You now know you’ve got to stop depending on your credit cards.
I was the worst at this. I loved having them. They made me feel secure.
I felt that if I needed anything or if anything unexpected came up, they were there.
Today this seems crazy to me. Credit cards are not security.
Some people treat them like a lifeline.
If they are your lifeline, it’s time to cut them off.
By continuing to depend on them, you are continuing to accrue high interest charges and buy more stuff than you need.
Real security is having cash in the bank. It’s having enough retirement savings to never have to worry about money again.
Cash is the security, not credit cards.
Having 6-12 months of expenses in cash gives you peace of mind. This cash acts as security, insurance, and freedom.
If anything goes wrong in life, which can easily happen, you’ve transformed an emergency into an inconvenience.
Car accidents happen unexpectedly. Let’s say you were hit by an uninsured driver and your insurance is picking up less of the bill than you expected. You now need a new car to replace the totaled one.
If you don’t have an emergency fund, how are you going to pay for this? You’ll likely need to charge a credit card or take out a loan for the new car.
What if you had the cash just sitting in the bank? How much easier is it to fix this issue?
I always have the urge to deplete my checking and invest everything I have into my stocks and index funds. I don’t want my cash to just sit there and earn nothing. But, that’s the wrong way to look at it.
When you have cash, you have direct access to it if the unexpected happens. It’s a safety net.
You can sleep easier at night. Sleeping is much better when you don’t have the constant money worry.
Believe me, I didn’t sleep well for years when I was trying to dig myself out of debt, but now I sleep very well.
Another benefit of keeping some extra cash around is you can take advantage when the market tumbles.
Anyone who had cash in 2008 or 2020 knows exactly what I mean. In 2008, if you had cash, you could buy real estate so cheaply and reap crazy rewards just a few years later. In 2020, the stock market tumbled dramatically and quickly.
If you had cash to invest, you could have seen amazing gains in less than a year. I was actually in a position where I had some cash and did reap some of this volatile market’s rewards in 2020.
When you have cash, you can take advantage of the down cycles in the economy and get great deals on appreciating assets.
