Comments on: ★ Use Cash, Spend Less. Boo Credit.

By: Sam

Sam — Mon, 05 Jan 2009 02:34:38 +0000

Credit is the best thing for people who can use it wisely. Credit has freed me.

I put all my monthly bills, food, and gas purchases on a “rewards” card. I get money back, help my credit score for later in life and I have a secure way to pay for my purchases.

If used RESPONSIBLY credit cards are great. I never use my debit/cash anymore (except for a few local joints that don’t accept them).

By: carol h

carol h — Thu, 18 Dec 2008 15:19:09 +0000

at the beginning of the month i put “spending money” in an envelop in my purse – and when i choose to stop for coffee with a friend or lunch, the amount in my envelope and how far it is into the month determine whether i have a plain cup of coffee or steamed milk with coffee! and when i am out to lunch, it makes the difference between a cup of soup or a sandwich -

By: Lauren

Lauren — Tue, 16 Dec 2008 20:46:36 +0000

For staples, I usually prefer plastic shopping, too, because it makes for easier returns, I don’t feel like a target and I can then track at the month’s end how much I spent on things like gas and groceries. For treats and nights out, then it’s definitely cash, because once the green is gone, it’s time to go home.
But this http://blogs.southtownstar.com/money/2008/12/the_psychology_of_cash.html has me thinking again…

By: Deb

Deb — Tue, 16 Dec 2008 16:35:37 +0000

There’s a lot to be said for the power of cash – both in how it affects you and your budget, as opposed to spending on plastic. Did you know that your brain actually registers handing over of cash for payment (or your debit card) the same way it registers pain? It virtually ignores when you hand over a credit card. There are a lot of studies that have been done on this and makes for interesting reading.

Something else that we tend to forget – credit cards and the whole system of debt purchasing like we do today has only been around since the 1950s/1960s. That’s when the first credit card was introduced (Diners Club). People survived just fine w/o credit cards before then…what’s changed except for the way we spend (or overspend!)?

I cut up my credit cards last February and haven’t missed them in the least. On the contrary. In fact, this year I’ve managed to pay off more debt than I would have ever thought possible…and have not added so much as 1 penny to it!

Living on “cash” doesn’t necessarily translate into carrying around your paycheck in tens & twenties. Rather, it’s the living off of what you have, not what you can charge.

The key in the article you posted that it seems people may be missing is that those on budgets are ultimately going to be able to spend MORE because they’re not making debt payments. For example, my Christmas spending is going to go up significantly once my debt is paid off. I’m also going to be able to give more to those in need when the debt is gone too.

Boo credit indeed.

By: Tiffany

Tiffany — Tue, 16 Dec 2008 14:58:14 +0000

It definitely seems like using cash and spending less come hand in hand. It’s interesting to see more and more people move towards this method, and I think that is perhaps one really good thing that is coming out of this economy.

By: Daniel

Daniel — Tue, 16 Dec 2008 14:40:18 +0000

I’ll agree with you that having an economy dependent on people spending money they don’t have should be a HUGE red flag. But in all honesty our economy will implode if and when people stop spending money they don’t have. So we’ll need to prepare for that.

A note about different contexts though… I hate having cash on me. Living in a pretty poor urban neighborhood I get hit up for cash A LOT. It’s mostly by people who I probably shouldn’t be supporting, although them potentially wasting the money is probably just as bad as me actually wasting the money. But regardless, if I have cash I feel compelled to share it. If I don’t have cash I can honestly say “sorry, I don’t have any cash.”

By: Mark

Mark — Tue, 16 Dec 2008 14:12:15 +0000

I think you really have to evaluate what type of spender/money manager you are to determine whether cash or credit is best for you. Me and my wife try to watch what we’re spending, and using a credit card actually helps that. The key is that you can’t treat it like your investment accounts where you don’t look at them because you don’t want to see how bad it is. You need to make it a regular practice to check your balance(s) and make sure that you scale back if for some reason you’re hitting the threshold for spending that month.

We use a Capital One Visa and Discover because both offer the option of getting cash back. The Visa gives us 3% back on groceries and 1% back on everything else, while the Discover card runs promotions where we can get up to 5% cash back on certain things and 1% on everything else. We also try as much as possible to put our regular utility bills on the credit card too. Since we need to pay them off anyway, we might as well get some cash back if we can.

I’ll admit that if you’re the type of person who isn’t committed to paying off your credit cards on a monthly basis, then this probably isn’t for you. Discover also recently launched a Spending Analyzer on their website which is pretty amazing and can show you how you’ve spent your money over the course of time.