Your Credit Score or a Life without Debt

By Susan Boskey

To seek a high credit score or a life without debt, that is the question. When seeking a high credit score, you must make sure to have a perfect-payment history, stability on your job, an expanding credit history, and available credit you carefully use and repay. To get started, financial planners will recommend that you obtain a low-limit (like $500) secured credit card, use it, and pay it all back. The goal is to gain a high score to have easy access to credit for a car or mortgage. That said, financial planners are unlikely to ever tell you how to live credit-free and avoid the misery of mounting debt.

Why don’t they tell you? From global to national to local, all money is derived from a debt-based monetary system and is, itself, a debt instrument (read: Federal Reserve Note on a dollar bill). Most financial planners are well-meaning but have not been educated on these facts and, therefore, cannot advise you accordingly.

The untold truth about money is what any online inflation calculator can tell you; $1.00 is now worth less than .o4 cents and keeps losing value due to how the system works. What this means to you is that the cost of living has skyrocketed and outpaces earning. Credit rushes in to fill the gap and you are the one stuck with the bill.

Knowledge of this, alone, should be enough to give people pause regarding how they manage their finances; but it appears not to be the case. To choose a life without debt is to think outside the box. It requires proactive strategies that go against the economic grain of a debt-based society. That said, a life without debt and how to accomplish it is well-worth consideration.

Growing up in the ’50s and ’60s, when the dollar was worth more, my parents paid cash for everything and did not own a credit card. Paying for large purchases on lay-away plan was still very common then, and for those too young to know what that is: We would make no-interest payments (at least monthly) for our purchase that the store would keep until the final payment. Receiving the purchase on that last day of payment was oh so exciting!

Also considered horribly old-school today is how my mother managed the family budget. She housed several recycled baby food jars in her desk. Each jar lid had a label on it for: vacations, mortgage payments, school clothes, groceries, utilities, etc. and she would add money to them each pay period. That’s how they stayed out of debt.

My point? Due to the continual loss of money’s purchasing power, it becomes ever more difficult to live without credit, but those who are self-directed still can. When the multiple personal costs of accruing debt are considered (health, marriage and family issues), the alternative starts to look pretty good. Of course, like anything else, there are trade-offs.

Some of the upsides of using credit, albeit a card or any interest-bearing loan:

• Convenience of not carrying cash 
• Statements that track everything for you 
• Being able to make large purchases on the spot 
• Credit card “rewards”

Some of the downsides:

• The illusion of wealth 
• Impulse buying 
• Overspending (paying “Credit Card Premium” prices) 
• Paying interest and paying high interest on credit cards/payday loans 
• Managing payments due to having several credit cards 
• Overdraft charges on credit cards 
• Often a lot of financial stress

Some of the upsides when you pay-as-you-go:

• Reality-based spending and prioritizing 
• More likely to save for large purchases 
• Minus the instant gratification of impulse buying, time to consider the purchase 
• Less financial stress due to more certainty

Some of the downsides when you pay-as-you-go:

• Often wait-time on large purchases 
• Limits activities to current funds available 
• Adds the task of tracking your own spending 
• Adds the task of staying on top of funds available in bank accounts 
• Can mean carrying a lot of cash

Remember that credit use is a choice you make and is not inevitable if you are willing to think creatively and make the trade-offs necessary to live a life without debt.

Susan Boskey is author of the book, The Quality Life Plan®: 7 Steps to Uncommon Financial Security. This book not only exposes the bottom-line of why more and more families need credit each month just to make ends meet, but also provides practical and transformational strategies, tactics and templates. By their use, you can reverse the downward trend of credit and debt while learning how to establish a long-term, debt-free lifestyle; one allowing you to genuinely build wealth despite the challenges of today’s economic environment. To learn more or to purchase the book, visit her website at http://TheQualityLifePlan.com