I’m debating another financial experiment similar to the spending moratorium I undertook last July. This time, I am considering not using any credit cards or debit cards for an entire month, starting April 1. No, this is not a joke.
I got the idea after talking to a friend who had to cancel her credit card because of fraudulent charges. (This was not the same friend that had her credit/debit/ATM card number skimmed.) My friend didn’t have a back up for some reason and was forced to go without a credit card for about a week.
She was astonished at how different it felt to make regular purchases – with cash. At Target she picked out a gift for her grandson’s birthday that came to $61. She balked. $61? In cash? She would not have thought twice about swiping her plastic.
My friend’s experience made me wonder. Is it easier to stay on budget with cash? I pay my bill in full every month so this experiment is not about learning to spend within my means. It’s about spending less.
I rely heavily on my credit card because I spend cash so easily. In fact, I try to limit my ATM usage to one withdrawal of $100 at the beginning of the month. So there is a chance this experiment could go very badly.
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Welcome to Bargain Babe! I’m Mara, and I’m so glad you’re here. I am an obsessive bargain hunter and penny pincher, and I am determined to live a full life without EVER paying full price.
Have you heard of Dave Ramsey?
He has a wonderful series of classes to help people get control over their money. We have been involved with them for over a year now and it has changed out lives!
In fact, he says to cut up those credit cards!
Would love to see how it goes. I think you’ll spend less too. I pay off my card in full each month AND I get airline miles which is going to take me to Puerto Vallarta in May! YEAH.
I am in the process of transitioning to all cash. I think it will make me think twice about my purchases, and I am going to split up my money into jars to better track where my money is going using Gail’s system (http://gailvazoxlade.com/blog/).
There are people out there that have more trouble with cash than credit cards, and if you are one of those, maybe you should cut the experiment down to a smaller period of time. Also, a reason I have had problems making the switch is that I use mint.com and if I use cash it can’t track my purchases (I could but always forget to update and next thing I know I don’t remember if I spent $5 on groceries, $10 for a meal and $5 for parking or was it $10 on groceries and $5 on the other two. And finally going only cash you can’t gain points that are available with some credit and debit card and you can’t shop online where sometimes it is possible to find a better deal on products.
Actually, for many of us, going without a credit card is not just an experiment, it has become an unpleasant fact of life. And may I add an additional challenge, no fair dipping into savings, even if a deal looks too good to pass up. It can be a sobering experience.
I always condone self-experimentation
You will end up spending less money for that month (I’ve done it), it’s hard to maintain for a long time however. I don’t keep a balance on my CC’s since I do my best to pay them off (harder to pay off after the holidays)…. Good Luck!!
OH WOW! Some good comments have been left. All I can add is “in the olden-days before credit-cards” all we had were cold cash and a checking account. A different way of life but not really a hardship as people make it. I will be anxious to hear back from you in one month. Bet you save money. Good Luck!
A dear friend uses this method All The Time, and she has 3 girls in various activities. Her budget is planned down to the penny, and when they are paid she gets out the cash she will need for the entire month. She bags the cash for their activities and labels them (i.e. “piano”, “ballet”, etc.), then does the same with her bills (“market”, “cleaners”, etc.). She even has a “miscellaneous” baggie for gifts and mishaps. She saves quite a bit of money every month, and she and her hubby are self-employed, so this helps in leaner times. Her spending is never out of control! LOVE her organization.
We, too, use a credit card (Visa, which we pay off in full monthly) because of the rewards we accrue and for the convenience. Visa is going to start charging us $30/year. My husband has calculated that we will still come out ahead. However, if Visa later decides to charge more, we will go back to paying for everything in cash (or by check) as we used to–that is, until another credit card comes along that makes it worthwhile again.
We have 1 credit card for emergancies only. I use my debit card as a credit card (I get 5 cents back for each transaction). I check the balance almost everyday. I am a frugal shopper and go no where without my coupons. Cash only is a great way to go if you can’t limit yourself when you go shopping. I put my husband on a cash only program, and only then did he realize what he was spending.
I agree that you’ll spend less if you use cash when shopping. However, I, like others, have a credit card that I pay off each month and gives me points that I use for oil changes and car repairs. In 2009, I paid exactly zero for these auto services! I discovered a way to accumulate a lot of points is to pay my homeowners, earthquake, auto insurance, AAA policies with this credit card. These bills add up to much more expensive “purchases” than I’d ever make in a store!
We use our credit card for everything we can. Why? Airline miles. Last year we flew roundtrip to London, business class, for a total of $330 (taxes). However… we immediately deduct all purchases from our checking account (Quicken), sort of a pseudo-debit card so it’s like we pay cash. I pay the credit card bill online a day or two before the statement date so our credit report shows minimal card usage.
It will be easier than you think. You should try it.
I stopped using credit cards 2 years ago, other than gas, iTunes & my gym membership (the latter 2 were automatic payments that I just left on there). When one cc company raised my APR to 29.99% in November, I completely stopped using them for everything. I actually do try to use cash whenever possible, after I lost my debit card & was forced to use only cash for about a week and 1/2. It totally makes you think twice about your spending. I’ve learned to tailor my spending since stopping the credit cards anyway, but the cash experiment is something I believe everyone should try, even if only for a few days! Do it 🙂
I think you will totally see a difference. We did and we were like you…paying off our credit card every month. The key is to take out the only the amount of money you want/should spend for the month from the ATM. When that cash is gone, it’s gone. That’s what makes spending it harder. There’s a finite amount of it and you can actually see it leaving your wallet. This also keeps those impulse buys at bay. We use Dave Ramsey’s methods and have really put our money to work for us not the other way around. Good luck! It just might change your life.
Having a pay-as-you-go routine is definitely more economical than using cc’s for all your expenditures. I withdraw a certain amount of cash from my checking account each month, and ration it out on a weekly basis. When it’s gone, that’s it! However, I usually have something left at the end of each month, which means withdrawing less $$$ the next month. I do use cc’s on occasion, but pay them off monthly, and have never had a debit card.
I’m curious if there are things you will need to buy that you can only use a credit card or debit card for? Can you buy anything online without a credit card? I know a lot of sites allow you to use paypal. Would that count as a credit card?
One thing requiring using a credit card is the FlyAway from the Valley to LAX, as it no longer accepts cash payment for a ticket. I’m sure there are other instances as well, but that’s why it’s a good idea to carry one card with you for emergencies.