no man’s credit is as good as his money December 19, 2007
Posted by deepali in budget, goals, happiness, personal growth.trackback
Cash is king, so they say. But is it? We live in a credit society, and everything we do depends on it. Those savings you have in the bank are being loaned out to others to generate income for the bank (in order to give you that nice interest rate). The debit card you use is tied into the credit network, even as it draws on the “cash” in your bank account. If there was a run on your bank tomorrow, there is a very good chance that cash would not be as readily available as you think.
So why the talk about moving away from credit? Well, quite simply, most credit cards are evil. They prey upon the uneducated and push you to spend beyond your means. Ultimately, you end up in a vicious cycle of debt with them, forever trapped.
Or so they say. It really is possible to use credit wisely, much like it is possible to drink reasonably. But just like an alcoholic should generally avoid even the smallest amount of alcohol, so should the shopoholic stay away from credit. But if you’re like most people, you’re not at that extreme, and with time, you can manage to use credit wisely. Unfortunately, as is often the case, first you’ll learn to use it foolishly and dig yourself into that hole. But that’s ok, assuming you attempt to dig yourself back out eventually. Without our mistakes, we’d fail to see our successes for what they truly are.
So why should you use credit? There are a number of excellent posts on that topic, including this one I really like. Basically, using credit responsibly can yield some measurable benefits.
Why shouldn’t you use credit? My particular reason for trying to move away from it is because I don’t like the system. It’s unfairly harsh towards the least fortunate (who always get the short end of the stick). I’d like to not support that.
But for most, it seems to be about freedom, which is no small thing. Feeling unfettered and unrestricted is truly beautiful.
But there is one small snag – freedom is a state of mind. It isn’t about real masters, but the imaginary ones – the ones we create to shackle ourselves. True freedom comes from actually believing it, from making it a reality, as opposed to responding to the perception of reality we think we see. It comes from not allowing even those real masters who hold claim over us to actually claim us. A truly free man will find this freedom regardless of his circumstances, and even the heaviest chains won’t take it away from him.
So I question those who removed the shackles of credit and claim to be free – where did that freedom truly come from? Is it from the knowledge that credit will never bind you (even if you inadvertently find yourself trapped in it) or from the fear of letting it bind you again?
Thanks for the link..
Just a couple of thoughts…
All ‘freedom’ is limited, and all ‘freedom’ is precious.
I am no longer in debt, so I am ‘free’ from the burden of payments, compounding interest, and credit card fees.
But, I am still alive, so I am still ‘tethered’ to the ‘burdens’ of living – saving for retirement, worrying about paying for kids’ college, etc.
So, I celebrate my freedom from debt, while fully acknowledging that I have a LONG way to go before I am truly ‘free’.
But, I’d much rather be debt-free than not.
NCN
[...] post by deepali and software by Elliott [...]
I agree with NCN on this. There are varying degrees of freedom. I can’t claim to be 100% free from financial burdens altogether, though I can claim to be free from credit cards. I know I can use my credit cards freely because I know that I have enough cash to pay them off in full every month. If I do not have the money to pay for an item, I do not charge it. Fortunately, I learned by watching other people and I never had to learn this the hard way.
Beyond that, I have never taken out debt that I could not reasonably pay off. I have had 2 car loans (both paid off now), and my wife and I have a mortgage. I am not wealthy by any means; I have just made the decision for delayed gratification when it comes to consumer items and large purchases. I have also been very fortunate along the way.
So for me, freedom from credit card debt is something I have always known, but to be honest, it was a preemptive measure based upon avoidance of the fact that credit card debt can be binding.
Thank you for linking to my article.
I guess the question is – does the debt (or fear of debt) own you? I have a friend with an absurd amount of debt, who lives as though she has none.
In any case, I’d prefer to be debt-free too!
[...] No Man’s Credit is as Good as His Money @ Paradigm Shifted. This is an interesting article that asks the question for those who claim to be free from credit card debt, “where did that freedom truly come from? Is it from the knowledge that credit will never bind you (even if you inadvertently find yourself trapped in it) or from the fear of letting it bind you again?” [...]
A very thoughtful post.
I can’t speak from experience the way NCN can. I have a mortgage, so I suppose I’m shackled by that, but not by credit card debt — I never have been. I use my credit card as if it were cash, and pay the bill off every month. I also get the benefit of free float on the money and a small rebate with each purchase.
But I also agree with NCN that financial “freedom” isn’t accomplished by becoming debt free. There are other obligations to meet, and unless one has gotten all of those taken care of, one still has to go to a job, so then that becomes a shackle.