By Bobbi Burger Brunoehler of Bobbisbargains.
FinancialFellow1/Flickr
Last year, Bargain Babe challenged herself to not use credit cards for a month. At the time, I was feeling all kinds of awesome because I didn’t have any credit card debt and always pay off my cards each month. However, when I organized my financial New Year’s resolutions, I realized I was using my ATM card WAY too much and irresponsibly buying items that I didn’t really need. I resolved to go back to my previously successful budget strategy of using cash only for my weekly purchases. I wanted to share with you my insights from my first week after I banned my ATM card.
Here is how I started:
- I designated a day of the week that was the “start” day. I choose Saturday.
- I took out a set amount of money from the ATM machine that I am allowed to use for groceries and sundries for the family. This does not include major items like new skate shoes, class fees, or oil changes. It does include food, tissues, and light bulbs.
- I paper clipped the money together so that I would easily be able to see how much was left. I attached a piece of paper to the paper clip to track what I spend. However, to be honest, I haven’t kept track.
Here is what happened:
- Immediately I became aware of how much I had to spend and I didn’t want to waste it.
- On my way home, I was going to stop for a Starbucks Latte and then I decided that I didn’t want to spend any of my cash.
- When I went to the grocery store, I started to load up on some things that I “wanted.” Then I remembered that I was only going to be using cash. Immediately I put several items back.
- When I got to the checkout counter I got rid of two more items. Interestingly, I had to choose between packets of flower seeds and packets of lettuce seeds. I chose the flower seeds. Hmm.
So far, I have saved easily over $100 and I have only been back on my cash system for 2 days! Wow. I didn’t realize how much using my ATM card was throwing off my budget. I’ll keep you posted on how it goes. I still haven’t started to implement the rest of my resolutions, but I plan on doing so.
How are you doing on your resolutions?
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.
I use my AMEX card every day for all purchases and pay off at month end. My reward from the card is a deposit into my daughter’s 529 account. But I realize I am way overspending each month. I want to do your cash method but don’t know how to start because I have a credit card to pay off that needs the “cash”. Any suggestions?
I do this when I notice myself slipping on my budget. I have the hardest time at the grocery store. I’ve always wanted to just buy whatever we want to eat & not worry about the cost. I shop at so many different stores I have to be careful.
I am in the same boat as Robin, as far as using the CC for dadily purchases. Likewise, I want to switch to cash but have to pay off the credit card first. I’d appreciate any insight.
I realize this will sound like “easier said than done,” but it’s how we all have to start: Cut back on your weekly purchases, buy only what you truly need, and reserve “leftover” cash to apply to your CC’s. In order to save $$$, we have to cut back on expenditures. It’s called an austerity program. That’s a concept all politicians fail to grasp. Like starting on a diet, it usually takes 2 weeks for things to really start to fall into place and kick into auto-mode. After that, it gets easier.
I was afraid of that, LOL!! I guess I’ll just have to have the willpower to cut back on the CC. Thanks EllieD.
I give myself a set budget and always use my credit card….often NOT spending the whole budget. HOWEVER–if I have cash, it burns a hole in my pocket.I dont’ think I could EVER go to a cash only budget. I NEVER use the bank machine, nor do I write checks. I stock up when there’s a sale and use coupons as well…when it comes to department store or outlet purchases, I ALWAYS buy on sale. Did you know you can get another 10-15% off a many outlet stores just by showing your AAA card? And yes, it can be used with other coupons/specials.
Oh- i always pay my credit cards in full. I keep a ledger so I know what I have spent and have earned many plane tickets and gift cards with the points earned.
The only way for a cash only system to be effective is if you know what you have actually been spending. Track your spending for a couple of months and then average the amounts for things like food, gas, clothing/gifts, entertainment/restaurants etc. (your variable expenses). I was amazed at how much I was spending! Figure out what your fixed expenses are such as rent, car payment, credit card or loan payments, savings, emergency fund, utilities, etc. and subtract from your after tax (net) income. What’s left is what you have to divide up between your variable expenses. I allow myself $20 cash per week as an “allowance”. Remember that the amounts in the variable catagories can be flexible, you may need more in your clothing amount one week so you take it from your entertainment amount. I don’t carry my credit card OR debit card. Each payperiod I take out my variable amout for the next two weeks. But I only keep one week’s worth in my wallet at once. Once the money is gone I stop spending….period. I always seem to have cash left over at the end of the week and instead of spending it I sock it away knowing It’s there for me should I want to treat myself or my children. This is the perfect system for a single mom….actually for everyone and a great way to teach your kids about planned spending.