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Three Reasons Cash is King Print
Friday, 28th November 2008 (by J.D.)This article is about Choices, Credit Cards, Odds and Ends
This is a guest post from Danny Kofke, author of How to Survive (and Perhaps Thrive) on a Teacher’s Salary.
Times are tough. Many are finding it more difficult to stretch their dollars. I know this first-hand because I am a school teacher, and my wife is a stay-at-home mom with our two young daughters.
Despite earning a modest income, we have managed to own all of our possessions (including two cars!) except our house, set aside a six-month emergency fund, and invest so that we are on track to retire as millionaires. We live a financially secure life on a teacher’s salary.
One strategy that has helped us is to use cash to pay for our purchases as much as possible. Here are three reasons I believe that cash is king:
We know where our money is going
I believe that one reason so many people are in financial trouble is that they do not know how much they are spending. It’s not the big-ticket items that are hurting most of us, but rather the $10 lunch here and $5 coffee there. These add up over time.
Pulling a set amount of cash out of your account on a weekly basis for your expenses can help eliminate this mindless spending.
We spend less
There are studies that show you will, on average, spend 12-18% more when using a credit card instead of cash. For most people, it’s much easier to swipe a card through a machine than to pull out the green stuff.
Using cash causes my wife and me to think twice before making many of our purchases. This leads us to buy only those things that we truly want, since we’ve paused to consider before opening our wallets.
You can get a great deal
Here’s the fun part. Most stores are hurting because people aren’t spending as much as they used to. Many are willing to lower their prices if you offer cash when buying their products.
A month ago, a friend told me she was going to an electronics store to buy a television that was listed for approximately $1,000. I told her to walk into the store with $700 in cash and tell the sales associate that she really wanted that particular television but this was all she could spend on it. After some talk, the associate agreed — my friend saved $300.
This approach might not work at all stores, but it doesn’t hurt to try.
I know that not everyone will be able or willing to use this approach. But I hope that my examples have shown you that there are advantages to using cash. With the credit markets tightening, I really believe that cash will be king during the next few years.
J.D.’s note: I know that GRS readers are divided between the “cash only” and the “wise use of credit” camps. I believe both have their merits. Though I’ve elected to join the “wise use of credit” folks, I support those who opt for a cash-only lifestyle. For more on this option, check out my pal NCN at No Credit Needed. Photo by Refracted Moments.
November 28th, 2008 at 5:53 am
It definitely is base on a person’s personal lifestyle and habits but credit is very lucrative if you know how to utilize it for sure.
November 28th, 2008 at 5:54 am
Cash is indeed king. It has helped us immensely. Those $5 purchases add up over a month and it’s easy to watch the money go right out the window. My wife and I own one car outright and we have a plan for the second. We have paid off our credit cards and we’re on a couple of other loans. In the meantime, cash is king. Watching where the money goes is a huge key.
November 28th, 2008 at 6:00 am
You nailed it. I also teach and so does my wife. Combined we make less than $70,000 per year but we are comfortable financially. Each of us has 13% of our income deducted for retirement and we set aside another $300 for an IRA and about $250 to savings. We put a large addition on our home in the last year and paid cash for all of it, increasing our home equity by nearly $40,000 and we didn’t borrow a dime. I recently taught a workshop in my school district on personal finance because too many teachers believe we are underpaid so we can’t get ahead financially. I do agree, compared to our professional peers, we are paid less, but that just means we need to spend less until our pay increases. Goes to show you it’s not what you make, it’s what you spend.
November 28th, 2008 at 6:24 am
One thing to watch out for if you decide to go from credit cards to cash, is that you will probably get into a cash crunch the first month you try this. Here’s why. If you pay your credit cards off every month, you are effectively carrying a 30 day short term loan for whatever your balance is. For us, that’s about $2,000 - $3,000 that our family spends on groceries and utilities that we have charged directly to the cards. If we were to convert to cash, We’d have to come up with that $2,000 to $3,000 to make up for the short term loan we had been carrying in addition to anything we wanted to purchase that month as well.
For us, we prefer to charge and pay if off each month. We’ve already taken a few short vacations with the Marriott points we’ve earned!
-Jorge
November 28th, 2008 at 6:27 am
It’s a fiscal crime how little teachers are paid. The value a good teacher adds to the life of a child and the child’s family is immeasureable (is that a word?). It must be a job choice made out of love for the job - it certainly isn’t for the money. I have the utmost respect for the teaching profession.
November 28th, 2008 at 6:35 am
I know this isn’t your current point, but only a tangent–
In your estimation, do you think that the big name big box electronics stores are likely to reduce the sell price in exchange for cash?
November 28th, 2008 at 6:41 am
Both credit and cash have advantages. I believe it comes down to awareness. If you’re being conscious about your spending decisions you’ll be able to get ahead. However, if you’re walking around wiht your head in the clouds then you’re going to find yourself with some debt problems.
November 28th, 2008 at 6:46 am
Oh wow. I had no idea how little American teachers earn! Here in Ontario, once you’ve reached your salary cap (after 12 years experience) you can be clearing $80 000 a year.
I wish my teacher friends could see this post. It doesn’t matter than they earn a great salary, have fantastic benefits and a pension fund to boot, (not to mention more job security than the rest of us.. ) but they always seem to be complaining about money…
November 28th, 2008 at 6:47 am
I am a firm believer of cash only, in fact many people think I am crazy. On the 1st of every month I go to the bank machine and take out the exact cash I plan on spending the whole month. I find that it works because by not using plastic I actually think twice about my purchases. You must also possess strong self control inorder to do this because some of my friends have tried but they ended up blowing the cash because they had easy access to it.
I personally have a tougher time handing over cash than I would swiping a card. I used to do things differently a few years when I would purchase an item on credit card and then transfer the funds electronically. Now I am a strich cash man.
@Beth Yea funny you mention that I was just going to ask these people what planet they teach on. I know a few people a bit older than me that just began teaching and the entry level salary is roughly around $40,000. They are looking forward to the salary cap which touches $80,000. Not bad if you asked me.
November 28th, 2008 at 6:48 am
I agree. Although I still use my debit card for gas and groceries, I only take cash when Christmas shopping or otherwise.
November 28th, 2008 at 6:53 am
One day I was in Barnes & Noble, where we go sometimes to let our daughter play with the plush toys. We get coffee while we’re there and sometimes her dad buys this art magazine he likes to read–it’s a good time, and relatively cheap. Anyway, I saw a book some parent had left in the kids’ area. It was about personal finance for African-American women, but I like PF books, so I picked it up and flipped through it. Much to my delight I learned about this credit reporting agency.
http://www.prbc.com
All this time I thought you had to use credit cards to build your credit score, for the very reason PRBC exists: people usually get no credit whatsoever for paying rent and utilities and similar on time. PRBC aims to change that. They seem to be a big potential help to people who come to this country and they would definitely be a big help to young adults just getting their start in life.
I intend to sign up with them soon; my credit score is in the dismal 500s range. We’ll see if they do as much good for my other scores as getting a secured credit card would do. Even if they don’t, they have a program where you can qualify to buy a house if you’ve paid your rent and three other bills on time for a year. You have to sign up for one of three payment services they work with, but I am willing to do that.
I might still get a secured credit card when I can swing it simply because the law treats credit card and debit card purchases differently–credit cards have more legal protection. I want to get a strict hold on my budgeting and spending before I do that, though. And I’d only use it on things I paid off in full every month.
Other than that? Yes, cash is king.
November 28th, 2008 at 7:16 am
I agree about using cash. We started using the envelope system and have been very successful in keeping to our budget. By taking money out for dining has also kept that part of the budget under control.
November 28th, 2008 at 7:30 am
I love cash for negotiation. Just recently my mom went to a furniture store and found a leather chair she really liked. It was about $1000 and the guy wouldn’t come down. I told her to take $700 in cold hard cash, pull it out and ask if he would have the chair delivered to her house for that amount. At first he seemed unsure, but then he realized that he owned a small furniture store in rural NC (where furniture is plentiful, but people with $ are not)and we’re in a recession that has hit that area pretty bad. And this crazy woman has cash! Needless to say Mom spent Thanksgiving in her nice new chair.
My sister also raises and trains horses and she’s stocking up on horses now. She’s paying about a quarter of what she was for horses 2 years ago (a $1000 horse costs her $250 now). In a year or two when they are trained and the economy has recovered she’ll sell them for a very good profit. She always uses cash and she has plenty set aside just for an economy like this.
But like someone mentioned above you’ll still need to tend to your credit score if you plan to get a loan for a house. My sister uses cash all the time, both her houses are paid for - so she has a bad credit score cause she never uses credit. The best way to fix that is to have a credit card, use it for something you can’t really splurge on, like buying gas, and pay it off monthly.
November 28th, 2008 at 7:35 am
Interesting. I can see how this would work if you physically stacked up piles of cash allocated to x, y, and z part of your budget and then were careful to spend no more than that amount on each budget item.
It seems like quite a risk, though, to leave that much money laying around the house. Burglars are pretty knowledgeable about where people hide valuables, and so there are precious few places you can put your stash where it won’t be found. When my neighbor was burgled, his insurance wouldn’t cover the large amount of cash that was stolen, because he couldn’t prove he had it in the house and he couldn’t prove how much it was. I’d rather have only one object that can be lost or stolen, which has a $50 stop-loss on it: a credit card.
For me, an Excel spreadsheet showing the allocated amounts less the amounts spent over time works just as well or better than a fistful of cash. Guess it all depends on your individual psychology.
November 28th, 2008 at 7:42 am
I’d rather save $700 by not getting the TV at all. Honestly, whenever I see somebody using cash at the store, I assume they are a drug dealer, involved in the sex industry, or for some reason can’t get a bank account due to criminal background or immigration status. The wad of Benjamins makes me feel nauseous, the last time I handled cash I caught horrible bacterial infection. The stuff is so incredibly dirty and nasty and has been everywhere and is never sanitized.
As for spending more, the proof is in the pudding: I have stuck to my debit card based budget for almost three years every single month except one or two. Yeah, walking into a store with $50K in credit card limits on you and sticking to your budget takes a little discipline, but is more than possible and makes you stronger in the end.
November 28th, 2008 at 7:43 am
Great article, Danny. But, I do agree with you J.D., that neither method of spending is really bad. I’m a “credit” girl (but never have a carry over balance), but many of my close friends only use cash.
I think the most important point is that with conscious spending (really thinking about what we are choosing to spend our money on), we don’t necessarily have to worry about spending more money with a credit card. If one is disassociating their credit card with the money in their bank, then, yes, use of that credit card may promote a little more spending. However, when one equates their credit card to their own money/their own savings account, then I believe one can be just as conscious of a spender no matter what method they choose to use at the store payment counter.
November 28th, 2008 at 7:47 am
Tyler, I’m not an expert, but it doesn’t hurt to ask — especially if it’s a small business or independent. The reason is that retailers pay a percentage of each purchase to the credit card company, not a flat fee. Whether they let you have a little money off for paying cash or have to pay the equivalent to the credit card company often doesn’t make a difference to them. It’s money in the customer’s pocket rather than the credit card company’s.
Which brings me to another point — if you’re really looking to support local businesses, cash is better. It costs less for them to make a deposit than it does to pay all those fees when people use their debit or credit card.
I can’t help but wonder if using my credit card all the time for the reward points (and paying if off) is driving up prices as a result.
November 28th, 2008 at 8:05 am
Beth: Teachers’ salaries depend on which state you live in in the US. The US average is about 40k but I believe Connecticut and California traditionally have the highest salaries (I don’t know if that’s starting salary or after so many years of experience).
From what I’ve heard about Canada, the tax rates are a bit higher anyway so maybe in the end it evens out a bit in terms of take-home pay.
Just some comments…
November 28th, 2008 at 8:16 am
@frugal bachelor…I use cash exclusively, but I never carry more than I’m willing to risk losing. Plus, I have a system for minimizing my risk: I plan my expenditures ahead of time and run my errands on a specific day each week. My first stop is the bank. By the end of the day, my larder is full, and I’m down to a few twenties, which I split with my spouse to cover contingencies. I guess it’s all in your perspective, but it’s a hassle-free system for my family.
@Jorge…I remember that month very well. We prepared for the transition by putting money aside for a few months. I remember being very anxious about making the change, but it was worth it in the end. One benefit of being off the credit card cycle is knowing exactly how much money we have to work with at all times.
November 28th, 2008 at 8:24 am
Beth, I read an article by the small business association in my town that mentioned how much credit card fees hurt local businesses. Although I like using my (rewards) credit card, which I pay off each month, I started using cash/debit card at local businesses as a way to support them. I didn’t realize, however, that using debit cards cost local businesses. Going to have to start a strict cash policy when I shop at local businesses if they incur fees when I use my debit card.
November 28th, 2008 at 9:08 am
Sorry I forgot to clarify that I used credit/debit for big purchases like vacations or electronics, simply because some places do not accept cash. I never walk around with a wad of cash. I just go to the bank on the 1st of the month and pull out x amount and keep in stored safely in my home. When I leave the house I take as much money as I need for the day. If a robber were to break into my house I have bigger problems to worry about than losing a few hundred dollars.
November 28th, 2008 at 9:38 am
I agree with cash being king but to keep your credit rating up it is necessary to use a credit card once a month for a small purchase to show that you able to service debt.
If you pay with cash you are less likely to hand over the money.
November 28th, 2008 at 9:46 am
@Anne…Is using a credit card really such a big deal? Here’s some food for thought. When we went cash only several years ago, my husband and I each had credit ratings of about 740. As of April when I last checked, mine had risen to 795, and his had risen to 792.
November 28th, 2008 at 9:49 am
The $1500 in CC strictly-purchase-rebates (no BT arbitrage or bonuses in this #) I’ve received this year (as a quite moderate spender IMO) begs to differ with the cash-only method, but as has been said ad nauseam (including above I’m sure): if you’re not the type who can responsibly handle those CCs, then by all means don’t let them exist in your life. But then, be careful of preaching to those of us who do use them to our advantage, lest you be made to look like a fool, or at least the type without the same reasoned center.
November 28th, 2008 at 9:52 am
First, let me say at the outset that teachers deserve every cent they make and I would not do their job for twice their salaries.
That said, teachers are not poorly paid. Teachers make solid, average salaries for their communities and too often fall back on people’s memories of the underpaid, even poorly paid, schoolmarms of old to elicit sympathy.
Case in point: I live free of all debt other than my mortgage and it will be paid off within a year. I manage to have a six-figure savings/retirement account, take several nice vacations a year and an international trip every couple of years.
I buy my cars for cash and pay off all my credit cards every month. In short, I’m doing OK. Not wealthy by any means, but OK.
Now, if I compare my education and years of experience in my field to a similarly-educated local teacher with like experience, according to the public school district’s salary schedule, I find something odd.
Because I have 40 years’ experience in my field and only a bachelor’s degree, it is unlikely there is a teacher here identical to me; they have much more encouragement than I ever did to get advanced degrees.
Nevertheless, the salary schedule takes into account a B.S. and 40 years and comes up with a salary that is 25% HIGHER than mine.
Also, our local teachers pay nothing for their health insurance and all public school teachers in my state have a defined-benefit retirement. Working teachers do not have to contribute to either of those expenses, while I do.
Teachers: earning their money? You bet. Worth what we pay them? Absolutely. Poor? No way.
November 28th, 2008 at 10:31 am
I usually carry no more than $100 in my wallet, and it goes fast. I find that the final twenty lasts a lot longer the than first eighty.
November 28th, 2008 at 10:38 am
In the end it is all about discipline. My partner and I pay for everything that we can on credit cards or by debit and we don’t have any issues. We use a budgeting software that is based on the envelope concept and we know how much we can spend on what, and when. For us, at least, using cash versus plastic would not make a difference in our spending.
If someone is living beyond their means I could see how cash would help their situation - as it is finite. Or if someone has an issue buying lots of big-ticket items, the hassle of having hundreds of dollars in your wallet would probably stop them.
November 28th, 2008 at 11:00 am
I’m going to start using cash exclusively just because of Frugal Bachelor’s comment. I can only hope people would assume such exciting things about me based on my method of payment.
November 28th, 2008 at 11:01 am
As far as teachers go there are certainly many who make quite a bit of money for working 10 months out of the year, not including extensive vacations throughout. Two teachers married to each other can make a heck of living and live in conditions much better than the parents of most of their students. That said, I do not wish to generalize.
Like with many professions, the best teachers are underpaid while the worst ones are overpaid. The C students I knew in high school who went into public school teaching earn more per brain cell than anyone I know. Of course they are not the majority of teachers.
As far as cash goes.. In a really extreme emergency, cash is as worthless as credit. Better to have precious metals or even canned goods- something with inherent value that isn’t created out of thin air and manipulated by central bankers.
Really, cash isn’t any more REAL than credit is.
November 28th, 2008 at 11:07 am
BTW,
As a logical business owner I can say with 100% confidence that the cost of accepting credit is well worth it. Cash has transaction and handling costs as do checks ( especially bad ones). Accepting credit comes with a lot of convenience and security. Business owners who complain about credit transaction fees usually have many other problems and just like making excuses and conflict. And those who attempt to add fees for doing so are contract violators and sometimes lawbreakers.
November 28th, 2008 at 12:33 pm
Pete, you raise a good point. We do pay more in taxes here, but I’m not sure if that makes take-home pay comparable. On the other hand, our tax dollars are spent differently — so who knows?
November 28th, 2008 at 12:56 pm
Greg, I’m actually the daughter of former small business owners so I totally agree with your point that credit definitely has advantages. As a consumer, the ability to dispute charges is an extra level of protection I like to have for big purchases.
However, I don’t think people really understand how credit cards and debit affect businesses. Correct me if I’m wrong, in addition to the cost of the terminal (and phone lines), debit transactions are a flat fee per use while credit cards are a smaller flat fee plus a percentage (I can’t remember if it’s two or three?) So by using a credit card instead of debit, the business has to pay more. More operating costs translates to higher costs for consumers, right?
I don’t think it’s unreasonable as a consumer to ask for a discount if I’m paying cash (or debit). The worst the business can say is “no” — in which case I wouldn’t feel guilty using my credit card
November 28th, 2008 at 4:40 pm
Maybe its just me, but when I have cash in my pocket I am just like a 10 year old with his allowance! I feel like I have permission to buy whatever I want because, see I’ve got the money right here!
And there are lots of times where it would just be totally inconvenient. What if you went to the store to get your weeks groceries and you were like .33 cents short? Do sit there and go through all your stuff to see what you need to put back? What if you really DO need everything? Do you just leave it all there and go hunting out in your car for spare change and waste an hour trying re-shop for everything?
Maybe I’m just a weirdo but I blow through that money much faster when its in my pocket than in the bank with my debit card. Maybe its mostly because my company candy machine doesn’t take Visa.
November 28th, 2008 at 4:45 pm
I hate cash. nasty, germ infested bills. yuk. you have to carry lots of it or have lots of it around. if not, then you have to make trip to the atm machine, etc. i hate carrying a big wallet, so i don’t like stuffing money into it. i hate the fact things aren’t whole dollars, so you get lots of change. what happens, is i collect the change, then i go to those coinstar machines which cost you money. if not, then you have to get the coin rolls and do those and still go back to the bank again. or you have to count out everything at the cash register.
i suspect that if the store accepted $700, they would have accepted $700 regardless of if it were credit or cash.
November 28th, 2008 at 4:53 pm
Come to New York State and teach. Competition is fierce outside of the city, you really have to know someone to get hired but you can start at $32,000; 100% paid health insurance, and a steadfast pension plan.
P.S. Teachers salaries of one suburban Western New York district were published in the paper. One elementary art teacher, with 28 years experience, was making $87,000 - no additional projects or responsibilities.
Of course, the arts are important but in New York State teacher contracts are sweet.
November 28th, 2008 at 5:04 pm
“Times are tough. Many are finding it more difficult to stretch their dollars.”
I keep hearing this on these kind of blogs but it doesn’t quite make sense to me. It seems like most people would be about where they’ve been all along except the people who have lost their jobs. Job loss is a big worry and like many have started saving more to have a cash buffer just in case. But if you still have your job how are things tighter than they were?
November 28th, 2008 at 5:06 pm
@Rob…You have an excellent point: in the end, it’s all about discipline, regardless of whether you pay with cash or credit. Living below your means is the ultimate goal, and both systems can be utilized effectively to that end.
That said, please don’t characterize those of us who use cash as people who can’t use credit wisely. My primary reason for using cash is privacy. It minimizes my risk of identity theft, which is well worth the *hassle* of anticipating my family’s needs, planning my purchases, visiting the ATM, and doing all my errands on the same day each week.
@Rachel…The short answer is “yes,” but after several years of using a price list and prioritizing my grocery purchases, I’m pretty darn good at figuring out how much I will spend.
November 29th, 2008 at 7:37 am
Interesting stuff!
I put every expense that I possibly can on my AmEx card. And I pay that sucker off every single month.
The result is that I’ve got boku rewards points that I’ve used for free upper-class travel to places like FL, CA, and even Africa.
SO there is an upside to credit…
November 29th, 2008 at 8:55 am
I just recently started using cash mostly - I deposit my check, move some to savings, and pay bills online out of checking. But I pull out about 40-50 a week to blow and 30-40 for gas(I work close to home.) Whatever I have left the following week, I save. It’s helped me a lot, completely changed my spending habits for the better!
November 29th, 2008 at 10:46 am
I noticed in your article you stated “This leads us to buy only those things that we truly want”, how about “need”, do you truly need most of the items purchased with this thought, evaluating “need” will cut down on wasteful purchases that sit in the closet, cupboard or garage, of which I have many. At this time I am now trying to eliminate this behavior by evaluating “do I really need it, what will happen to it after I purchase it”. My savings account is now going up and I find I do not miss having many of the items I thought I wanted. I am also trying to eliminate those items I wasted money on, that I do not use, by finding someone who may actually “need” them, through freecycle.org and such.
November 29th, 2008 at 10:55 am
I think its funny that people have such an aversion to cash because they think its dirty and germ infested-but don’t think twice about using a debit terminal which has probably been handled by hundreds of people and most likely hasn’t been cleaned since the first day it was set up. I wonder if they use a hankie to open doors and press elevator buttons too. Don’t mean to freak out the germ paranoid but its ALL dirty, people! And don’t even ask about the handles of shopping carts or the pump at the gas station.
November 29th, 2008 at 12:46 pm
@Esme: I travel around in a bubble. there’s a difference of course between plastic or atm machine surface and cotton paper bills which absorb everything and anything.
November 29th, 2008 at 5:18 pm
I found “The Richest Man in Babylon” has a good concept: You put a minimum of 10% of your salary away before you spend it on anything(including taxes). You then have to get used to using the remaining money sensibly.
I would like to recommend that people read Ellen Brown’s “Web of Debt”, after reading this book you might have a more informed idea to the underlying structure of money(cash V credit).
November 29th, 2008 at 7:26 pm
I use both cash and my check card, depending on the expense.
Carrying cash is great for me especially for eating out and getting some iems while on vacation. I like haggling with some vendors and I have found cash to be an aid.
For other expenses I use my check card as it’s easier for me to keep track in Quicken where I spend my money.
Lots of wonderful tips in the post.
November 29th, 2008 at 8:38 pm
I vowed to have a “cash only” weekend over this holiday during a time that for most people (and for me last year) can take a huge chunk out of the credit card. Today I went to a craft fair with $225 in my wallet and came home with a great haul and $20. Last year I rang up well over $400 on my credit cards there. There are still times when I whip out the plastic, but I am making baby steps toward getting out of the habit.
November 30th, 2008 at 3:55 am
When I lived in England I used credit cards for all my monthly spending, then paid the balance off each month. Now I’m living in Greece and this is still a mostly cash economy. It’s been a bit weird getting used to seeing people getting out huge wads of banknotes, but equally, it’s refreshingly weird that there’s no-one slinking around by their shoulder wating to steal from them.
We bought a car and the dealer would only accept cash - no checks or credit. And some restaurants won’t accept credit cards, so you do need to have some cash with you.
It actually feels right to use cash - its usually quicker and we are much more aware of when we’re running low. I hope Greece doesn’t catch up with other western countries too quickly!
But we haven’t abandoned credit altogether - we have a debit card so we can get at our cash when the banks are closed (or on strike, which is more often than you’d think) and I still use a credit card for some large purchases, but I get stung by the exchange rate from euros to pounds.
If you come to Greece on vacation be warned - bring cash!
November 30th, 2008 at 9:01 am
I just recently subscribed to your blog and enjoy getting the daily emails. Are you under the Dave Ramsey Philosophy? If not it sounds similar. What a lot of consumers don’t realize is that there are large fees charged to the retailers. My family is in the c-store/gas business and we are also a member of the Nat. association of C-stores. Credit Card fees are out of hand and we have people lobbying each day to get these fees decreased. Point being to have the economy come full circle, support your local and small businesses by paying cash. They really appreciate it and statistics show that you will spend less like the article states.
December 1st, 2008 at 10:09 am
cash is king. bond is queen.
December 1st, 2008 at 11:07 am
At this point, I’m not sure which camp we are in.
We tried using only cash when we started our Total Money Makeover in Jan. 2007 but quickly found for us that cash was too hard to track. So we mostly use debit (which is almost cash) and we each have an allowance for our discretionary spending and when the allowance is gone we stop spending. We both have credit cards but we don’t use them (or carry them) except for travel or large purchases for which we want extra protection. We have tried, and had success, with using cash when we bargain. I agree that if you have x amount in cash you can get stores and service providers to bargain down ward.
December 2nd, 2008 at 11:37 am
I think the main issue regarding credit and overspending, is that people don’t realize how much they’re spending. It’s not very discouraging to hand over the same card over and over again, for every sized purchase. If it was a big wad of cash though, I think many people would think twice.