Do you road trip with debt? If so, does debt interfere with your ability to enjoy your nomadic freedom?
Roadtripping with debt didn’t seem like a problem to us in 2007. After all, this lifestyle was only supposed to last a year. After that, we were supposed to settle down and get back into the “normal” routine of a mortgage and living beyond our means with the miracle of plastic.
We didn’t know that being normal was dumb.
But when we discovered that we we loved the nomadic lifestyle too much to stop, we knew we had to scale back our spending to keep going.
We still had no idea where our income would be coming from, but our original road trip budget could last another year if we got out of debt. Meeting real life examples of debt free road trippers also helped.
Old Habits are Hard to Break
In 2008, we painstakingly cracked open our nest egg and paid off our last debt, the rig. But old habits are hard to break, and we kept using credit cards.
There’s something about the security of using a plastic when you don’t know how much money you’ll make each month.
Physically we were debt-free, but mentally we were still enslaved by the credit card security blanket. We paid off the balance each month but I would sweat as I scrambled to find the funds.
But I Pay My Balance Every Month!
St
udies show that when you use plastic to shop, you’re automatically spending more than you would if you paid in cash. But somehow I thought I was different, and poo-pooed those studies thinking “Oh not me! I’m always careful.”
But after some agonizing credit card billing hassles with Bank of World Domination earlier this year, we burned the security blanket and committed to paying cash for everything.
Because we have the most sporadic, unpredictable income, suddenly every purchase we made was under scrutiny. Knowing that we could suffer the embarrassing fate of being declined at the checkout counter gives us a self-discipline like we never had before. It was scary as hell the first two months, but now it feels “normal” to us.
The Results
Since we stopped using credit cards, I can’t say that our expenses have gone down a whole lot (after all, we were pretty frugal to begin with), but the peace of mind I find in knowing that everything in our possession, everything we eat or consume, is paid for on the spot.
Next week we’ll hit the road, completely, truly debt-free for the first time ever. I can’t wait!
Disclaimer: I’ll confess that we still use one piece of plastic to handle some aspects of our business. The efficiency and protection our card company offers when dealing with vendors, product returns and exchanges and other things that make our businesses run can’t compare with the lame customer service we get from our bank. I know Dave Ramsey would disagree, but since we don’t use the business card for normal everyday spending, I’m OK with it.
We still pay our balance every month, but until our business ventures stabilize our income to a level where I feel comfortable dealing with vendors in cash, we’ll continue wearing the credit card security blanket for the business.
And now with our new business venture, that shouldn’t last too much longer!
Recommended Reading:
As a fan of Dave Ramsey myself, I congratulate you! The crowd goes wild!!! 🙂
The one reason we still use credit cards for almost all expenses is because over the years we developed the discipline to ALWAYS pay them off, in full, every month, no exceptions — so now we travel all over the world (not often, but one month a year anyway) on airline miles for free. We’re flying to Asia next week, business class no less, on free miles. Tickets would have been $3,000 each (economy) if we had to pay. Vietnam and Cambodia are cheap once you get there. So we get a month of travel in Asia for less than it costs us to travel in the RV in the U.S. for a month (gas, maintenance and campsites). We open and close credit card accounts somewhat more frequently because of all the offers for “50,000 frequent flyer miles credited if you open a card with us, and the annual fee waived for the first year”, and INVARIABLY when we call to cancel the card the next year just before the $75 annual fee kicks in, they agree to waive the fee for another year if you keep the account open. If the banks ever stop making these offers, we’ll go to all cash, but meanwhile it’s a heck of a deal for people who have steady enough income to be sure they can always pay the bills AND the discipline to keep expenses in line. I know this doesn’t work for everyone.
Meanwhile, congratulations on the progress toward complete financial independence! Being debt free is the greatest thing ever!
C&B, I hear ya on the membership rewards thing. I always take exception to Dave Ramsey’s rants about how “millionaires don’t turn into millionaires with membership club points” but they sure do come in handy, which is one reason why we still use a rewards club for our business purchases.
I know we have the discipline to pay bills of each month but it’s the steady income part is our goal! Hope you have a great trip to Asia!
We’re very much into the whole idea of living debt-free (in fact it’s been a goal of mine since I was a teen!). We still have credit cards (I admit), but pay 90% of everything we do with a debit card…and of course we track every penny. Haven’t tried the completely going cash idea, but I like it.
Nina
Nina, I know you guys can do this! We’re rooting for you all the way. Debt free is the way to go!
Hello everybody, I’m Johnny Cash…
(sung to “Ring of Fire”)
Credit, is a wonderous thing
and it makes, Citi Bank sing
Bound by terms in 3 point type,
I fell into a credit ring of hype.
(Chorus)
I fell into to a credit ring of hype
I should have read that 3 point type,
and it earns, earns, earns,
my wife’s ire, my wife’s ire
The shame of spending is deep
when incomes start to seep
I fell for many cards, but oh
the spending went wild…
(repeat chorus)
And there you have it faceless and nameless internet personages, Mr. Cash’s tribute to credit cards.
Historically speaking, credit cards where never supposed to be long-term loans and by long-term I mean beyond 30 days. Emergency spending is a different matter, your car, your health and so on, but again, these are for emergency uses only.
Our nation is topsy turvey when it comes to matters of money as jobs are few and banks employ actuaries who are smarter than all of us and paid to be so, and then there’s health care costs which are deeply political and divisive. You see everything in the U.S. is for sale and the sellers of these wares will do anything to achieve their margins especially health care providers who have share holders to answer to and that’s one of the problems right there, is health care a basic right or a commodity to be traded and sold like pork bellies? For my money pork bellies look good as everyone likes savory bacon (save for Rene who likes gas inducing soy based products). I’m not saying the health care system is right or wrong, but if you take ill I think you’ll come to your own conclusion pretty fast.
In terms of jobs, there aren’t all that many right now unless you can make one up and the easiest way to do that is to provide a service or product that will benefit your immediate community. Everyone needs a plumber and outsourcing to India or China is not an option. Medical services is very hot too. Is there hope? Always.
One sure way to make $s is to learn how to work with your hands again. Where my wife and I live the guys making decent money are the ones who work on boat engines and electronics, they charge $100 an hour and folks who love their yachts will pay it or else. Or else what you might be thinking? Or else the problems will get worse, anything that sits in salt water is in a state of decay, you get Oxygen, chloride, and hydrogen together and you’ve got a corrosive and rustic party on your hands and thems is money parties to a mechanic.
Our grandparents could fix just about anything within reach in their day, those who can fix things will be in demand just pick your specialty…
Where’s my guitar, ah, here she is, let’s try some more Johnny, here’s a favorite:
“Folsom Pinot Noir Blues”
I see that cork a comin,
it’s turning in the neck,
this wine ain’t seen sunshine
but my glass is next…
Enrico strikes with a grape stained tongue…
Enrico, you’ll have to play that for us.
Using credit cards for “emergency” expenses is a bad idea. Instead, save actual cash and put that in real emergency fund, so that way when catastrophes happen, you aren’t in two binds; the emergency itself, and debt.
As for fixing things with your hands…I agree. We pay our mechanic handsomely.
I will sing it for you and sing loud and proud.
By emergencies I meant as needed cause most folks
don’t have sacks of cash ready to cover a broken leg
or arm or MRI, credit cards do a great job in instances
like this.
Also, I want to put this out there, we use AmEx, it’s the best
card for our business needs cause every month we pay it
off but can also download a spread sheet that outlines
our spending habits. AmEx is also excellent for various
services as well as we travel all over the globe and there
are emergency numbers you can call for legal, travel, hotel,
and all kinds of support tasks, think concierge services. You don’t have to be wealthy to use AmEx but it’s a great card though not accepted by every vendor out there.
And, and, you get points aplenty, we fly almost exclusively on our AmEx points.
But I agree with everyone on this post, cash is king and CCs are to be used with discretion.
Enrico
Neat-o!
Your post makes me realize that I don’t talk about money much on our blog, and maybe it’s time to get honest about it. Non-RVers can get the impression that fulltimers must have a trust fund or a plush retirement.
We do use one credit card for almost everything, then pay it off, but I hadn’t considered how that might impact our spending. Although, “frugal” squeals a little when we use the word.
Thanks! Yeah, we do get a lot of those “oh you must have won the lotto” comments. Far from it. We just live differently.
I never thought that paying cash would make a difference but it really does. Commit to trying it for a month and you’ll see. Just make sure you have enough funds in your bank account first. I went into overdraft mode at least twice before I got the hang of it!