2 Great strategies to help you go credit card free
In my last blog, I shared how and why my family went credit card free about eight years ago. Today, I want to share two key strategies for being successful at living without credit cards.
Both of these methods need to work together for you to be successful!
Budget and Save
This sounds simple on the surface, but budgeting and saving for major expenses takes discipline and a plan. We do a monthly budget that includes both our usual monthly expenses as well as a portion of what we will need to pay in the future for major expenses.
Let’s use car insurance as an example. Say you pay $1,000 every six months for car insurance. Divide that $1,000 by six and make sure you put $167 back in savings each month so you will have the $1,000 when the bill comes due.
Emergency Fund
Many times, families will maintain a credit card for emergencies. The problem with that is, it can be too easy to declare something an emergency. Even if a real emergency happens, such as a job loss, going into debt at that time will only make the situation worse, not better.
Your emergency fund should be contributed to monthly until it contains three to six months of your usual expenses. Having this money set aside will help if there is a job loss, major emergency home repair, or serious illness.
What about business credit cards?
This topic is one of the first questions I get when people consider going credit card free. Some businesses require that you have a credit card. I see this especially with small businesses, including sole proprietors. If your job requires you to have a credit card, be strict about only using it for business. If possible, set up a separate bank account and pay for business travel expenses with the debit card from that account. That way your regular household budget is not affected by having to wait on reimbursements from your company.
Questions?
In our society, it’s assumed that most will have at least one credit card so cutting up those cards may seem a little scary! Do you have questions that pertain to your specific situation? Give me a call and we can discuss your options or I can refer you to great resources to help.