Goodbye Credit Cards
Goodbye Credit Cards
I just got off the phone with Chase. I just closed my last credit card. And when I say my 'last' credit card, I mean it. I will never have a credit card ever again.
This move has been a long time coming. Over the years, since I first went out on my own in 1993 or so, I've had credit cards. I was never one of these people who went around with 15 credit cards, all maxed out. I think at my worst, I had maybe 5-6 credit cards (including store credit cards). I've had my share of high credit card bills. At one point I was up to $7,000 on one card. That scared the hell out of me. It took me over a year to pay all that off. This was a long time ago, though, during my 'ignorant youth', right out of college. For the last 10 years or so, I've tried to maintain a VERY low balance - at most a couple hundred bucks every year. But even that relatively small credit card balance every month really bothered me. I hated the 'surprise' every month when that bill comes in and suddenly I have to write a check for $500-700. That kind of money adds up fast. 18 months ago I decided to cancel all my credit cards but one and never use a credit card again. I did so, leaving this one card as a 'safety net'. However, in the last 18 months, I didn't need that safety net so today I closed that last card. I am now operating 'without a net' and loving it.
Over the years, I've gradually moved more and more towards a cash-only life and away from credit cards. Those high bills and that scary $7K bill were not the way I wanted to live my life. I've gradually moved from a life of car payments, to a life of no car payments. My last two cars I bought new, and paid off early. My previous car I bought on a 4 year, 0% interest loan, but paid it off in 3 years. I then drove it for 3 1/2 more years beyond that before it just wore out on me. My current car I bought on a 4 year, 2.9% interest loan. I paid off that 4 year loan in 2 years. I've been driving my current car, payment-free for 2 1/2 years now and I think I can get quite a few more years out of it. My next car will be bought cash, with no car payments.
My financial life has improved immensely since I started on this quest. Three years ago, I had a situation where I needed to get my hands on $15,000 cash in order to execute some stock options at my job that would pay me several times that back. I only had about $2,000 in my bank account. I'm ashamed to say that I had to borrow that money. Today, three years later, I now have over $40,000 in liquid cash that I could get my hands on if need be with no penalties. This is all due to the fact that I do not owe money to anyone, for anything, (except my mortgage). It's an amazing turnaround in such a short time. This is due to the fact that I do NOT use credit cards and I do not have a car payment. Think about that. I am not making $500/month car payments anymore. I am also not making $500/month credit card bill payments anymore. That's an extra $1,000/month that I have available. With that extra money I have built up a sizable cash reserve. I can easily survive a 6 month layoff from work, should the need arise. I can easily pay for just about any repair that may arise on my house. I can literally go out and buy a car for cash right now.
One of my goals this year was to save up $25,000 in my savings. I achieved that goal earlier this month - a month early. The purpose of that money was to provide financial support for myself for at least 6 months, should I lose my job, and to provide a 'home improvement' fund for making any repairs, replacements needed in my house. My goal for next year (and the next several years) is to pay off my house, early. Starting on January 1, 2010 I will be making BIG extra principal payments on my mortgage every month. My goal is to have my house completely paid off by July 14, 2014 (my 45th birthday). That gives me 55 months to pay off about $130,000. It is not going to be easy. It will be a true test of my financial management skills to pull this off, but I know I can do it.
By my 45th birthday, I will owe nothing to anyone. Once I achieve this goal (and I will) the possibilities are endless.
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