As I write of this I must give you a caveat that this may not be the best or most useful path for everyone. However, it is the best path for those who cherish the ideals of self sufficiency and the American Dream.
First of all, there didn't use to be credit at all. It has only really begun to emerge in the last few centuries. Sure, there was credit if people knew you in town at the local market or mercantile but that was about it. Everything else was cash and carry.
However, buying EVERYTHING with cash is a way to be completely financially independent at all stages of life. I would like you to do something if you wish. Take all your bills and calculate how much interest you have paid on credit cards, student loans, mortgages, car loans etc. since you were 18 years old. Now having done that what could you have done with all that money you paid out in interest?
My best climbing buddy since 1970 is an example of what you could do.
To be fair I need to go back to when he was 11 years old when he was driving with his parents in the back seat of his car when a drunk driver's car was catapaulted through the air at about 50 miles per hour from the opposite direction on top of his families car. The accident concussed his mothers skull, broke his father's pelvis and broke my friends back in a way in which he has been in pain to a greater or lesser degree since he was 11 years old. However, the drunk man's insurance paid for my friends education to UCLA with some left over. So my friend got a Bachelor's and master's degree from UCLA and went to a beautiful location and bought 2 1/2 acres of land upon receiving his master's degree. After buying the land on payments for about 5 years it was paid for and he owned his house which he built his first 6 months out of college. The first house was small 12 by 16 feet and a slope roof about 12 feet high on the low end and about 16 feet high on the highest portion. When it snowed during the first winter he camped out in the snow so he could buy material for his house. But he couldn't afford to buy windows the first winter. So, at 24 years old he was very cold in his sleeping bag. But by age 30 he had built a full size house, never had had to pay rent because he lived in the first 12 by 16 foot structure he lived in and then added onto that. So by age 30 he had a full size house on 2 1/2 acres of land near a small town in one of the most beautiful spots in California. Though he had both a bachelor's degree and master's degree he decided that where he lived was most important to him because the beauty, skiing, hiking, swimming in mountain lakes, camping and wonderful friends was much more important to him than anything else. So, he started a masonry business in the summer and played country music and rock and roll at local clubs and bars in the winter.
Now, I want you to think about this. You are 30 years old. You have NO debts. You pay cash for everything. You have credit but don't use it because you don't want to use it except in emergency. You own your own house. You are your own boss. You can travel anywhere on earth you can afford to anytime because your time is your own because you own your own businesses. If you don't have work for up to 6 months you are okay because you own your own home and have developed cash reserves rather than paying interest out to credit card companies and banks. You are free and clear.
His Masters program overseer came by recently and said of all his students my friend was by far the happiest.
I remember one time for fun my friend and I (since we both love the wilderness and climbing mountains) took a job planting trees deep in the wilderness mostly to just have our expenses paid being deep in the wilderness. There was a forest service guy who looked at us like we were nothing and I remember the conversation. It went like this.
The Forest Service guy said, "I'm really upset I can't afford to buy a house." My friend said, "I own a house." The forest service guy said, "How could you?" My friend said, "I also have a master's degree from UCLA." The forest service guy said, "Then what the hell are you doing way out here camping and planting trees." My friend looked at him, "For Fun!" The forest service guy was so upset that he didn't want to talk to my friend anymore.
This is what I'm trying to get at if you want to live the American Dream and it suits you, you don't have to do it by borrowing money ever if that is your wish. Yes. My friend had a head start by almost dying in an accident. But he was helped by his own father and my father building their own houses and so my friend as a child saw the wisdom of never having a mortgage ever. This one idea freed him up and set him free to do whatever he wanted to from the time he was in his late 20s. He still owns this house and still travels the world especially Asia and Europe and still plays concerts all over the world. But his idea that he got from his father and mine allowed it all to be possible along with the drunk that crashed into his parents car and almost killed his whole family. He was offered over a million dollars for his 2 1/2 acre estate in the last 10 years. He turned it down. He wants to live on his beautiful property in the house he built with friends until he dies. And he never paid rent or had a mortgage since 1976 and likely never will.
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