Good Article: "Do you really need credit?"

It all boils down to living beyond your means, for whatever reason.

(I know from personal experience so it's not like I'm taking any sort of holier-than-thou position).

What should you do in case of emergency? Have some money saved up. Unfortunately saving is so 20th century. Consequently you NEED a card.

Banks have turned into pushers (with the blessing of the government). But to expand this further. Many Americans feel they NEED credit to survive. Likewise, many banks and companies feel they need to extend risky credit to continue to grow. How long can this ballon keep growing? My guess is that we're already starting to see this falter when you look at what's happening in the sub-prime mortage market. Banks are failing due to foreclosures, the housing industry, nationwide, is seeing the worst "slump" in years, etc.

Multiply that across the rest of the nation and bad times are ahead for all...

My question is, what can one do, as an individual, to prepare for the coming "adjustment" (e.g. recession)? Sock money away in the bank, investments, off-shore holdings?

 

This is exactly correct. People believe credit cards are life savers, because they just can't find the extra cash to have a savings account. But somehow they are able to find a way to pay outrageous finance charges on their credit cards. Heres an idea: Get rid of your debt. Make payments towards your savings account as if it were your credit card payment and make THAT your FREE "life saver".

 

This is an interesting topic. I have had past financial difficulties which I never plan on going through again.

In 2004 I went totally cash only, I only started looking at the positive aspects of credit, such as in obtaining a mortgage in 2006 when I learned about credit repair.

So I slowly, and reluctantly, ventured back into using credit to increase my scores. Everytime I use it though, I use it for something I have already saved for and I pay it off at the end of the month.

I think budgeting is the most important thing a person can have, honestly I am a avid beleiver in planning your money and not straying from it. Although everyone is different budgeting works very well for me.

I will prob be laughed at but I am a total "fund" type person. Each paycheck is planned in 3 categories:
Must pay: such as mortgage, food, gas etc, utilities, basically all monthly expenses. Cash for day to day expenses is here also.
Need to pay: Medical bills, IRA contributions, things that you should pay every month but in a very tight pinch could omit if necessary.
Savings: "Fund" savings: Regular savings, emergency fund, Car fund, Vacation, Kid's clothes, Adult clothes, Uniforms, Christmas, Car repairs, Household items, furniture, etc etc etc. I plan a set amount to add to each one each month. Those funds are further planned and broken down ( like my kid's clothes fund is divided into amounts for each of the kiddos and thats the amount I have to work with when school shopping). If I don't have the funds saved to buy those nice towels on sale then they don't get bought.

My plan is although I am really just getting started in earnest now that my mortgage is done, is to let the emergency and regular savings funds build up. It takes discipline to make yourself save that money but it is so worth it at Christmas to already have funds to shop with, birthday money is already there, school clothes money is there. It eliminates alot of my stress.

I try to view my credit cards as a convience, a way to keep my credit scores hopefully inching up and a way to securely order things online that I have saved for. But I don't forget how dangerous they can be if allowed out of control. The day they become a need is the day I will cut them up and attack my budget with a vengenance.

And I don't make alot of money, I am the sole provider for the family, hubby is disabled but can't get disabilty, he can do small remodeling jobs and his money is usually used for his tools, and mad money as he and I don't share the same budget values. (He's the fun parant, I am the strict one) But he takes care of our place and the kids and enables me to work nights (money is better) without worrying about the kids being taken care of. It works for us.

Ok I am embarressed now, y'all can see how obsessive-compulsive I am /blush But I am proof you can save money if you plan things right. It's not so much how much money you make but how you use it. And a drive and determination to make it work.

I am constantly looking at ways to further better my savings, eventually when I get enough emergency and regular savings saved I will want to maybye move that money into something where it can earn interest. That stuff I am still learning about.

Ok I'll go away now, lol

Tegleg