No More Cards

Debbie is trying to get Baby Step 1 in place. As she pays off her credit card debts, should she close the accounts?

QUESTION: Debbie in Denver is trying to get Baby Step 1 in place. As she pays off her credit card debts, should she close the accounts?

ANSWER: Yes. You’re not going to use them anymore, and why would you keep them around if you weren’t going to use them?

People are broke, so who gives a rip what their opinion is? “They said” and “I heard”—that financial planning firm will put you out of business. If you listen to broke people, you’ll be broke if you follow their advice because they’ve used their best advice that got them where they are. It’s like fat people saying, “You know, you really ought to eat that.” Same thing, right?

Here’s the thing you need to know. The Dave Ramsey thing—you said you’re new to this whole thing—is about getting out of debt and staying out of debt because that gives you control of your most powerful wealth-building tool, which is your income. If you don’t have any payments, you can build wealth and you can give and live better.

Having said that, you need to know when you close your credit card account, it’s going to lower your FICO score, but if you’re not borrowing money, you don’t need to borrow money to have a FICO score. You need to know. My FICO score is zero. I don’t have one. I’m doing pretty good. It’s working out for me.