Do You Really NEED Credit?
Last night my father-in-law stopped by again for a quick visit and a sleepover while he is travelling from frozen Indiana to his home in sunny Florida. Y’all might recall last time he visited, I got treated to the new car and leased car arguement…well last night he made the statement that we supposedly NEED credit to function in today’s American society.
Let me back up to what started this: I asked hubby if his dad had ever seen or read my blog, with the intent of showing off our debt reduction pie chart in the sidebar and maybe sending the subtle message for him to ease up on his strange money advice. He saw the name “Debt Free Revolution” and made a remark about how he had seen some guy on TV and what that guy said was “not earth-shattering.” I innocently asked if that guy might have been Dave Ramsey, because Ramsey now has a television show. When FIL confirmed it, I offered to give him a Dave Ramsey book.
What followed next was not pretty: apparently my father-in-law is a rather harsh critic of Dave Ramsey…AND the concept of a debt free lifestyle! He firmly believes that cutting up the credit cards, paying them off, and closing those accounts is financial folly. He used the example of trying to buy a brand new car…which he thinks must be done through financing. I simply said I have no intention of buying brand new nor financing.
OK, FIL said, if I can pay cash for a car then all the power to me. But he said I will still need credit for a mortgage, and I tried to tell him I got my mortgage in 2001 with BAD past credit and only one income factored into the equation; zero-down VA loan no less. I don’t intend to get another mortgage until this one is paid off in full, so his arguement about carrying a house note while trying to get financed for another is moot. We also intend to have a good sized down payment for the next house (still half a dozen years into the future) so I really don’t anticipate mortgage problems when we do decide to move.
I think the statement FIL made that troubles me the most was that you MUST have a credit card (or cards) AND you “must” carry a balance. Carry a balance?? At those interest rates? He advocated rate shopping, which is something my mother also does, but that doesn’t make sense to me. (Remember I am a little bit of a numbers nerd.) Why would I want to have money in savings, even if it’s a good money market, then pay almost twice that interest rate to carry a credit card balance?
Honestly, I think the most powerful argument in favor of a debt-free lifestyle is what I just got done dealing with: the repairs on the Pizza Taxi. One year ago, just before I found Dave Ramsey, $509 in car repairs would have been a major money crisis for us. We might have put it on a credit card if there was room, or we might have gotten an AER loan (Army Emergency Relief I think) despite how they treated me years ago when my old Bronco blew the engine. There is simply no way just one short year ago we could have cash flowed these repairs!
Hubby and I briefly discussed it over coffee this morning, and we both agree: We are in MUCH better financial shape now than we were a year ago. We don’t know his parents’ full financial picture, and we aren’t nosy enough to ask either. It’s quite possible his parents are doing many times better than we are. But we are quite pleased with the way are financial future is headed…and that future does not really include credit!
Oh, as a final note, father-in-law said he discussed it with mother-in-law…and I am no longer allowed to ask for appliances or furniture as presents. I am supposed to ask for something more personal, nto practical. There goes the dryer idea…
