What can Credit Buy you that Cash Can't?
By Keith Bunn Jr.
October 7, 2013
Back in the Day
Before I was doing all this financial coaching stuff, I was never really concerned with what my credit score was. I didn't care what was on it, good or bad. If I tried to get a loan of some kind and it was denied, it was no big deal. I'd just figure out another way of doing what I wanted to do.
But I have borrowed money plenty of times in my early years. I've had a mortgage, I've had a couple of credit cards, and a couple of car loans. I even financed a 50 foot section of chain link fence, a gate, and gutters on my house from Sears once. So don't think I'm that guy who has never had debt or loans and keeps telling you that credit is bad, never borrow money, because I've been there, and done that.
Credit vs Cash
So it was towards the end of last month I was thinking, what can credit buy you that cash can't? Now you would think that this would be an easy thought process, but it really wasn't. I mean, if you really think about it, when you are talking about material things (cars, homes, toys, etc...) and possibly trips, like vacations. Cash can buy all that, just as well as credit can. Can we always get what you want, when we want it with cash? No, not always. Depending on what we want and how much it cost, it may take awhile to save for it.
So what can Credit Buy that Cash Can't?
After thinking about it for awhile, I came up with four things that credit can buy you that cash can't, and its probably not what you'd ever think of.
1) Credit buys you a FICO score: There is no way to get a FICO (credit) score unless you use credit to get it. When we use cash, that doesn't get reported to the credit bureaus.
2) Credit buys you Instant Gratification: As mentioned above, we can't always get what we want, when we want it when we use cash. Sometimes we have to be patient when using cash. But if you look up the meaning of the root word 'gratify', it means, to afford pleasure to. And it is my belief that if you can afford it without payments, you have no need for credit, but I'll give this one to credit anyway.
3) Credit buys you Risk: When we buy something on credit, we open the door to risk. We have the chance of something greater happening to us that normally wouldn't when we use credit. Example: when you lose your job, how are you going to make the car payments, etc... When you use cash to buy things and you lose your job, you don't have to worry about creditors coming to get your stuff.
4) Credit buys you Stress: Or should I say, more stress. As mentioned above, we have added stress when we are worried about someone coming to take away our stuff when life came along and smacked us. When we use cash, that stress never comes around. Yes, there is some stress when there is a job loss or something like that, but not as much when you know for a fact that your stuff is yours and not someone else's.
Well, those are the things that I came up with that credit can buy you that cash can't. If you can think of some other things, I'd sure love to read them. So let me know what you came up with.
The reason I do this, is to give people hope and to try to inspire others. To make people think about their finances, whether they are young or old, so they can win financially.
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