by Rick Kelly

Created on: September 27, 2008

Lately, watching the news can make anyone feel panicked about the financial future of the United States. Over the past year, everyone could feel the recession coming. We all knew that gas prices, home foreclosures, and unemployment were all rising. However, no one seemed to imagine the extent to which the banks and financial institutions of the United States would start to fail in the inconceivable way that they have. This has made all Americans, whether they are financially secure or not, take a second look at their bank accounts to calculate the amount of cash they have on hand. In fact, the move to use cash-only has become a financial trend for consumers in the United States who feel they can no longer rely on the corrupt lending practices of U.S. Banks.

WHAT HAPPENED TO OUR FINANCIAL INSTITUTIONS?
In order to make more money for themselves, lending institutions began lowering the prerequisites for consumers to get credit by offering subprime mortgage rates and low interest, easy-to-get credit cards. As the recession continued, people who were already suffering financially were shocked to find out that their monthly mortgage payments and introductory credit card rates were rising beyond their means to pay them back. Out of credit and unable to repay any money beyond high interest and penalties, many consumers were forced to abandon their homes and their lives as they knew it. This amount of bad debt was unprecedented, and to prevent a financial collapse, Wall Street is now asking Congress for an $800 billion bailout to get started again.

WHERE DOES THAT LEAVE US?
If you are looking for credit to buy a car, loans to go to college, or money for a mortgage, you may be out of luck. Banks have clamped down on everything from small business loans to credit cards. This is one of the reasons why consumers are making the move to using cash for everything. People who were living on credit before are also now realizing that purchases both large and small should be paid for in cash. Think about it this way: For every five hundred dollars in credit card debt you have, if you only make the minimum payment every month, it can eventually cost you twice as much to pay back as what you originally charged.

HOW DO YOU START PAYING CASH?
If you have a lot of credit card debt, the first thing that consumer advocates will tell you is to cut up your credit cards and start paying cash for everything. You will have to work out a payment plan with your creditors, and this will not be easy. Banks will tell you that they will charge you penalties and will also ruin your credit score. However, in light of recent events, they may be happy to settle with you for a lesser amount owed. Paying cash-only will also help you with your budget; i.e. if you don't have the cash, you can't buy it. Living without credit is a hard blow for most American consumers, and a difficult way to begin living. However, freedom from credit can ultimately be obtained by using cash, and as a consumer you will find that in the long run you will have more money. There are many consumer advocate shows and websites that will confirm this - complete with success stories from people just like you that successfully gave up credit in favor of cash.

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