Life without Credit

I recently read that life without credit is much more expensive than life with credit - I beg to differ.   The article sited several reasons why having "good credit" is ultimately so important. 

I'd like to start with what the creditors don't want you to know.

About 11% of people pay cash for cars - all kind of cars - it speads pretty evenly from clunkers to sweet rides.  Drason and I paid cash for BOTH of our cars - we will never do it any other way.  We have financed cars in the past - I regretted most of those deals - I never regretted paying cash.

About 40% of people buying second homes pay cash - I have often heard the argument that investing can earn more with that money than the mortgage payment - but if people who have the money to buy a second home are largely paying cash - I think that is a pretty clear testament to the truth.

According to the Fair Issac Corp about 1 in 5 adult Americans do not have or do not use credit.  
As one of the 1 in 5 - I can safely say we get along just fine.

Now the Bible is pretty clear on credit - to read more click here http://www.gotquestions.org/money-debt.html

What most Christians say is - the Bible does discourage debt, but does not explicitly forbid it.
To look at that question I think you have to look at what your debt involves- for example

I go to the dealership to look at a car 
I can not afford to pay cash for the car, so I have three choices -
A - get a loan and make monthly payments
B - Save up my money until I can get the car
C - buy a cheaper car that I can afford right now

Lets look at option A - this would require going to a bank, credit union or dealer and signing a contract to pay them X amount of dollars for X amount of time.
ALL CREDIT WORKS LIKE THIS - YOU HAVE TO SIGN ON THE LINE

So what does the Bible say about signing these contracts?  Well the Bible does not say "contract"   in fact signing contracts is something fairly recent (last 500 years or so)  but it does talk about covenants.  The Hebrew term for covenant is berit, meaning “to bond or fetter.” It is translated into the Greek as syntheke, “binding together”  (ever heard of legally binding) or diatheke, “will, testament.” In the Bible, then, a covenant is based upon mutual commitments. It typically involves promises, obligations, and rituals.

The Bible talks pretty plainly about making hasty oaths/vows/covenants.


http://bible.logos.com/passage/niv/Judges%2011.29-40 the story of Jephthah

Perhaps this is why Jesus gave a new commandment concerning vows.
"Again, you have heard that it was said to the people long ago, 'Do not break your oath, but keep the oaths you have made to the Lord.' But I tell you, Do not swear at all: either by heaven, for it is God's throne; or by the earth, for it is his footstool; or by Jerusalem, for it is the city of the Great King. And do not swear by your head, for you cannot make even one hair white or black. Simply let your 'Yes' be 'Yes,' and your 'No ,' 'No'; anything beyond this comes from the evil one" (Matthew 5:33-37)."

and in James

James 5:12 But above all, my brethren, do not swear, either by heaven or by earth or with any other oath. But let your "Yes," be "Yes," and your "No," "No," lest you fall into judgment.

James 4:14 says we do not even know what will happen tomorrow

Jesus is being pretty clear - so I guess I am interpretting this to say that if you have to sign on the dotted line - it is probably a big no no.

Now that encompasses many more things than just credit. 
For example - my cell phone - for which I signed a 1 year contract
my driver's liscence - I have to sign that I would obey all traffic laws and carry insurace
my insurance - contracted to pay every 6 months
my direct tv - 2 year agreement

Food for thought - I am totally off subject - Is it cheaper to live with or without credit?

A $10,000.00 car loan at 6%  interest for 5 years costs the original 10k plus about $1600.00 plus origination fees, and any late fees, over the life of the loan
A $200,000.00 home loan at 6% interest for 30 years costs the original 200k plus $231,640.00 plus fees over the life of the loan
Most families carry between 2000.00 and 8000.00 in credit card debt - for most families this would take about 2 years to pay off - making minimum payments, and would cost about 30% more than the current balance.
Lets say you buy in store deals - 1 year same as cash.  If you pay it off in the 1 year - good for you, but 80% of people do not pay anything in this time.  After the time is up they are assessed intrest rates from 15-30%.

I guess the point is that if I really need something I need to save up to get it - not go into debt.

How long did it take to save for a car?  About a year

Goodnight,
Amanda