De-Fanging the Credit Monster

credit, debt, economics, living debt free, simplifyingAfter the economic crunch we have been through in recent years I don’t need to tell you, Dear Reader, that living eyebrow deep in credit card debt is a bad idea.  At one time it was considered the norm – almost a status symbol.  Now more and more people are seeing that reducing this debt is beneficial.  Some time ago I wrote about how to slay the credit card dragons in The Economics of Simple Living.

Today I want to briefly reiterate the benefits of living credit free.  You will note that I did not say credit CARD free – for indeed we do still have a couple of credit cards.  If one plans to live in this modern society, having at least one active credit card is a necessity unless you go into “survivalist” mode. 

Buying supplies on-line is a fact of life for us, because we are rural.  There are many things we want that are not available from the stores in the nearest town, and driving for an hour to get to either of the nearest big cities and their plethora of shopping also means dealing with the traffic and exhaust fume stink of city driving.  Not to mention burning up a tank of gasoline at between $3.00 and $4.00 a gallon.  These are things we gladly do without.

Debit or Credit Card?

We can do our on-line shopping with a debit card rather than a credit card, but there is one major danger here that I learned the hard way.  Should someone steal your debit card information and use it to make purchases, you will lose most or all of your bank account balance.  You can dispute the charges, and your bank will look into them, and in most cases you will get the money back – in time.  But it can take months to resolve the issue, and that can mean being without your funds for that entire time.

If you must use a debit card for purchases, I recommend opening a second checking account in which you keep a balance just sufficient to cover planned expenses for the week.  Use on-line banking to transfer money from the main account into the working account as needed, but do not connect the two accounts as overdraft protection.  Just keep track of your balances and don’t over draw the working account.

Using a debit card does have the benefit of removing the temptation of buying something you don’t have the funds to cover.  But, if you make yourself vow that you WILL pay the credit card bill off every month, this temptation should become manageable.

If someone makes unauthorized purchases with your credit card information, you will have to make the minimum monthly payments while the matter is resolved, but your main stash of working cash is safe.

Benefits of Living Credit Free

Imagine how much rosier life would be for you if your boss said, “I’m going to increase your salary by $200 a month.”  Or $300.  In some cases even more.  Whatever you pay each month in finance fees to the credit card companies goes back into your monthly salary when you pay off those cards.

In addition, the stress levels are reduced by not having to worry about whether you will be able to make the payments.  And bill paying time is slashed when you don’t have half a dozen credit card bills to reconcile and pay every month.

Using the simple dragon slayer principle outlined in The Economics of Simple Living we have managed to pay off our truck and eliminate our credit card debt.  Our only remaining debt is our mortgage and we are working on eliminating that too.  Life is far more pleasant now that we’re not drowning in debt.

And that Dear Readers is my Simple Living Tip for this Tuesday.  Thank you for reading and please share your experiences and thoughts on this matter in a comment below.

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