Just Say No to Credit Cards

Just Say No to Credit Cards

We have cut and closed a total of 24 credit card accounts!  Let’s cut to the chase – if you can’t afford to pay cash for something, you can’t afford it. A lesson we’ve learned the hard way.

Our Credit Card Closures Timeline

Between 2013-2015, we opened and closed 6 credit cards: (2) Ultra Diamond cards, (2) Capital One cards, Target, and American Express.

March 2017:

10th – We said goodbye to 9 credit cards: Citi Expedia, Discover, Capital One, QVC, Kay Jewelers, Lowe’s, Mohawk, Care Credit, and Nordstrom’s – in the shredder they went.

13th – We shredded 5 more credit cards: Dell Financial Services, Anne Taylor, RC Willey, Best Buy, and our Sam’s Club MasterCard.

18th –  We cut-up 2 credit cards: a credit union card and our Chase Disney card.

May 2017:

3rd – Paid off and closed our Citi credit card.

19th – We closed our final, “emergency” credit card with our new credit union, after finishing Financial Peace University.

Note: Credit card must be at a zero-balance to close.

Related: Getting Out of Debt Using a Debt Snowball

Plasectomy

Why all the plastic surgery? We were sick and tired of being in debt. Our bills were piling up, and we were barely able to pay the minimum balances on the many debts we accumulated.

Related: Debt-Free Journey Coming Out Letter

Our credit cards were our emergency fund. When you’re broke, everything is an emergency! No longer did we want to go deeper in debt, so we decided to do The Total Money Makeover and quickly saved $1,000 in our starter emergency fund (Baby Step 1). Credit cards made it too easy to over spend, and we quickly realized that those perks, points, and rewards were not worth the usage.

“No one ever says they got rich off of credit card points” -Dave Ramsey

We’re living the all-cash (and debit-card-only) life now! We’re on a budget and live within our means. Living an all-cash lifestyle enables you to save money and spend more wisely.

How We’ve Paid Off $14,076.11 in 3 Months

Credit Score

Won’t closing your credit cards hurt your credit score? Yes.

You see, your credit score is an “I love debt” score. It’s a score on how much you interact with debt. That’s why it’s called a “credit” score. By no means is our credit score an indication of how well we’re doing financially. In fact, my husband and I each had nearly an 800 credit score, but no money in the bank – no savings and lots of debt!

Currently, we each have a low 700s credit score, after closing all our credit card accounts. That’s because we still have a personal loan, (2) car loans, and our mortgage. However, once we pay-off our loans and mortgage, we will have a zero credit score. Quite frankly, that’s our goal – we do not want to owe anyone anything.

Why have credit cards when we plan to have thousands in the bank? By the end of Baby Step 3, we will have between $12,000-$24,000 in our fully-funded emergency fund in cash! We definitely won’t need a credit card then.

Lots of people out there argue that you need a good credit score to secure better loan rates and better insurance rates for long-term savings purposes. Think about it, it saves much more money to not go in debt (get loans with interest) or play the game of credit cards for a high credit score just to have cheaper insurance. Just have cash to pay for stuff!

It’s a myth that you need a credit score to get a mortgage – if you have no credit score, you can find a company that will do manual underwriting, like Churchill Mortgage. Just have save cash for a healthy down payment and a good work history!

The company I work for does require a credit check upon hiring, however they are checking our credit history (credit report) not your score – there’s a difference. Companies that require a credit check are looking to see if you pay your bills, showing you’re responsible and trustworthy. They’re not looking at your credit score.

How to Close Your Credit Card Accounts

If you’re ready to go all-cash and cut up those cards, I’ll let the man, Dave Ramsey, explain why and how:

How to Close a Credit Card Account

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