When I was small, my mum once declared, "Never borrow money, no matter how much you think you need it."
I pondered what she said, briefly. I had no concept about debt, earnings or anything else related to money then — although I was absolutely sure that a bill or a coin could get me some chocolates. But since she sounded emphatic about it, I decided to keep that rule in mind.
From that day on, I made sure I had cash on hand to get what I wanted. Everything I had, I owned outright. Even now I still try to stick to that rule. Maybe that puts me out of sync with the average consumer, but that's the way it is.
It is precisely why I don't have a credit card. Yes, I never had plastic money and never will get one, unless the rules of commerce make it mandatory.
Of course, in the world of instant gratification, the thought of living without a credit card seems as ancient as sending a letter through a pigeon-carrier. That's not the life for most people.
And, as with anything, there is always a trade-off. For one, it's not always easy to move places without a credit card. Booking air tickets and hotels or paying the rent may prove to be a challenge at times.
However, I keep things simple, which makes it easier. Besides, people in the old days survived without Visa or Mastercard — so can I.
You might have thought the same way sometime. If you've thought about ditching your credit cards, a few pointers will prove handy.
Before anything else, set aside a budget. Have a monthly or weekly amount allocated for food, transportation, rent and entertainment, and make sure you don't exceed it.
Often, you might appear to need a credit card to buy big-ticket items because the monthly salary is not enough. But, if you want to purchase new suits, a car or a house — save up. Wait till you can afford it, cash in hand. Cut back on other areas to reach your financial goals.
Invest, get a part-time job, or do whatever is necessary to increase your income and minimize your outgoings. Don't make the mistake of wading into the "buy now, pay later" or "no down-payment" culture that most people fall into.
One way to avoid spending on big-ticket items is to adjust your mindset — don't bother keeping up with the Joneses. Don't let jealousy eat you up when your car-driving colleague whizzes by as you walk your way to the bus stop, or every time you see them fiddling with an iPad or BlackBerry. You don't know; they might be buried neck-deep in debt.
Don't buy stuff online. You'll just end up buying things you don't really need. If you really have to, get a debit or prepaid card that feels just like a credit card, except that you're not spending what you may not have — anything you purchase is debited straight from your account.
Plan your travels. Look for hotels and car rentals that don't require a credit card. Trust me, there are still many cash-only hotels and vehicle rental companies.
Air tickets? No worries. Find a travel agent close to home or work so you can just pick up the tickets yourself at your convenience. I'm lucky: I know an agent who delivers the ticket to me at no extra cost!
I'm fine with these trade-offs. My mum was right — staying debt-free is liberating. Today I am not burdened with mounting credit card bills, car loan repayments or a mortgage. All my life, I haven't owed a bank a dime. It might not suit everybody. But for me, at least, it works.
