No need for credit cards

In November 2014, I cut up all my credit cards. That was almost three years ago and I’m still alive today to tell my story. I have lived every month without the need to use a credit card. 

I changed my lifestyle. I changed my approach. I changed mindset. You don’t need credit cards. You think you need credit cards, because you can’t keep up with the Jones’. The funny thing is, most of the Jones that you see, at traffic lights, carrying bags and bags of new “things”; have probably not paid outright for those “things”. Its probably on credit. Now imagine their debt figure floating above their head, or car like a video game gauge system. Granted, there are a number of people fortunate enough to have the latest car, latest gadget and newest clothes, but when you look at the statistics and (UK) average wages;  its not mathematically feasible.

The median average wage UK as calculated by our Salary Calculator is £27,000. [source]

If that’s the case and your renting or paying for a mortgage and not to mention everyday living expenses. How could you buy a brand new car? Without inheritance, lottery win or a pot of gold at the end of the rainbow.

Britons spend around £27,500 on a new car
[source]

It is not rocket science, the new car is more than the average salary. That salary is before tax. So then the car is bundled onto a lease. Why? Because you think the monthly payments make it affordable? cheap? in budget? That can’t be further from the truth.

A new car will break down. An old car will break down too. However a used car only cost you £5000? That’s a cheap breakdown compared to a £27,500 – right?

How have I survived a breakdown with no credit card’s? A £1000 emergency fund that’s how! Since having the fund it’s been used once and through small contribution’s over months and months of frugal living it’s now at £5247.00. Still no credit card’s or loans (I have a mortgage – that’s my only debt)

Its incredible the transformation of no monthly credit payments has made. That includes the car payment, which stood at £234.64 per month – back in 2013. That’s when it ended though. It had been for 36 months. A HUGE £8447.04 spent, but I did not own the car. Have I still got that brand new car? Nope.  

Just live on less than you earn. It IS that simple.

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Excess saver

“Would you like to pay an additional €24 per day incase you have an accident or damage the vehicle etc?”

Over 4 days that’s €96. That’s in addition to the €850 excess if there is an accident or damage. 

Fortunately I have the emergency fund funded; and growing. We said no thank you and sure enough at the end of our trip we were €96 better off. All thanks to the growing emergency fund.

Live on less than you earn. Simple.

A timely read

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I have just been reading about car finance deals soaring to an all time record high, which ties in nicely with my previous post about consumerism. My thoughts on consuming less is very timely indeed. The problem I see with the car finance deal, is that you are essentially thinking it is the best deal out there, but how much does a 3 year warranty, 1 year insurance and no more than 10,000 miles per year really cost? Surely financing a car is more expensive than paying for a car outright with cash?

A second hand car is not the end of the world. It’s just not what the Jone’s are driving. Who cares? No body, but you. I have had a car on finance and it is fair to say; I won’t again. If I’d just been able to fast forwarded to where I am now. Know what I know now, I never would have done so.

Take your current car payments, mine some 4 and a bit years ago, were £264 per month. Now save that for 6-10months. That’s £1584–£2640 in cash that is saved. “What am I meant to drive in the mean time?” Buy something cheaper. “How, I have no money?” This is the vicious circle that (I know) “pushes” you into taking out finance. So “find” £500 to get yourself started. There are numerous vehicles out there for around £500 and if you rock up with £400 cash in your hands, you could probably walk away with the £500 car and £100 in change. A quick search online gave me 2,288 cars under £500 – they won’t all be perfect, but there’ll be one for you. One located:

£500 Volkswagen Golf 1.6 SE 5d 105 BHP TRADE CLEARANCE – GREAT VALUE

If you don’t ask, you don’t get.

Buy the car and drive it until it goes pop. Even use the £100 towards a good servicing, to lengthen its service to you. It’s a car! Not a person. It is meant to be used and used until it is no longer usuable. We, as consumers have a responsibility to slow down in our mindless consumption – the earth is only so big and can only disppose of so much. Where will the “unwanted” stuff eventually go?

That car, based on the £264 saved over two months, gives you £528. Now imagine that the car lasts you 12 months. That there would be £264 saved, over the coming 10months giving you potentially £2640. Even if you could save only half of that, it’s £1320. Although the bracket is slightly higher; there are 23,861 cars available at £1,500 or less! So in theory, in a year you could have purchased another new (second hand) car. Keep repeating this method (use the car until it goes pop) and before you know it – you would have a brand new car, but with no finance. Obviously the newer the car that you keep purchasing the longer it is likely to last. Don’t forget though, brand new cars go down in value before you have driven off.

This is similar to what Dave Ramsey talks about over and over again. Get rid of your car payment. Live on less than you earn. It works. It is as simple as that.

 

How many clothes have you got…

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I keep reading about how debt is a huge problem. How people don’t earn enough to get out of debt. Wages are too low. Families, couples and single people can’t save – perhaps due to debt, outgoings, just don’t earn enough etc. Living on or below minimum wage doesn’t help either. Sadly there are millions of people in this boat. Then reading that if you don’t have enough savings to get a credit card for an emergency?! Without going into the detail or pulling in loads of stats; this whole piece is wrong in my opinion.

Just stop. Stop. Think about it. Everything that is raised in the news (about this topic area) is about savings, debt, minimum wage, the breadline etc.

Let’s just stop and forget all of that for 5 minutes (to a lifetime).

For 5 minutes think about consumption. We as consumers, consume too much. I’m talking everything from food, new smart phones, new cars, plastic toys to clothing (and many many more). But why? Think about the behaviour behind it all. The mindset. The reasoning. Why consume so much? Surely it isn’t rocket science? Maybe for 5 minutes if we stopped consuming, or better still, in our lifestyle consumed with 110% purpose and need we’d be better off.

With less consumption comes less spending. Less spending means less consumer debt. Less need for loans, credit cards and financial prison. This would then mean more money at the end of each month, rather than too much month remaining and not enough money.

I am no financial expert. I am not offering financial advise. I have no money qualifications. I did have – at its peak – £40,291.54 of debt: credit cards, personal loan and student loan. This did not include the mortgage. As of today, I have one debt, the mortgage – I see this as a good as repayments are thankfully low. And almost 3 years later I have stayed out of my overdraft. This does make me a real life debt expert, as I faced personal financial chaos. It was my fault. Essentially from what I have learnt, I do have some knowledge of what not to do. The best way to learn in life is via your mistakes. However, don’t let the mistake become too big. It will become a life sucker. I know. I’ve been there. I’m still reminded of it. Oh, and I have not had a single credit card or personal loan in almost 3 years too – I had 4. Never again. I digress.

Why mention it though? Well since watching the minimalists documentary, my behaviour, mindset and most importantly consumption have completely altered. Thanks to my consumption altering, my savings are growing and I have become increasingly happier day-by-day. My worry, anxiety and stress diminished. I sleep far better. I read more. I have more time. I have more space.

In conclusion, I think, we should stop focusing on the debt, wages, savings etc. We should focus more on our consumption, living on less than you take home (earn) and stop trying to be like them. They’re probably up to their eye balls in debt, work all hours and never have time. With less consumption the debt, wages and savings will from my experience adjustment for the better.

Did you need to buy the new smart phone; really need to buy it? How many clothes have you got now, with tags still on?

30 months: you should have a credit card

I have, for the last 30 months had no credit card. I have lived in that time with no debt except a mortgage and Student Loan. Everything. Everything I have purchased has been with cash. I have not seen any restriction on my day-to-day living with using cash. I actually found i am happier financially. I’ve not suffered. 

No loans. No pay-day loans. No credit cards. No store cards. Even cleared my Student Loan. Then today I was served this comment:

You should really have a credit card to help you keep a credit rating. Should you wish to move home. Get a new mortgage with another lender. It’s sensible to have one and it’ll give you protection on big purchases should the company go bust.

For years I battled debt and the spiralling drowning prison like state. Then, when I come out the other side – well almost – I get advice like that.

My response was simple, black and white. No, I don’t need and won’t be going back to that way of life. I will use cash or wait until I have enough, thanks.

Fortunately thanks to the likes of: Dave Ramsey, money saving expert, the minimalists and become more with less my lifestyle means I really don’t need a credit card.

My Frugal Month: Week 1

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There was a massive high-five, whilst the shopping list was being written tonight. We totally made it!

The end of My Frugal Month: Week 1 is done. £30 put in an envelope seven days ago and still there is £30. It has been a mixed week, but the end result is successful. Nothing spent from the envelope for this week. One day at a time. Seven in total. Zero spent. It proves that it is possible.

We have taken the decision to split the £30 between the remaining three envelopes. So we now have £40, £30 and £40 in our envelopes. Although, My Frugal Month is not like other methods, ours is specific about living off one salary. Can we do it for a month? If we can then how much can we save? The end goal is all about the potential second child – no news – and how we can survive on one wage. It is doable. One week down and it is a great boost to morale.

You think that it is not possible, because you have lived everyday up to this point; off two wages. At the same time living with and for worthless stuff, clutter, endless consumption, debt and mindless thoughtless existence. Now; everything is thought through. Every gear change, litre of fuel that goes in the car, every slice of bread, every ale – gave alcohol up for lent too – every chocolate bar, every t-shirt and every-single-thing that you consume, you question: is this worthwhile?

My Frugal Month: week 1, has, definitely been made easier to succeed by asking this question everytime: is this worthwhile? Even when I have been at worked. I’ve questioned; is this worthwhile? is it adding value? I am quickly coming to realise that the combination of ‘the minimalists’ and ‘Dave Ramseys’ principles and teachings could easily be the perfect two. We’ve been living a more meaningful life the last few months, but this new-found frugality added to our minimalists journey is tremendous. Live on less than you make. Simple. Isn’t it?

One day we’ll reach a point of the debt free scream (clear the mortgage) – I did a mini one when I made my last ever Student Loan payment – and a more “polished” minimalists lifestyle.

This is my frugal month…

 

My Frugal Month: Day 5 – tempting 

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As always I have been for my lunchtime walk. It clears the head. Freshens you up for the second half. Gets you moving. However, I have the burning desire to buy a chocolate bar! Defeats the object of going for a walk. More importantly it will upset the Frugal Months positive direction.

How do you conquer temptation? This is day 5; I’m at work. Am I bored? Is boredom why I, we spend or consum worthless stuff?

Thankfully on my return to work for the second half I blinked and the afternoon vanished! Plus I never purchased the chocolate bar. That’s the first real temptation I have had defeated!

Different story when I got home, hence the late update to Day 5. Had to take our child to an out of hours Dr. Following a weekend of high temperatures and being poorly; after his injections. We found a rash this morning that appeared to have grown by the time bedtime arrived.

Left the house tonight with no plastic because of leaving in a rush. Just the week 1 envelope. Anyway, all is fine with our child and we’re good to crack on with the rest of this week. What was also awesome from our frugal perspective, was the parking cost nothing. Dr was happy and just explained should be be concerned then do take them to their Dr.
This is my frugal month…