holding me back:
- I didn't have an emergency fund. I thought that if we got into a bind, we would always have our credit cards to rely on. This might have plunged us into a sea of credit card debt.
- I didn't strive for a better job. Because of the false sense of financial security my credit cards gave me, I didn't see the value in getting a higher paying job.
So in a Dave Ramsey style ceremony, I cut up the credit cards with the largest pair of scissors I could find – with my wife's approval, by the way.
That day was a turning point. We set our course on something we felt was better. But was it the best decision?
20-20 Hindsight Tells All
Looking back, we find that we don't regret our decision to destroy our credit cards! It pushed us to follow a financial plan that kept our household financially secure.
The pressure of not having a safety net pushed me to find a different job: one that nearly quadrupled my income. We paid off our student loan debt, and built a fully funded emergency fund! We also were able to save some money toward an account designated for my wife's continuing college education.
Sure, we might have achieved some of these goals without sacrificing the cards, but I'm pretty sure not all of them – and not as quickly as we have.
What About Credit Card Rewards?
We certainly missed out on some sweet credit card rewards. But later we learned about a financial institution that had a cash back debit card. We signed up, and are enjoying over $550 in perks every year.
What About Building Our Credit?
Our goal is to have a zero FICO score. Weird, isn't it? Let me ask you this: if you don't plan on borrowing in the future, why would you want a good credit score?
Although we may pay a little more for on our insurance premiums, it's well worth not having the risk of going into debt.
We do plan on getting another home in the future, but plan on a mortgage with a company that can look at other factors besides credit score.
Are You Ready To Cut Up Your Cards?
You might not be ready to cut up your credit cards like we were. But let me tell you, two years of being credit card free has been nothing short of wonderful.
Meet me in the comments and let me know your thoughts! It's okay to disagree!