Why I dont have Credit Cards.
I operated an internet cafe business from 2003 -2008. I setup computers and loaded a software program that charged users for the amount of time they spent using the computer.
I liked the business because I didnt have to answer to a boss, I set my own schedule, and the amount of money I made was only limited by how hard I worked and how much money I had to invest.
I used cash from another business I was running at the time to buy equipment for the internet cafe business. Business started doing well because the Idea was fairly new at the time and in the New York market competition was not that strong. I had to deal with two competitors but business was plentiful so we rarely crossed paths.
Business was good and in 2004 I had months where the business was bringing in $3,000 - $4000 a month. I wanted to expand the business so Bank of America , and Citi bank were sending me pre approved credit card offers. I made the choice to get approved and start using these credit cards to build the business. I was approved for $60,000 in credit.
I bought new computers, more software, and bill acceptors. Business picked up and I was making more money but I also had more work.
Things were going well until 2007-2008 and mysteriously businesses started closing. I had to go to locations every couple of weeks to pickup equipment. I was losing money and the credit card bills had to be paid. Things degraded to the point where I couldnt make the credit card payments.
I have learned many lessons about business and finances over the past 15 years. I would never again use credit primarily to build a business. I would only use cash to build a business. Some people would probably disagree with me and say if your responsible and disciplined you can use credit cards to your advantage. This is true, but I look at everything in terms of risk today.
I dont even use credit cards for personal items.
Today I am credit card debt free. The only debt I have is house, college loans, and car. Im currently working on getting rid of them all. I will feel so free when I have abosolutely no debt.
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credit isn't necessarily bad mate. it helps you build something when you don't have the required money. its only when you take on too much debt and earning volatility affect your ability to service the debt, then you get into trouble. That's why i guess you need to think wisely before taking on credit. but yeah, if the business is mature and if you don't need credit, then one shouldn't take on credit to burn earnings and buy value dilutive assets.
I appreciate your feedback. I take some hard-line positions on some topics and credit it one of them. Not everyone looks at money the same way, and there are some of us that really try to understand the dynamics of what we are getting ourselves into when we obligate ourselves to debt and there are those of us that don't. I know that you have an understanding of how money works, but the hard-line approach is for some of us that need to take the approach of caution because we can get too overly optimistic when we see a pot of gold at the end of the rainbow. I listen to Dave Ramsey, I don't agree with everything that he says but he helps people with no financial education and helps them build a personal financial system.
yeah, no you're write about it. even if i know how theoretically things work, i myself would think twice about taking debt. and finally it comes down to whether one can handle debt or not. theory aside, if everyone was prudent about debt, we wouldn't be talking a debt crisis globally. so may your hard line stance is actually better for most people.
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I have a home loan but i will never pay it early. Interests are going up and i have a commitment from bank for a lower interest. I also use credit card for every purchase i make and over years i have received thousands of dollar in cash backs. Never paid a dime.
You have discipline that others dont have. I know there are huge advantages to having credit and using it wisely.