Is it Possible to Live With a Cash Only Budget?
by: Elizabeth Williams



As interest rates increase and finance fees seem to cost more than your
minimum payment for credit cards, it's no wonder many people are
considering moving to a cash-only budget system. People who are
frustrated with how the credit card industry has been raising interest
rates and lowering credit limits to reduce their risks lately have been
considering cash-only budgeting – would you benefit from it? Is it even
possible?

For those who rely on their credit cards to make ends meet, you may be
thinking, “you can't possibly be serious!” But there is a small
percentage of people who already live without using credit cards, proving
it IS possible – but is it right for you? Here's how to decide:

Active or Passive Opt-Out

Passively choosing to live without credit means you live the ultimate
cash-only lifestyle. You don't finance anything, in addition to avoiding
credit cards, which means you don't get a loan for a car or a mortgage
for a home, for example. If you already have these loans, it means
working hard to pay them off and avoiding all other credit sources in the
meantime.

Passively opting out of the credit system means that you no longer
participate in the credit system. You'll pay the bills you have, but will
not create new debts by taking on new sources of credit. Your credit
history will become dormant as you pay off existing debts and not use any
other credit - and as a result, your credit score will probably go down
as well.

Living without credit means if you have to buy ANYTHING at all, no matter
the cost, you must buy it with cash – including large purchases like
automobiles and homes. People who choose this lifestyle tend to be very
good at saving money, so that they have it available when they need to
make a purchase. They also tend to have higher incomes than people who
become over-ridden with debt but it is definitely possible to live a
cash-only lifestyle on lower incomes as well (and very beneficial!)

Some purchases are difficult to buy without a credit card – things like
airline tickets, car rental or hotel rooms for example. People who live
cash-only lifestyles simply get a debit card with a Visa or MasterCard
logo connected to their checking accounts and use this in place of credit
cards whenever necessary.

Actively removing yourself from the credit system is just about
impossible. If you are already using some form of credit or financing,
you will not be able to get rid of the details on your credit history and
would simply have to wait until your payments have all been made to
existing credit before you could have no credit history (and it would
take several years for the information on your credit report to “go
away”).

While it's admirable to want to live a cash-only lifestyle, it may be
better to use a small amount of credit and pay your bills on time. This
will enable you to have a good credit score without carrying a lot of
debt, and should you ever need financing for emergencies or other
purchases – you should have no difficulty getting it.

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About The Author
Elizabeth Williams, Editor-in-Chief for http://www.CreditCardFlyers.com

http://www.CreditCardFlyers.com makes it easy to compare and apply for a variety of credit card offers
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