7 Ways to Avoid Using Credit


I am not quite out of debt yet, but I have dug myself out of a huge hole over the past year-and-a-half.

The process of being free of the burden of debt is liberating. I am done with borrowing money from banks. I plan on staying debt-free and frugal forever!

There are some trade-offs I have made in the process. It has been harder to live without a credit card and borrowing at times. I am committed (to the best of my ability) to live a credit free life from here out.  Here are some ways I stopped using credit, and ways you can stop as well:


  1. Save an emergency fund. My emergency fund used to be my credit cards — if there was an unexpected expense, the card came out to the rescue. $120,000 in debt later, I realized that wasn’t the way to go.  Instead, I built up an emergency fund of $1000 as quickly as I possibly could.  When I am done paying off my debt, I will be using the money I’m not paying towards debt to build up a healthy emergency fund, keeping me out of debt when something unexpected comes up. I will be working to build up 6 months’ worth of living expenses in this fund.
  2. Save for goals. Create a separate savings account for every goal you have. I have an account for a new car, for yearly trips, for a bicycle, and my kid’s college. Decide on your highest-priority goals, and set a dollar figure. Now save towards those goals. Without debt, it should be fairly easy.
  3. Get a debit card. If you need to use a credit card in certain situations, such as buying something online, often you can use a debit or check card instead, if it has the name of a major credit company such as Visa or Mastercard. Be careful with this!  Plastic still is way less painless to swipe than paying cash.  You must be vigilant about keeping track of the bank account.
  4. Buy a car on cash. Many people disagree with me on this one, but it’s very possible, and many people do it. Instead of making loan payments, and paying double the price of the car or more over the term of the loan, you can make savings deposits, and end up with the amount it costs to buy two cars in your bank account over the course of five years. I had two cars with massive payments, so I sold them and bought a total beater that I could get 2 years out of.  In the meantime, I put payments in the savings account and off I went toward cash for a car!
  5. Invest for retirement. Imagine putting all of your debt payments in a retirement account each month??  I put about $2000 a month towards debt now. That has early retirement written all over it if I stay the course.
  6. Use PayPal online. If you must buy something online, and don’t want to get a credit card (or a debit card), in many cases it can be done with PayPal — meaning that you must have the money before you make the purchase. Paypal even will send you a debit card if you like.  It’s a pretty good option, as long as you budget!

Credit cards have not been around for very long.  Our close relatives managed to do just fine without them.  We can do the same by living within our means, spending less than we earn, and not using credit.  Good luck!

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