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Getting off and Living off the 'Credit Grid'

Living in rural Canada, Robin & Liz Olsen became experts in DIY money-saving solutions. They like to share their ideas with others.

The dreaded credit score....

The dreaded credit score....

The Credit Grid

When I was a child, credit was difficult to get for most people. Banks always needed some form of collateral and unsecured credit, like credit cards, was not easy to get. As a result, everything seemed more reasonably priced, and few lived outside their means. People tended to save up rather than get a loan back then. Nothing was too out of reach for most middle-class people with no credit required.

Today, the credit options outnumber the savings options, and getting access to such large amounts of ‘pay later’ money has become too easy for most of us. This has led to a great many people living outside their means and paying more for things than they need to, as well as a lack of savings in households that could help tide them over in bad times or be used to pad the retirement funds most employers offer. How can you save when you are constantly making monthly payments to creditors?

How to Go off the Grid

Today, the entire world is based on credit, and living off that system is both difficult and a little intimidating. We have been doing it for almost ten years now, completely credit-free, with the only payments being the ever-present electric and utility bills and the dreaded property tax the government likes to collect.

Round and round we go, where it stops no one knows.

Round and round we go, where it stops no one knows.

The First Changes

The first thing to change may be your habits, actually. Credit cards and lines of credit make getting things easy but not cheaper. This ease of access gets us into the habit of getting what we want with very little ‘wait time’—we need to learn to be patient with our wants.

Focus on our needs, but anything that costs $10,000 or less should never be purchased on credit. I call this the minimum credit rule. One should always save up for such purchases, it takes longer, and you have to be patient, but you won't get better value for your money than paying cash, and you will place more value on your purchase. As you're saving money, that savings is also generating interest for you. Good things come to those that wait.

Did you ever have an 'Emergency Credit Card'? I had a credit card for this purpose, but it seemed like everything was an emergency when I had that card.

The solution, for me, was to open a savings account with a separate (but affiliated) bank and deposit $1000.00 into that account. The separate bank ensured that my debit card could not access the money directly, and I needed to transfer the money in order to use it. Once this was done, I was amazed at how much less ‘emergencies’ I was having.

Using credit for necessities is a dangerous habit to get into, in my opinion, not unlike pawning your T.V for rent money or gambling what little you have for food in the hopes of coming away with more. Usually, this signifies the beginning of the end of your financial stability. You could lose your job or have another inability to make payments, and you'll be really struggling.

So, for most of us, a personal credit card is not required for anything and mostly gets us into debt while providing a false sense of wealth.


Dealing With the Current State of Debt

All of this requires us to change our habits, but how to change them?

That is a difficult question as many are already in debt and would need to make the sacrifice to get out. I say ‘sacrifice’ because that is what it is going to feel like you are doing as you give up the entertainment budget for debt relief.

Debts like mortgages take a little more planning to pay down quicker than the mortgage term. On a 25-year mortgage, I think it is reasonable to be out from under it in 15 years. Banks hate this, no money in it for them.

It is not an easy transition and, at first, can be very difficult, especially if a high debt load already exists. One needs to learn to ‘live poor’ for a bit and forgo the creature comforts outside of the home and become comfortable at home again.

All I can say is that it is all worth it, in the end, to be out from under debt and living reasonably credit-free. At the beginning of the process, it may seem daunting to remove a high debt load, but it can be removed.

Staying off the Grid

When I was a kid, my Mom would sometimes make the clothes we wore. A skill set that had to be learned for sure, but anything you can create for yourself is going to save you money and reduce your reliance on things like credit.

Eating at home is always cheaper than other options. There are lots of good places serving good food and just as many bad ones, and they will always either cost more or what you are getting is not worth eating, one of the two.

Once off the grid, staying off is usually just another way of saying live within your means. Once you are on a cash-only system for the basics of life, this actually becomes much easier. You can't spend what you don't have in a cash-only system. This is not to say you should not use a debit card instead of actual cash. Digital cash is still cash.


The Advertising Campaign!

This is the biggest weapon the credit card companies use against us. This is not limited to credit cards advertising their own services, of course, but extends outward to every single advertisement you most likely have ever seen. We are flooded with ads at every turn. On cable T.V., we actually pay a company to pump ads into our house. Ads are on virtually every internet website now—all media sites, the billboards and buses, and radio ads—it is literally a deluge of advertisements all aimed at making you buy something. It is easily ten times worse than it was when I was a child in the 70s. Mostly due to the expansion of available media to advertise on.

The effect is to make us want virtually everything we see right now, even if we do not have the money. In such an environment, a credit card company simply needs to exist and be generally accepted, and they will rake in a fortune. We need to turn it off or resist the temptation to return to a state of debt or go deeper into debt. I would cancel cable T.V and go exclusively with subscribed streaming services online as these shows have no ads built in.

Most of us can handle the big debts in our lives. The real trouble starts when these debts are compounded by unsecured personal debt. This is the 'Credit Grid' trap. It can be avoided.


You Can Do It!

For a young adult in the world today, I would highly advise adopting the 10,000 dollar minimum credit purchase rule and opening a savings account with 1000 dollars in it to cover immediate emergencies.

If you do not have a personal credit card, do not get one. Take it from a guy in his 50s who has experienced the downside of debt problems; plastic is not needed in your life.

For anyone in my age group or somewhere in between, as it were, I would think the same rules apply. Even though getting out from under the preexisting burden of debt can be a struggle, it is worth it.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2020 Robin Olsen