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How many of you are "cash only" folks? due to recent financial problems I've gone to cash. Any checks I get I cash at the credit union, I place enough money in my account to cover any bills I have that must come out of it, and the rest I take in cash. Sort of like the financial planner and his envelope system.
It has helped me to concentrate on my spending, I only take X amount of money with me whenever I go somewhere, so no longer can I just whip out the debit card and know it will be covered, now I have to calculate as I go.
Has anyone else done this?
I went to a "cash-only" system many, many years ago. By that, I mean this. I never spend more money than I have. But the form in which I keep that money varies according to convenience, or even necessity. Why carry wads of currency when a single, plastic card serves the same purpose? That why most people get themselves into trouble using credit cards. They fail to understand how credit cards work, that the purchases made have to eventually be paid for. Also, they fail to keep in reserve enough cash to easily handle nearly any emergency, such as suddenly needing the $10k to $30k it would take to buy a new car. They can't write a check. So they have to finance the purchase.
Several months ago I realized just how easily I pulled out my debit card for purchases, only to really forget what I had purchased at the end of the month. I would be balancing my checkbook and thinking, now just what was that item or what all did I buy at that store? I decided I was spending on things I couldn't possibly need if I couldn't remember what they were. So three months ago I just started giving myself cash to carry around to pay for things and I started recording all spending (again) as well. It has really gotten me back on track with conscious spending, I'm not depriving myself but really taking time to think before I pay.
This really helped me cut down on my purchases of ice cream!
How many of you are "cash only" folks? due to recent financial problems I've gone to cash. Any checks I get I cash at the credit union, I place enough money in my account to cover any bills I have that must come out of it, and the rest I take in cash. Sort of like the financial planner and his envelope system.
It has helped me to concentrate on my spending, I only take X amount of money with me whenever I go somewhere, so no longer can I just whip out the debit card and know it will be covered, now I have to calculate as I go.
Has anyone else done this?
I also am all cash, all the time. Have been for years. Only use my credit cards (which are all no annual fee cards) when travelling and then pay them off when I return - or often pre-pay them so I don't have to worry about coming back from a trip before my CC bill is due. I find using cash really helps me to spend no more than I had planned on. I only carry the amount I'm willing to spend, and no more. Can never over spend that way. If I only want to spend $5 when I go into a grocery store, then I only bring $5 in with me so will never spend more than $5. Can't spend what you don't have!
Why carry wads of currency when a single, plastic card serves the same purpose?
The problem with using debit cards as well as checks from your checking account is that you have access to ALL the money in your bank account and could spend up to that max. Where as with cash in hand, you can ONLY spend that amount. Like my example above about only bringing $5 into the store with you. If that is the amount you have budgeted for, and the amount you bring with you, then you can't spend anymore than that $5 - period! But if you bring a debit card or a checkbook, then you could still spend much more than you have budgeted for - technically up to your max bank account balance. So for those people who are very diciplined with staying on a budget, using a credit card, debit card or check is probably OK. But for those who aren't as diciplined, then cash works better. I personally am very diciplined but like to use cash anyways. What I do is kind of a reverse budget. I decide how much I want to spend that month and take out ONLY that amount of cash from the bank. I put it in an envelope and each day grab whatever pre-determined amount of cash I have budgeted for that day and that's all I can spend. Usually I will have some money left over at the end of the day/week/month and then use that for any "fun" thing I want. So by always using a pre-determined amount of cash each month, I can NEVER overspend.
This really helped me cut down on my purchases of ice cream!
Ha ha! me too :-)! I don't track my purchases anymore because I just use a pre-determined amount of money (all cash) for my spending each month and stick within that amount. If I use up too much, too fast then it's rice and beans and no Ben and Jerry's untl next month even though I have the money to add more to my monthly cash flow. But I choose to live on less than I earn (retirement pension) so "pretend" I'm on a lower income and only have the amount I budget for and no more. Did this all my working years and was able to save for an early retirement (at 42) that way.
I'm using cash more often lately. It finally hit me that by using cash at local vendors I leave approx. 3% more profit for them which leaves more money in our communitiy instead of with VISA or MASTERCHARGE. I tend to not keep too much cash in my wallet so it has been a change for me to keep some cash available.
the problem with only have the $5 is that when I get to the store I remember one more thing that I need .... so the cash method in the past has complicated my life and caused extra shopping trips.
rodeosweetheart
8-14-11, 1:37pm
We have gone back and forth with this and just decided to go this week back to a grocery eat out cash only, since this is where we hemorrhage money with the debit card. My husband is a complete foodie and I like to go out with our friends and eat, and boy, this is horribly expensive, so we are going to try 2 weeks of planning the meals out and sticking to cash only. We will see how it goes.
We do this with spending money and gas and it works great there.
janharker
8-14-11, 10:08pm
I'm not one for shopping. But sometimes I just need to. So today I picked up a couple of items from the Overstock bin at the Lands' End website. Simply can't pay in cash when shopping on line.
Like most of you I was the same way with the debit card, it was too easy to swipe and run, then when I went online to look at my spending I was surprised how much I'd gone through. By only carrying X amount of money with me I'm also less likely to swing into the craft store to see whats on sale that I don't really need.
I'm also trying to stick to a tight budget, so I put so much aside for gas, for groceries, etc. When I leave to run errrands I only take the money with me for that purpose, that way I don't spend the gas money on groceries or a Latte'.
I think some folks are more desciplined when it comes to spending with a debit card, but I'm not one of them. As for credit cards....NONE...paid them off and destroyed the evidence!!
Mrs. B
I use both. I have had the experience of only carrying cash and forgetting something or having an emergency and not having enough to cover it, so I keep my debit card with me.
I hate paying for things in general. It makes me itchy and nervous, especially on a debit card because it looks like a credit card and credit = guilt in my brain. I actually take the cowards way out half the time and make DH do the actual paying (from our joint account) so I don't have to fork over money. :) I am not tempted to use the debit card as easy money.
Personally I really hate shopping, so I don't need to work at not spending money.
(to give an example I was griping to SO that the zipper on my wallet disintegrated the other day.
me: I don't understand. You just gave me this wallet. Why's it already falling apart.
SO: That was christmas 6 years ago that I gave you that wallet.
Me: Oh, I guess I can splurge on the $9.99 for the one I saw on amazon...)
The only place I tend to go frequently and spend money is the grocery store. Ironically I've found that in the 1 1/2 years that we've lived across from Safeway I spend less on groceries. Before we moved to this apartment we'd go once every few weeks and "stock up" on everything we ever ate, which meant that we'd buy tons and tons of stuff and it'd sit in the pantry for forever. Now we only ever go to the store if we specifically need something like milk, or if we're making something for dinner that we need an ingredient or two for. As a result we only ever buy what we're going to be using that day. Whether I pay cash or use credit won't make any differnce.
The only time we buy stuff in bulk now is when we go to costco. But that's stuff like canned tomato product or dishwasher detergent. We're not going to go crazy making spaghetti sauce or running the dishwasher just because we have those things, so I don't feel at all bad about our spending at costco, all of which goes on the amex card.
the problem with only have the $5 is that when I get to the store I remember one more thing that I need .... so the cash method in the past has complicated my life and caused extra shopping trips.
I have had that issue too, I have a family of 4 to shop for and frequently my kids seem to be ill. I buy what I know they will eat in a few days because at the end of the week they may not eat the same thing. So now I am working with carrying my checkbook register everywhere and writing down every debit. I used to do that many years ago but stopped when life got so busy, now life is busy but I don't have some of the income I used to that cushioned the spending.
I use both debit card and cash. If it's a larger amount (trips to costco), the card comes out and I'll also ask for extra cash. I like to keep between about $50 to $80 cash in my purse. For quick grocery purchases, gas, and most other things, I try to use cash as often as possible. I enjoy shopping but don't over-spend (too often) no matter what the method of payment is. Money spent is money spent. We were raised to believe that if you can't pay for something up front, you can't afford it. The only exception was our house. I've never carried credit card debt, and in general don't spend money easily.
I used to use checks fairly frequently, but these days hardly ever.
Just a reminder: debit cards are much less secure than credit cards.
That said, I use my debit card to get cash from the ATM machine.
Yesterday I wrote my HSA debit card number on my doctor bill. If I had wanted to pay cash, I would have had to drive 60 miles round trip to do it. Today I used my HSA card to pay on site for my chiropractor. At the end of the year the bank sends a report to me and to the IRS with the amount I spent on medical bills. Had I tried to do that after paying cash it would have required at least a couple of hours to compile the info and then I'd have to keep those receipts for years. Sometimes cash is far too much hassle. One of my mottos is 'return on investment.'
I pay off my credit card in full every month. It's the people who don't have the discipline to do that who really shouldn't ever be using them, IMO.
shadowmoss
8-17-11, 11:45am
Another good reason (to me) to use cash is that your movements can be tracked via credit/debit card activity. Not that I'm hiding anything. It's the principle of the thing. I live in Honduras now, and I use local currency cash to pay for pretty much everything out on the economy and I'm enjoying being back on cash. Credit cards are accepted here some places, but there is the currency conversion factor and foreign transaction charge to deal with. It's definitely gotten me out of the habit of just pulling out the ol' credit card to pay for small things.
Just a reminder: debit cards are much less secure than credit cards.
Good point. I worry that using a debit card will somehow give someone complete access to all the money in my bank accounts - checking, savings, money market - and somehow wipe me out. With cash I don't have to worry about this (carry too small of an amount to worry about - same with amount of cash I have at home - too small to worry about besides an emergency stash that is hidden), and with a credit card I know that the company will only charge me $50 if it's used illegally. And like Shadowmoss, I also don't like the idea that my buying habits and movements are tracked. Too Big Brotherly for this paranoid simple liver :-)!
ButterflyBreath
8-21-11, 12:24am
This thread was from awhile back but I am reviving it momentarily. I too have used a cash only system before. I really like it, however after awhile I do start to notice the differences and subtle ways that it's more of a hassle. I feel freer when I use cash only system. This probably sounds crazy but to me it seems like a more spiritual way to manage money. It's more grounded in reality and not so illusive.
I used to do the envelope system, labeling each category and organizing it. Of course there are some things that pretty much have to be paid by checks. I prefer checks to online and auto pay. I know it would be more convenient, but I don't like the feeling of the money not passing through my hands.
I wonder if this change in how bills and expenses are paid have had an impact on how we think about money. Society as a whole? Does money not mean as much if we don't see it physically?
We are retired and on a fixed income. We use a single cash-back credit card for everything. We pay it off every month. We keep in our checking account only what we've budgeted for the month -- the rest in an emergency fund (savings account). If we ever have to go into our emergency fund to make that monthly payment, we know it's time to cut back on spending. We have our cc payments withdrawn from our checking account automatically, so there are no missed payments. And in those cc statements we have a record of virtually everything that we spend money on -- useful at tax time.
We deal exclusively with credit unions, too -- no commercial banks. This has worked for us for ten years.
Life_is_Simple
8-21-11, 3:33pm
Another good reason (to me) to use cash is that your movements can be tracked via credit/debit card activity. Not that I'm hiding anything. ...
LOL!:laff: We're going to see you on a made-for-tv-movie someday.
Captain: "Find out where Shadowmoss is - track the credit card activity"
Detective: "Sorry, Captain. Shadowmoss uses cash only - always has. We cannot track this person!"
;)
shadowmoss
8-22-11, 5:51pm
LOL!:laff: We're going to see you on a made-for-tv-movie someday.
Captain: "Find out where Shadowmoss is - track the credit card activity"
Detective: "Sorry, Captain. Shadowmoss uses cash only - always has. We cannot track this person!"
;)
Alas, I'm not totally cash-basis yet. Add to that that I live outside the US and work for the US military means that not only does everyone know my name, they pretty much know everything about me. :)
I actually do better at limiting spending when I use a debit card, but my bank has instituted a $5 a month fee for using it, so I'll have to switch to cash.
rosarugosa
8-22-11, 9:22pm
We're actually thinking about using our credit card for groceries to get the reward points. I don't think this would cause us to spend any more freely than we are currently doing with our debit card. But I plan to watch this very closely.
I think I spend less when I only use my credit card which I pay in full every month. I NEVER charge something that is $1-$5, but if I have the cash I spend it. JMHO
Re paying cash for online purchases - 7-11 Stores have a new service whereby you pay them cash and they pay your online purchase. Sort of a physical, cash based Paypal. I haven't used it, just heard about it.
I have been doing cash only for many years. I do it differently though. I deposit my checks and withdraw only the dollar amount I need for the week based on a zero based budget. That means that every dollar that comes into my hands is assigned to something. Be it bills, groceries, or spending. I don't just have a loose dollar amount to play with. I use a coupon accordian style envelope to organize my cash, with lables that read: Groceries, gasoline, personal care (which includes things like hair cuts), clothing and gifts etc... Once the money in a category is gone, then I have to make due with what I have. So if I spend all the grocery money, then we eat what is in the cupboards, eat oatmeal instead of cereal because we ran out of milk etc... Used up the gas money, then I walk, take public transportation or just wait until the following week to run an errand.
I have been doing cash only for many years. I do it differently though. I deposit my checks and withdraw only the dollar amount I need for the week based on a zero based budget. That means that every dollar that comes into my hands is assigned to something. Be it bills, groceries, or spending. I don't just have a loose dollar amount to play with. I use a coupon accordian style envelope to organize my cash, with lables that read: Groceries, gasoline, personal care (which includes things like hair cuts), clothing and gifts etc... Once the money in a category is gone, then I have to make due with what I have. So if I spend all the grocery money, then we eat what is in the cupboards, eat oatmeal instead of cereal because we ran out of milk etc... Used up the gas money, then I walk, take public transportation or just wait until the following week to run an errand.
I have tried this numerous times, and even have a Dave Ramsey version of cash envelopes. But somehow it gets all mixed up--mainly because of the inflexibility of larger bills. So say you want 10 worth of gas, but you only have a 20, but there's a 10 in the food envelope so you take that and promise to replace it when you break the 20, but it never gets put back, and then all the change just rattles around in there. And the envelopes get all wrinkled and ripped, and if you have a big shopping trip with food and beauty items and gas etc., then you have 3 or 4 messy envelopes cluttering up your pocketbook.
I find it easer to use the cash or debit and then just on a daily basis go in to my cash tracking system (which right now is Dave Ramsey's, but there are a lot of good ones, like YNAB) and see what I have left and when I should slow down.
I do like the idea of cash and I'm using it much more often. It's just more of a hassle to track.
Aqua Blue
8-24-11, 10:34am
Catherine, that is my experience with the envelop system. I apparently rarely buy a pure category at one store.
Catherine, that is my experience with the envelop system. I apparently rarely buy a pure category at one store.
Yes! If I were to do an envelope system, groceries, grooming and household would all have to be together. Which is fine if I had realistic budgets for each.
I have tried this numerous times, and even have a Dave Ramsey version of cash envelopes. But somehow it gets all mixed up--mainly because of the inflexibility of larger bills. So say you want 10 worth of gas, but you only have a 20, but there's a 10 in the food envelope so you take that and promise to replace it when you break the 20, but it never gets put back, and then all the change just rattles around in there. And the envelopes get all wrinkled and ripped, and if you have a big shopping trip with food and beauty items and gas etc., then you have 3 or 4 messy envelopes cluttering up your pocketbook.
I find it easer to use the cash or debit and then just on a daily basis go in to my cash tracking system (which right now is Dave Ramsey's, but there are a lot of good ones, like YNAB) and see what I have left and when I should slow down.
I do like the idea of cash and I'm using it much more often. It's just more of a hassle to track.
I have never had a problem with paper envelopes, because I generally don't use them. I use a plastic accordian style coupon holder for my cash. Each section has a category and I only take out the money I needfor that particular shopping trip. I go so far as to divide the month up by week in the "envelope" so I have Gas week 1, Gas week 2 Gas week 3 and so on. Left over gas money each week goes into a bank envelope in the glove box. This will be for an emergency or will add up for use on a long, non-routine, trip.
I have a schedule for getting gas. I go every Friday afternoon. On Friday morning I simply take the gas money out of the accordian style envelope, fold it and tuck it into my wallet. (spending money is not folded and this helps me keep track).
Grocery budget for the week includes all paper, cleaning and personal care items. I make it a one stop shop. There is no need to go to multiple stores for these items. So I put it all into one budget.
Coin change I don't track. I dump that into a coin jar at home and we do something fun with it or we pull coin out for tolls and such if we are planning a trip North. Left over money from the category each week goes into a flake for something we are saving up for, it doesn't go back into the envelope.
ie..Right now I'm putting money away to help my son out at college. So if I save $5 on groceries this week, I'll flake that $5 into his bank account to help him out with laundry, food etc...
It's not hard to track if the only money you actually take with you, is what you have budgeted for the week, for that particular category.
I use mostly cash. There are some things I pay with checks, like horse board, car repairs, health and car insurance---these expenses are all tracked in a notebook in "Check" categories for my main expenses, (horse, car, other) and I deposit money into my checking account monthly and keep track of how much goes into which category. I always know exactly how much I have in each to cover whatever comes up.
I only have a debit card now, no cc, and I use that for ordering online and larger purchases where I don't pay cash or write a check.
As for cash, that is tracked as well, in categores such as 'Horse, Car, Personal Expenses, Special Treats'. These have money deposited in them monthly too. I used to use seperate envelopes but like others here, it got confusing making change or borrowing from other envelopes. My current way is much easier. If I think I've gone wrong somewhere, I just count the cash and compare it to the totals in the 'cash' sections and it should balance.
Gas money is usually kept in the car--unfortunately I spend close to $150/month. My cell phone is now a pay-as-you-go, so instead of paying a bill by check, I just buy a new card with cash. I always try to keep a bit of cash in my wallet for an emergency but rarely use it. My mom says that my wallet creaks and has cobwebs when opened, which shows how little I go in there.
Many years ago I was in a deep depression for almost a year; one reason was feeling that I had no money. It was then I read YMOYL and I changed my ways to first using envelopes, then this system. You don't know you're winning unless you know the score.
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