Most people think that living frugally means living without debt. Obviously, one of the main aims of a frugal lifestyle is the ability to live within one’s means and avoid being overburdened by monetary concerns. However, that doesn’t mean that credit cards and loans don’t have their place in a frugal mom’s lifestyle. For example, a mortgage is a pretty big debt, but it is also a good investment for the future – it provides security for the family and something to pass down when you’ve gone. But, what about credit cards?
Credit Cards and Frugality
You’d think that credit cards and living frugally would be incompatible, but that really is not the case. You see, credit cards can be very useful to the frugally minded individual. Many credit cards, for example, it is possible to apply online for any number of credit cards which offer air miles, cash back and, free insurance and any number of other benefits. So, if you apply for one of these cards, and don’t use it, or use it and pay off the balance in full every month, you’re actually benefitting from the card rather than being a slave to the lenders.
Having at least one credit card or bank loan, which you pay off regularly and on time can also help to improve your credit score. It might seem a bit perverse, but if you’ve never had a line of credit before, it can be very difficult to get a mortgage, bank loan or car loan, and this can cause major problems when you want to move forward with your life. Since credit cards are often easier to obtain, they are a great tool for improving your credit score so that you can access those important lines of credit when you need them.
Using Your Credit Card Frugally
Although there are definite benefits to having a credit card, if you want to live the frugal lifestyle, you need to use your credit cards wisely. If you have a card that offers cash back for every dollar spent, for example, it might be worth using it to pay for all of your monthly expenses, including your utility bills, but you will want to make sure you pay off the balance in full at the end of every month to avoid paying interest that is worth more than the cashback benefits.
If you can help it, you should never use your credit card to pay for extravagances and extras that you wouldn’t otherwise purchase and which you don’t need. This is a slippery slope, which could lead very quickly to you paying huge sums of interest, getting into financial difficulty and ultimately a debt problem.
Paying with Cash
If you feel like you might not be able to control your spending when using a credit card, or if your credit card does not give you any benefits from using it, it would almost certainly be better to pay with cash. When you actually have to hand over cash, it feels more real – you physically see the money change hands and this helps to curb impulse spending.
The bottom line: Credit cards and loans have their place, and they can help you live a more frugal lifestyle, but only if you use them sensibly and maintain control. You need to decide if this is something you can do, or if cash would serve you better as you live a frugal life.
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