4. I need good credit
Your credit score is just a number that gives lenders a very quick idea of how trustworthy you will be to repay any loans that they give you. When you have a lot of debt already, more than likely, you are going to have a lower-end credit score and may even have bad credit.
Don’t worry, though—you absolutely don’t need good credit to accomplish anything in this life. Of course, having good credit can ease the process of getting a loan and may get you a better rate when shopping for lenders, but you don’t need good credit to get out of debt.
Once you can clear yourself from your debt, you will notice a big difference in your credit score.
Building credit is only necessary if you plan on borrowing money again. If you have no need to borrow, you will have no need for credit. Even still, a reputable lender will work with you if you prove you are debt free, sharing your full financial picture. I have friends and read about many people that are debt free, and their credit scores are great. Credit is not as important as you’ve been taught or the lenders would like you to think. Once you make this mindset shift, you will be on your way to financial freedom!
5. I need a new car
Oh, boy. Here comes that word “need” again. I am going to allow for the word to be used a little loosely on this topic, though.
If you are traveling to work, you will need a car, unless you live in an area that has a good transportation system set up, and you can save money by taking a bus or train to work. Another great form is a good ol’ bicyle, very inexpensive (no gas or oil changes), and excersice is included. Here’s the one I used for 2 years while I was out in hawaii.
That being said, you don’t need a new car. The best kind of car is one that is reliable and is paid off. At the very least, you want to owe as little as possible for the car you drive.
Sure, it may be a little more enjoyable having a brand new car. You may get some nice comments from your friends when you first buy it, and you may not have to worry about maintenance for a year or two. But remember that the average car loses about 10 percent of its value as soon as you drive it off the lot, according to Carfax. It loses another 10 percent the first year you own it.
Could you imagine taking a loan out so you could purchase a stock (don’t do this!), and then watch that stock drop by 20 percent the first year you owned it?
Get yourself a reliable car that you are comfortable driving and that you can either pay off in cash or take a very small loan out to purchase.
Ask around at work. Ask your friends, and family. You will find out that some people have small car payments, other have huge car payments, and some have no payments at all. The ones who don’t have a payment are smart. They either paid off their car in one lump sum, or made monthly payments until it was paid in full, and then kept the car. We all get tempted by the latest models, and as few of us can afford to drop $25,000 to $30,000 on a shiny new car, we opt for a monthly bill. But that monthly bill comes at a cost greater than money. It’s taking away from money we could be putting into savings or investments, or spending on experiences like vacations or education.
6. I am not going to have any fun
You may not be able to do the sort of fun things that you have grown accustomed to doing while you have been racking up credit card debt, but there are a lot of cheap or free ways to enjoy yourself.
You don’t have to go out to the nightclub and spend a bunch of money on dinner and drinks to have a good time. You might only have to change your perspective on things then you can find fun, and you will probably be better off because of it.
Find a hiking spot near you and go out, get some fresh air and a little exercise. Purchase a puzzle, and spend hours upon hours putting that thing together. Look into events in your area that are free or cheap to attend. These are just a few easy ideas to help you find ways to spend your time, not just your money.
You need to spend YOUR money. Not money you do not have (which is what a credit card is). If you don’t have the money in the bank to buy something, then you can’t just use a credit card.
It might make you happy in the moment when you buy it. However, how will you feel when you are still paying for the expensive dinner out 6 months from now. Probably not worth it as much when you look at it that way.