On the other hand, I know precisely how much money I can spend every month. Once I allocate money for savings, the mortgage, the utilities, saving for irregular expenses, and regular monthly expenses (including an entry for the cash I will need), then I see how much I have left per week. The rest goes into savings. Each week I transfer that week’s grocery, pet, gasoline, and other money to my account. If I spent less than I allocated, then I transfer only enough to bring the total up to the next week’s allocation.

Even when I am super busy and don’t bother transferring money, I still know to the penny how much I have spent on debit and how much I have left for the week. Cash just evaporates; debit (carefully used) leaves a trail.

As with any method, this is clearly a YMMV issue. I am in awe of the people who have self control over cash!

I like the idea that, once the money for a particular enveloe is emptied, then no more spending in that category until the next pay period. At times, it’s just not convenient to carry the cash where I need to go or for what I need to do, so I use a credit card or debit card for that purpose and track the purchase, effectively popping the money from that envelope into the “next payday” envelope. The idea is that I then only pull out enough to fund the areas, using the money I already have out and redistributing it.

One of my little tricks for short term saving is to go to the post office, buy a single postage stamp to send a letter, get my change in dollar coins, and then drop those dollar coins into a piggy bank. When the bank is full, take those dollars and go get what I was setting the money aside for. Is it inconvenient to carry around a ton of dollar coins? Absolutely, but again, it forces me to make that deliberate step to put aside what I need to so I can get what I want without worrying about where the money is coming from and what else it can be used for. The expression on people’s faces when I hand them a fistful of dollar coins is often hilarious (I’m sure they must hate me at that moment, but oh well :) ).

The point is, it makes you think. If you think, you are less likely to spend on impulse. If you take the impulse out of the equation, you ultimaterly save more. To me, that’s the end goal.

I’m not nearly as offended as some, but I have advised several people to follow my example and use a system that is more cash-based. Those of you who posted that you use a debit card system with diligent record keeping are simply doing the “virtual cash” approach. I can agree with both, but have found that paper cash has worked better for me.

On both sides of this point it boils down to this: those who actually spend their money at the time they buy something tend to have better control of their finances. Thos who rely on time delays for payment (delay debit, or credit) to take place some time after the purchase are more likely to overcommit or misplan. There are, clearly, exceptions on both sides.

The thing I see that (almost) all the posters on this thread have in common is this: you are all likely to remove the cost of a thing from your future financial plan from the moment you make the decision to purchase it. You don’t even wait to make the purchase, you’ve run a balance of your accounts in your head while still driving to the store — – and you’ve taken that money out of the equation prior to actually spending it. That’s planning. That’s not normal for most people. I love it.

I’ve never had credit card debt. Sure I’ve made some stupid purchases here and there and maybe could’ve saved a bit more when I was younger, but I’ve always known where to draw the line. I grew up in cash-only country and didn’t have a card for the first few years in the US. I only got the first credit card after I started working and got a bank account. By the time I got my first credit card, my spending habits were well established. Just having it in my wallet didn’t make me go on a spending spree. So maybe using cash to clearly understand how much one can afford before using credit cards makes sense. But if you aren’t sure you’ll be able to control your spending with credit cards, you certainly shall stay away from them.

“Pay cash and debit is about living within your means and not spending what one does not have.
I don’t care what other people do, but the superior attitude is a little bothersome.”

I think superior attitude goes both ways. I think the decision to avoid credit cards is a valid one as is the decision to use them and pay the bill in full. But your statement clearly shows that you think everyone who uses credit cards is not living within your means. This is just not true. A lot of people use credit cards and pay off their balances in full. Your statement “For every person who makes a token sum using credit cards, there are thousands more who become conditioned to “debt slavery” and never get a damn dime back. ” is wrong. 42% of the credit card users pay their balances in full: http://www.send2press.com/newswire/2006-03-0302-002.shtml. This may not be a majority, but it’s almost half. Additionally, this is really free choice. Credit cards just give you the ability to borrow money and they clearly warn you that if you don’t pay in full you’ll pay interest. Buying stuff you don’t need is still your choice.

I used these advantages for my benefit, since I wasn’t buying big ticket items. I was nickel and diming myself to death through vending machines, coffee and breakfast in the mornings, etc. If I carry cash, I for some reason don’t consider it something to be saved – I revert back to my childhood thoughts that cash should be spent to make me happy. It changes my mindset and if I start the week with 40 dollars in cash I end the week with a few cents and nothing to show for it (except some gum at the gas station, 20 cups of coffee from the cafeteria, 2 DVDs that I’ll only watch once, etc).

I can really see how a cash only system would help someone who buys moderately expensive things like video games or expensive kitchen gadgets on a regular basis. Take this example: You have 50 dollars in cash and you stop by bed bath n beyond and see a really nice all-clad saute pan for $110 on sale. If you have to drive to the bank to get enough money to buy your new pan, I think you’re less likely to actually go back and buy it. But depending on how you work, you might “reward” yourself for not buying it by picking up a 40 dollar bathmat instead because you’ve got the money on hand. I often fall into this kind of trap, and then go back and buy the pan later anyway. I realize that the ultimate problem is my ability to control my purchases, but I can use the psychology of cash vs credit cards to keep my spending down. But that’s just me.

I also find that carrying only credit cards makes it very difficult for me to simply drop a couple bucks in a vending machine, and it keeps me from going inside the gas station store altogether. I used to buy something every time I got gas or passed the vending machines on my way back to my desk. Having no cash makes it impossible for me to buy that mountain dew. The water I get for free from the fountain is better for me anyway, so it’s a win-win for me. But again, that’s just me. I can see both systems working well for different types of people.

I have a cash budget for my daily coffee (the $1.50 type not the $4.00 type) and for lunch when I don’t bring it.
I can reconcile my ATM withdrawals and my credit card statements much more easily.
I don’t think a cash-based system would work for me as well. And, for those small $2 impulse purchases…well my technique is to go home. And if I really need it, I will go out again to get it or remember to get it the next day. Otherwise, the $2 stays in my pocket.

Paying cash and debit is not turning down free money. There is no such thing as free money. Pay cash and debit is about living within your means and not spending what one does not have.

I don’t care what other people do, but the superior attitude is a little bothersome.

Some rewards cards may be scams, but ours is totally legit, and we have the cash to prove it. We’ve ‘earned’ $300 to $500 a year for the last seven years – which we take as a credit to the card or as gift cards (our choice) – just for using our 1% cashback card. Paying cash (or swiping a debit card or writing a check) makes no sense to us, it’s the equivalent of saying “no, thanks” to free money and we’re not rich enough for that…yet! =)

I prefer cash or debit spending for normal household expenses. The only electronic billing I have set up is for the credit card, due to the exorbitant late fees that could occur due to a postal snafu.

I don’t play the credit card “rewards” game, because I believe it’s a scam in most cases. Nor do I carry much of a balance. If my balance is over $1000, I’m not happy. Ideally, no balance at all would be better, but we’re a one-income family right now. Having paid off over $6K in credit card debt, I feel that my current system will NEVER land me back there.

The problem behind credit cards is that you normally have a much HIGHER limit to be spent in a month than what you have available in your bank account to pay it off with. For those with a swipe-it-and-forget-it debt problem, going to cash IS indeed training for controlling your spendings. If cash is just inconvenient for you, then you have to control yourself before you should trust yourself with plastic.

If cash works for you & has no inconvenience factor, by all means do what works for you. I think the gist of the post is to 1) stop the maddness of useless debt spending 2) get a way to control yourself and 3) continue to do what works for you for debt control but in a way that’s feasable for life.

I realize most people check their online accounts daily, but that’s too much of a hassle. I do an ATM withdrawal twice a month, fill the envelopes and we’re done with it. I never have to worry about having enough money in the account because it’s in the envelopes.

I guess each person has to find what’s best for themselves.

The “silliness” of charging $2 is not the only system that curbs my spending. I use software called You Need A Budget, that is basically an electronic envelope system. It works great, but it is much easier to track my spending when there is an electronic trail (i.e. credit/debit transaction that can be downloaded). When I withdraw, say $20 from the ATM, then I find if much harder to track and put into a category.

I have actually gone to a mostly “cashless” system because it helps me keep a better eye on my spending. I get upset when I can’t use a credit/debit card somewhere, because I rarely carry any cash.