How to Live without Credit Cards

Credit cards have managed to become a natural part of living in the twenty-first century. It seems that the average person can’t survive without holding on to at least one credit card. What would become of taking a holiday, renting a car or making ends meet from month to month for that matter? Well, there is a way to live without credit cards and it happens to be a lot better for your finances. Take a look at the following tips to get started.

Change Your Mindset

The first thing you need to do to be free from the shackles of credit card dependence is to change your mindset. Sure, this might sound like a bit of financial psycho-babble, but it actually makes sense. If you want to stop using credit cards for all kinds of purchases, from gas to meals and clothing, you need to change the way you think about making a purchase and realize that every time you whip out your credit card you are actually taking a high interest loan. Do you really want to pay 24% interest on your hamburger? What about the clothing that is on sale? How much would it really cost if you didn’t pay your credit card bill on time? Changing your mindset could save you lots of money.

Set Goals

The next step is to set realistic goals. Your goals should be specific and each should be bound to a timeframe. For instance, you might want to buy a car in the next year. You then need to figure out what kind of car, how much it costs and what you would need to put aside every month to make your dream a reality within your timeframe. Having goals helps to give the action of saving some direction and you end up having more success than if you saved just because it seemed like a good thing to do.

Save an Emergency Fund

Many people use their credit card as a type of emergency fund, but this is the most expensive emergency fund there is. Instead of relying on your credit card to bail you out in times of distress and then piling more strain on your already burdened shoulders try saving towards an emergency fund. A typical benchmark is to save up three to six months of your salary. This way if you run into difficulty you can dip into this account and then start to slowly build it back.

Live Life on a Budget

This might sound a bit depressing, but a budget does not have to be extremely limiting. A budget is essentially a plan of how you will divide your income into saving and spending. Having a plan prevents you from spending on things you don’t need or even really want and ensures the money goes to what is really important to you.

It is completely possible to live life without credit cards. If you follow these tips you can start your new life today.