This is a guest post written by Nonarae of the blog, frompoortoprosperity.com. Learn how to fix your finances in recovery using this simple cash method.
There are a lot of things in this world that bother me. Things that I wish were different.
On the top of that list, is the idea that you need to build or fix your credit score. And following that, is the idea that you need debt if you want to have anything nice in life.
These things are just not true. As an example, my husband and I have been debt-free for two years now, and we still have not been required to use a credit card for anything. We have rented hotel rooms, and a U-haul trailer. We own a 2015 Ford Focus (my car), and a 2013 Toyota Tundra (hubby’s truck). While paying off our $65K of debt, we also cash flowed our wedding, and then took a trip to Tennessee to meet Dave Ramsey and go White Water rafting in Chattanooga.
The truth is that you can live a perfectly happy, full life, without a credit score or debt of any kind.
Below are 4 reasons why you shouldn’t actually worry about your credit score, and what to do instead.
Dog Chasing Its Tail Relationship
First and foremost, let me tell you the biggest reason why you are wasting your time trying to fix your credit.
IT IS A NEVER-ENDING BATTLE.
The Worse Credit Cards
You have to have credit to take out loans, but you can’t get loans if you don’t have credit. You start with the bottom-feeding credit cards. The ones that charge 25% interest if you carry a balance.
It’s also super stressful, in so many ways. It is not difficult to qualify for one of these cards. But if you don’t already know how to manage your money well, you can very quickly max out your balance. In the end, you put yourself in an even worse position than where you were.
Then there is the dreaded cycle. Continuously having to borrow money and pay it back to get a higher score. Many people truly obsess over this number. They give it so much value that it doesn’t even deserve to have.
Encourages Unnecessary Spending
Don’t trade one addiction for another. Sobriety groups, recovery mentors, sponsors, support etc. They all preach about this. Simpy because it is super easy to pass one addiction off for another.
Shopping can very easily become addictive. When you purchase something that you like, your brain releases a hit of dopamine. Dopamine is the same happy drug that you get when doing drugs. Or binging on anything that temporarily makes you feel good.
Using a credit card can also be very easy to do. You just swipe the card and take home the item. It’s too easy.
I can’t tell you how many times I have been paid on a Friday and on Monday, I’m broke. I check my bank account to find that I’ve spent $400 over the weekend. Not even knowing what I spent it on! Over-spending like this is dangerous and can put you in financial hardship fast.
Steals from your Future
Fixing credit requires you to borrow money that you don’t currently have. Usually to pay for things that you can’t currently afford. Doing this puts you in a position where you have to make payments to somebody. Therefore, it ties up any free cash that you could have had in case of an emergency.
It takes away the financial margin between you and life. You end up having to borrow money when you need something. All the money you have is already going to payments for other stuff you previously purchased.
Doing this also makes it harder to enjoy life. You don’t have the margin to buy the things that you want. So, you become resentful of the things that you do have. This is because you have to work so much harder just to keep them. Ending up in buyer’s remorse.
I remember when I had a car payment. Every time that bill would come in the mail. I just wanted to sell my car and be done with it.
Paying $463 per month for a car payment wasn’t impossible. But seeing the balance hardly decrease because my interest rate was so high, killed me a little inside each month.
The first two years I owned my car, I paid almost $12,000 in payments. No lie! And about $9,000 of this was in interest. Seeing this was honestly the worst feeling in the world. I felt hopeless, like it would never go away without some kind of miracle.
I honestly don’t want this for you. You have struggled enough in your life, and don’t need the extra emotional burden of debt – just because society says you need it.
Borrowing Money Is Not Sustainable
One of the biggest problems with fixing your credit or building your credit from zero, is that most people don’t have the self-control that is required in order to have a healthy relationship with a credit card. Some people can, don’t get me wrong, but most people cannot. The credit, itself, is not inherently evil or bad, the issue comes with the person using it.
In order to do well with a credit card, you must be able to pay off the balance each month. This requires already having the money set aside to pay it off when you make the purchase. Or you must be willing/able to forego paying for something else, as soon as you get paid.
When you are using a credit card, it can be very easy to forget about all the important expenses you have coming up. Simple things like rent or food.
Also, credit is expensive. The average credit card charges between 19%-25% interest if you carry a balance! Did I mention that it’s expensive? This doesn’t even include the annual rate for having it. Or late fees if you don’t pay the bill on time.
As a recovering addict, you can’t afford to pay this outrageous amount of money required for a credit score. It just isn’t worth it.
If all or any of the above things resonate with you. Then, you definitely need to tackle your finances with a different approach. I will tell you exactly what to do.
Fix Your Finances In Recovery By Doing This:
Instead of falling into the trap of trying to fix or build credit. You need to just focus on saving the money that you do have. So that you can pay cash for the things that you want.
Saving your money and paying cash guards against the possibility of somebody taking your stuff away from you. Plus, it will allow you to save the money that you aren’t handing out in payments each month. So that you can own other things quicker, too.
Eventually, you will also be able to invest the money that you save. That means you earn interest rather than pay it. This helps you grow your money faster, without so much effort on your part.
If you would like more tips on money matters and your finances in recovery then check out Nonarae’s blog, FromPoorToProsperity.com.
Nonarae writes about money mindset and personal finance, for recovering addicts, over at her blog – FromPoorToProsperity.com. She strives to help addicts on their journey to sobriety and recovery, with rebuilding their lives from a financial perspective.
In her free time, Nonarae is a wife and fur-mama to two very rambunctious cats, and auntie to six nephews and five nieces who are all under the age of 5 (youngest nephew is shown in the picture below). She is a lover of life, traveling, nature, and God.