What if you couldn’t use a credit card. What if you couldn’t get a loan? Imagine a world where “credit” as we know it no longer exists. Or never existed in the first place. Would that world be better or worse than what we live in now?
In many ways, credit that is used wisely can be a benefit to our lives. It allows us to get a house without having hundreds of thousands of dollars in cash available. It allows us a car without having to have tens of thousands available. I know, if you purchase smartly and within your means, you don’t need hundreds of thousands of dollars for a house and you don’t need tens of thousands for a car. But, for those that feel that they can afford to pay those payments, credit makes it all possible.
What would a world where there was no credit look like? Instead of spending our last dollar to pay off the loans we get with our credit, we’d spend more of our time working for fulfillment. If we didn’t have the ready cash available to pay for something, we’d have to save for it. Or trade for it. And we’d do more for ourselves. We’d mow our own lawns. We’d do our own handyman work. Do-it-y0urself tasks wouldn’t be something of a novelty, but more of a normal thing.
For some, it may seem trivial. What difference does it matter whether I use credit or not. I’m responsible and pay my bills, they’ll say. And then, they’ll get up on Monday morning and go to the job that they’ll freely admit they don’t like much, but they keep it because it pays well. But, if there was no credit, they wouldn’t need a job that pays well. They probably wouldn’t need any resume tips. They’d have the ability to find a job that they enjoy. A job that is fulfilling and rewarding.
And that makes a difference. The stress and turmoil that a job you don’t like can bring into your life is not only unpleasant for you and those around you, it can actually be fatal. Without credit, keeping up with the Joneses becomes a thing of the past. You only need to keep up with what skill sets they have that you don’t and find an amicable trade.
Will this world ever exist? Wholly? No. There are way too many hands in the pot of credit for it to ever go away. Too many millionaires made by taking advantage of other people through credit. But, that doesn’t mean that you and I can’t strive to lead our lives in the direction of no credit. We can take control of our finances through good financial management principles and lead a life as free from credit as possible. And, it is possible. Don’t be afraid to dream of that. And don’t be afraid to guide your finances with intention.
Breaking free from the harness that we’ve given ourselves can lead us to a better life.
photo credit: TheTruthAbout
I started this blog to share what I know and what I was learning about personal finance. Along the way I’ve met and found many blogging friends. Please feel free to connect with me on the Beating Broke accounts: Twitter and Facebook.
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I grew up in the country where there was no credit available. In fact we didn’t have credit cards till early or even middle 1990s. Looking back I can say it was good. People were careful with budgeting, cautious with spending and had no interest to pay. Now, almost everyone has a credit card and a huge debt.
In this world, I see a lot less debt, but a lot MORE muggings!
@aloysa, and that’s exactly what I was getting at. The easier it is to use, the easier it is to get in trouble with.
@sam, for sure, more cash hanging around, more muggings. An unfortunate side effect. Unless we could figure out a good way to use debit cards without having the credit card effect take over…
BB – our debit/credit card goes everywhere our one credit card used to go, except for online purchases. Having said that, we’re good with using cash too.
We use about half cash half credit and always pay off the CC bill every month. Cash only would be ok with me, but if we don’t have credit does that mean we don’t have mortgage?
I wouldn’t like it much then. I like mortgage loan.
In this world I see a lot lower standard of living since capital wouldn’t be able to shift from money to good ideas, thus halting business growth. I guess that wouldn’t necessarily be a bad thing if you’re a super minimalist, or don’t want to start a business, but I think the concept of credit will always be here, although the leverage ratio might shift a bit.
I really believe that with credit we spend more, and there’s research to back it up. I know it feels different paying with cash versus credit.
Well, in fact, our life is closely connected with money and financial issues. We use a number of various financial options and tools and sometimes it looks so natural that we even don’t pay attention to this. As for me, it’s really difficult to imagine our life without credit matters as I have several credit cards I constantly use, recently I have repayed my mortgage and car loan. I would definitely not be able to buy a house or car without taking loans. Besides, sometimes I apply for some personal loans as they can help to manage finances. Of couse, their will be no debt without credit, but using this financial service wisely, debt problems can be avoided.
BB,
Great idea! I think a world without credit would be wonderful. It would be tough to grow the money supply without credit, but I think we are smart people we can come up with a new economic system. Check out Digital Coin by Paul Grignon. It is one of many ideas that tries to find a new sustainable system that does not enslave a portion of its citizens in order for the system to work.
Keep up the good work,
Eric