As we begin 2012 it looks like old habits die hard. A recent article in Money Magazine (Jan-Feb 2012) indicates that late in 2008, debit-card transactions grew at a faster rate than credit card use. However, since last April, consumers have been using credit cards more and returning to pre-recession buying habits.
Banks are doing their part as well by ramping up solicitations and boosting incentives. Last year, 8 out of 10 credit cards offers were for cards with some kind of reward options. It looks like nothing has changed because we did not learn the lessons from the “Great Recession”.
You might think, it is a good thing to get a credit card for all those rewards and deals to help you in tough economic times. But I would like to offer you a different perspective. My wife and I are coming up on our 4th anniversary of debt-free living.
In February of 2008, we finished up paying off all of our consumer debt (credit cards, student loans, car loans, etc.). Life is different for us now and here are seven real rewards of debt-free living
- We don’t worry about banks hiking fees or interest rates on credit cards because we don’t use credit cards.
- We don’t play the “Guess Your FICO Score” game. Don’t get me wrong, we do review our credit report on an annual basis to make sure it is accurate. However, we don’t rely on the FICO score to tell us we are winning with money so we don’t have to jump through all the credit hoops to hit the magic FICO score.
- We built a 6-month emergency fund. Without the crutch of credit cards we had no alternative. Now, if we have an emergency we have the money to cover it.
- We have learned contentment with what we have. If we need or want something else, we save and then pay cash for it.
- We are more selective and patient with our purchases. We just don’t buy something just to get miles or points or because we can avoid interest for 90 days.
- We can save for retirement. We have the money for it since it is not going to monthly debt payments.
- We are able to give more. We have more disposable income since all the money is not going out to creditors.
The rich rules over the poor, and the borrower is the slave of the lender.
Proverbs 22:7 (ESV)