In the wake of a global recession, people realize just how bad an idea it is to rely on credit… but as time goes by, it’s easy to forget just what happened and start to use it again. It seems like nearly everyone has a credit card, but there are very good reasons for avoiding credit cards.

Your options for paying for most things include cash, debit, or credit. Some places accept checks, but this method is becoming outdated quickly, so relying on checks isn’t wise. Debit works much like cash, obviously – you must have the money in your account in order to use it. On the other hand, credit cards will allow you to put hundreds or thousands of dollars of merchandise on it without the ability to pay for it yet. Then, the company charges you interest on whatever you can’t pay off, meaning that a purchase usually ends up costing much more than it otherwise would have.

For instance, if you pay for a $2,000 TV with credit and resolve to pay the minimum balance of $40 each month, and your credit card has an 18% interest rate, the TV would take thirty years to pay off and end up costing you $7,000. The same money in an investment, such as an 8% return on a mutual fund or stocks of some kind, could have accumulated to over $60,000 in the same timeframe.

Furthermore, cash and debit encourage you to live in a healthy mindset of spending only what you have. Spending money you don’t have will limit or eliminate your freedom to change jobs, move, adventure, travel, and pay for the most important things in life when emergencies crop up. It ends up feeling like a mountain on your shoulders and takes a long time to get out of once you’re in serious debt.

You will have freedom – from debt, from being tied to a job in order to pay off the debt, and from the rat race of trying to get the best thing faster than anyone else, by using cash to pay for items instead of a credit card. In fact, it’s a good idea to simply not own a credit card, or keep just one “in case of emergency” buried deep in your wallet or with your other emergency plans and documents.

Sometimes, it isn’t possible to pay cash for something. In cases like this, you have to decide if the item is really necessary for your survival or happiness at this moment. If not, perhaps you should delay and try to save up money so you can pay cash, save money and feel good about it. You’ll feel better about every purchase when you know you can afford it. Plus, you may be surprised at how few places really require you to use a credit card.
Whether you’re beginning to learn about credit cards and payment options or already in debt, reconsider using a credit card for all but the true essentials – places where you simply can’t pay any other way and must provide a credit card. You’ll save money, feel better, and avoid debt.