Is never borrowing money for anything a realistic way to live ?

My mother told me that unless I have the money for something sitting in the bank account to pay for something, I can’t afford it. I’ve lived by that since graduating high school, I paid cash for my car, I have no credit cards, the National guard is paying for my schooling, so no student loans. So I’m using the money I’m saving to put aside to one day pay cash for a house, I live in Maine so there are plenty of cheap houses under 100k that are decent that In 2 or three years I should be able to pay for. My boyfriend thinks living is crazy, because I make more then enough to finance a new car, and I’m not building any credit. I don’t see why I need it, is living without borrowing money a realistic idea, or should I take out a credit card or a car loan so I start building credit 

17 Answers

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  • PANKO
    Lv 6
    2 months ago

    Let me put it this way, Sarah, Can you handle my accounts? I've been in & out of debt 6 times since being an adult. I've never went bankrupt, but close. My wfe just paid off the last of our debts (again). Going into debt to live better is a fools game.

    He should let you handle all of the finances.

  • Amy
    Lv 7
    2 months ago

    You should open a credit card to establish a credit history. That gets checked by e.g. potential employers to see whether you are reliable. Having a card does not mean you need to carry any debt or pay any interest. 

    Do not get a car loan and pay interest solely to raise your credit score. And anyway, buying a used car is a better deal than buying a brand-new car.

    However, getting a mortgage on a house is very reasonable. You'll pay interest, but the alternative is to pay rent while you wait.

  • 2 months ago

    You need credit because insurance prices in most states are based on your credit and because you can't rent some things without credit and because some businesses only accept credit cards and won't let you pay with cash or any other method.

  • 2 months ago

    It's very realistic.. Apparently, you're proving it.  However, it is very difficult to acquire assets, like a house that will appreciate in value, or build a business or wealth without borrowing unless maybe you have money to begin with.

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  • ?
    Lv 4
    2 months ago

    I live in Maine. I don't see a lot of houses under $100,000 that I'd want to live in. Even if that were true, maybe it hasn't reached *your* area yet, but...

    All those people fleeing the cities where COVID hit hardest are snapping up property like crazy. If you're going to work from home, it could be anywhere, right? Not a lot of beach weather here, but there is skiing, one could drive to Montreal, Boston is a couple hours away (less if you fly.)

     I would see if you can establish credit, if for no other reason, those houses costing less than $100,000 are going to be purchased, reno-ed, maybe flipped by the time three years go by. Or wealthy people working from home will have added on their home offices and *those* houses won't be for sale. 

    I suspect a few will wash out from the Maine winters, but I wouldn't count on buying a *decent* $100,000 house - three years from now.

    I have a couple credit cards I use all the time. One provides a discount on gas. I pay them in full each month. Doesn't cost me a penny.

  • Anonymous
    2 months ago

    While it simplifies things to always pay cash, establishing credit wouldn't be a bad idea

    particularly if knowing you'll be able to pay on time (not having to worry about interest).

  • 2 months ago

    It's not a BAD way to live, but there are times when you MAY need credit. Ever try to pay for a hotel bill with cash or rent a car?  Both would be either difficult or impossible. Need a car NOW--can't wait to 'save up' for it? You will need to finance it. You should be trying to build credit--even if it's slow or small--because you don't know if you will ever need it, and it's easy enough to do if you do it correctly.

    You can get a single credit card--charge one or two things, pay off the balance when you get the bill, and you'll STILL be living on a cash-mostly basis, but not overextending yourself. That's the real key to sound finances: not overextending. Not spending MORE than you can afford, not paying high interest rates and not doing it unless you NEED to. And credit is almost a necessity in this day and age. It didn't used to be--no--your mother was correct THEN--but times have changed. Money has changed. 

    Your boyfriend isn't right that this is 'crazy' because it's not crazy. But he's right about you needing to build a credit score. You are already prudent and responsible, and there's no reason you can't be the same way if you have a credit card. 

  • 2 months ago

    Credit used wisely is smart.  A credit card, for example, which you use for everyday purchases and pay off every month costs you nothing but can give you free rewards.  Having a vehicle that breaks down causing added expenses is dumb is you can get a better vehicle with a very small interest rate.  (Many places have 0% interest from time to time.)  Throwing money at rent instead of getting a mortgage and building equity is often very unwise as well.  You just need to make sure you don't over extend yourself with high interest rates and payments.  

  • Anonymous
    2 months ago

    In the modern world, you need to build credit.  You don't have to go crazy - my husband and I pay off our credit card every month.  Stay responsible.  It can come in handy if, for example,  you do pay cash for a house and suddenly find yourself facing an emergency like a sewer line replacement or furnace replacement that's expensive that you can't pay for in cash.  

  • Rick B
    Lv 7
    2 months ago

    I think that living without debt is amazingly smart.  You are not building credit?  So what???  If you pay cash for everything and have savings, you don't need credit.

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