4 reasons I use cash instead of credit cards

I’m honored to be guest posting over at Simple Mom today on a rather controversial subject: why I use cash instead of credit cards. Here’s a snippet of my post:

We have a policy at our house: if we can’t pay cash for it, we don’t buy it. It’s a plain and simple policy, but it’s saved us a boatload of debt, fights over money, and stress about our finances.

Sure, it has meant we’ve gone without a lot of different things we wanted over the years because we didn’t have money to pay for it. But truthfully, I’ll take the peace and freedom that comes from living without credit card debt over all the bling and stuff. It’s worth more than money can buy, anyway.

Do I think credit cards are evil? Well, I wouldn’t go so far to say they are wrong or immoral, but I would say that I’d strongly encourage anyone who is currently swiping plastic on a regular basis to step back and consider a few things…

Click on over to read the whole post and be sure to leave a comment over there to be entered to win one of 10 copies of my book!

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  1. Leighann says

    We don’t have any credit cards. Everything we have we pay cash for.

    There have been a few times that we’ve gone hungry because we haven’t had a way to buy groceries. It’s not so bad for the grown ups, but we have small children and watching them be hungry is no fun. A credit card would have at least let us been able to buy some food.

    It also makes it really hard to build up credit so that you can get a mortgage or a car loan. My husband and I have no negative points on our credit score, but we don’t have any positive points, either. We can’t get credit, so we can’t get a loan to help build our credit up further, so if the car breaks down we don’t have a way to get it fixed (and our poor 98 Saturn wagon stayed broken down 8 months out of 12 last year because we couldn’t afford to fix it, which meant my husband went without work quite often, which meant we lost out on even more income).

    However, at the same time, we’re not drowning in credit card debt. We’re not spending more than we make, and we’re paying cash for everything. There’s always a balance.

    • Leighann says

      I do have to say that there is one big huge downfall to using a cash only system.

      Last year, after we got our tax refund, I was out with my two children doing shopping. I had withdrawn more than $400 in cash, to use on groceries, property taxes and other things. It was all in my purse. Somehow, I’m not sure how, my purse and I got separated in a store (I’m pretty sure my toddler helped with that) while I was distracted with deciding things (you know how it goes).

      I am so, so lucky that the person who found my purse turned it in to the store and didn’t keep the cash. All the cash was still in there. However, they could have easily kept all that money.

      That’s my biggest fear with carrying large amounts of cash (like for grocery shopping). Now when I do it (not like I have any other choice) I am constantly checking to make sure the cash isn’t lost. It’s not saving any money when you’ve got $100 to buy groceries with and you lose it all, or someone picks your pocket. At least with a debit card or a credit card you can usually dispute the charges. If you lose cash, too bad, so sad.

      • Liz says

        I agree! I hate carrying large amounts of cash. Right after graduating from university I moved overseas and lived in a country where cash was used for everything. I remember walking from the bank to my travel agent once with the equilivant of about $850 cash to pay for a plane ticket – and I was a nervous wreck the entire time! I rarely carry more than about $20 with me now that I’m back in the US – and my credit card (which gets paid off in full every month!) is used for almost every purchase I make.

        • Kamila Straker says

          I agree with you that lost cash is just plain painful but just to illustrate that losing CC could be just as devastating.

          Couple years back I traveled across the States and must have either lost my card at a pharmacy or it was never returned to me in the drive thru window. By the time I realized what has happened, there were already 3-4 charges of gasoline and snacks from a local gas station. I found out about the card about 3 hrs. away from the pharmacy when I was trying to check into a hotel. Luckily my bank covered all the items and gas that wasn’t mine. These thieves were FAST FAST FAST. Plus I had no CC for the remainder of the long trip.

          Lesson learned. I like cash. I carry it always in my back pocket of my jeans. So far so good.

      • says

        I completely agree with you. I personally do not own a credit card and never have. However, I do have two debit cards and use them frequently. I can’t express how much safer I feel carrying my card instead of a bunch of cash. I know in the past month I left my wallet at work, out in the open, and didn’t even realize I had. When I figured out I had misplaced my wallet, the least of my worries was whether or not someone wiped me out. I knew if they had gotten a hold of my debit cards, that I could easily have the money returned to me. Its a good feeling to have. I have enough stresses in my life as it is.

      • says

        Just to clarify, I don’t carry large amounts of cash on me. Only what I need to cover what I’m planning to buy and then a little extra. I definitely do not recommend carrying around hundreds of dollars at a time–especially if you are prone to losing things!

      • Stephanie says

        Why in the world would you carry around those large sums of cash? It makes no sense. Only take out what you need. If you have to pay bills , pay that first before going to the grocery store so you don’t have a bunch of cash on you. Cash makes you be responsible with what you buy and how you carry it. No one says you have to keep hundreds of dollars in your purse all the time

    • Anonymous says

      I respect your decision, but I do not think I could watch my kids go hungry, or have my husband go without work. I think I would probably have used a credit card to buy groceries, but only the bare minimum.

      • Jen says

        I highly caution against using debit cards at gas pumps. Thieves are well known to install skimmers on the pumps. They attach these skimmers inside the pump where you can’t see them, or they attach them over the card reader with double-sided tape. The data is transmitted through Bluetooth technology. Then they transfer that data to blank magnetic-stripped cards and drain checking accounts. Debit cards don’t offer the same fraud protection as credit cards. If someone skims a credit card number, the bank will investigate the charges without the victim losing money immediately, unlike debit cards, where it could take 10 days to replenish funds.

        • says

          Well what’s the difference between a debit card and the one linked to my checking account? We use Chase bank and they’ve always been awesome about investigating charges, we had a card get stolen one time, and they removed the charges right away.

          • Tabitha says

            If you use a debit card like a credit card, you are protected under the credit company on that card (ours happens to be Visa) even if the money is coming out of your checking account….IF you put a pin code it and use it like a check… you only have checking protection from your bank…

      • Brandy says

        I would be careful using a debit card online and especially at the pumps. Through my research after my information was stolen from what we think was an online purchase during the holidays is that the number 1 place card info is stolen is from debit card use at the pump.

      • Brandy says

        With the prepaid Visa cards, do you have to pay the $4-5 activation fee every time you load money to it?

      • says

        Would a prepaid card establish credit? Someone further down is wondering about establishing credit if you don’t have credit card and don’t finance anything and I’m wondering the same thing.

        • says

          Crystal, I used to do that, but then on a secure site, had my debit card used..The bank was able to stop it as we figured it out before they made the charge, but it scared me and I have not done that since.

  2. says

    We are huge fans of cash only. Actually I have a question that’s a little off topic but still related. We are hoping to buy a house and want to get an FHA loan but since we have always been on a cash only system, we’re being told that we have to get a credit card in order to establish revolving credit. Our bank (Chase) told us they don’t offer any secured credit cards right now. Any suggestions? Is there a way we can do this without acquiring a credit card?

    • Kari says

      I don’t know much on this subject…but try to find an underwriter. I don’t even fully know what that means, but I do know it is an option.

    • e says

      Im sure Dave Ramsey has insight on this on his website or books. He is completely against credit cards and he doesnt think you need to build credit at all.

  3. Cheryl says

    We could pay cash, but we usually use our credit card. We get 1% back, so it’s like a discount on everything we purchase. Then we pay it all off every month. Our credit union gives us a higher interest rate on our account for using our debit card 10 times during the month, so we do that, too.

    • Ginger M. says

      I’m glad this is working for you, but it did not for me. Just as Dave Ramsey says, it turns out I was spending much more money when I used my credit card than I do with cash. I do still use my CC, which pays 2% cash back, for things like gas, utilities, charity, and medical bills, and pay the balance as soon as I get home, but I have proven (and reproven) to myself that I cannot be trusted to use it for groceries, eating out, clothes, etc.

      • Kristie says

        So true! That’s how it was with us. We got rid of all our credit cards. We use a debit card, rather than carrying wads of cash around. It is still easy to go over-budget, but it’s a good alternative to credit cards.

  4. says

    We use cash for groceries. It’s much easier for me to *see* what’s left and stay in my budget. If I get birthday or Christmas money, I’ll also keep it in cash. Again, impossible to overspend an envelope if it’s in cash. And we get a little bit of “blow money” every month that is cash.

    For all my other (non-bill) expenses, I use the debit card. I like having it with me. Much easier than cash all the time, especially with kids underfoot.

  5. says

    No credit cards here. “If I can’t pay for it now, how will I be able to pay for it later?” is my explanation. I have a debit card for online purchases and fuel (it’s a convenience, otherwise I have to take all the kids into the store with me), but cash is king for everything else.

  6. Liz says

    As I read through your post I just kept thinking “What do you do for those things where you HAVE to use a credit card?” – specifically like paying for things online. I saw your comment above that you use debit, Paypal, or prepaid cards – but doesn’t Paypal require you to pay with a credit card? And, what about if you rent a car? I tried to do that once before I had a credit card not realizing that car rental places won’t take cash or a debit card – and let me tell you, it could have put me in a very difficult position in a very unknown city if the gal who was helping me hadn’t been extremely accomodating.
    Maybe I’m wired differently than others, but I love having my credit card (and I only have ONE) and I’ve never used it for something that I didn’t have cash in the bank to pay for.

      • says

        I ran into a problem at Enterprise in Denver (DIA) this past November, where they wouldn’t let me use my debit card. I was shocked…I wasn’t using credit cards at the time, but by God’s grace (seriously, long story, long trip home), I just happen to have my husband’s company credit card on me and they took that.

        I am no way endorsing credit cards, I don’t like them…but I did have that happen…”grain of salt”

      • Leighann says

        I have tried to rent a car several times. One of those times was actually an emergency. No rental company (and I tried all of them in a 75 mile radius!) would rent to me or my husband without a credit card. They refused to take our debit card, they refused to take cash, and they refused to let my father in law use his credit card and for us to drive the car. You were really lucky that you got to use your debit card, because I was never able to!

        • says

          We typically rent online as part of a package deal through a travel site. Have never had a problem there. I’m sorry you ran into issues.

          • says

            There was one time I was thankful for that credit card, was when I was getting a hotel after getting stranded in a nearby city, they needed more than one form of payment even though I was paying with cash and had to have a credit card on file and not a debit card. They never charged anything on it, but it was a nicer hotel.

        • Tammy says

          I guess the key word here is emergency! Very hard to get a car at the last minute when you need one real fast.

          Of course since you were looking at package deals online debit cards work .

          There is always the good and bad with every story.

  7. says

    Another thing I love about using cash: wouldn’t you feel ridiculous whipping out plastic to pay sales tax while working the deals at Walgreens? I’ve had times when I had absolutely nooooooo cash or change on me, so instead of putting .19 on my debit card, I bought things I didn’t need…doesn’t happen when I’m carrying cash!

    • Sandi says

      No. Why would you feel ridiculous using your card to pay for the tax with your card? I just don’t understand. The cashier probably doesn’t care. I would feel more silly for purchasing items I didn’t need just because the total of my transaction was low.

    • Allison says

      As a former Walgreens employee, I second what Sandi says. As long as the payment went through, didn’t involve $10 worth of pennies, and wasn’t suspicious or fraudulent, I really didn’t care how people were paying.

    • Wendy says

      I wouldn’t feel silly about using my debit card to pay 19 cents. My Wags cashier doesn’t care and my bank pays me 10 cents every time I use my debit card as a credit card. :)

      But whether I use cash or debit card, I know how much I can spend and always have a list with me in the store where I keep a running total. That way I know what I should be paying at the register so I don’t go over.

  8. says

    Wait, you don’t use credit cards? :) Just kidding . . . I know you’ve discounted the role of cashback programs before when people raise that issue, but we really do use our credit cards only if we have the cash to pay for it, and mainly for the big purchases. I don’t think paying in cash is as painful as you say for everyone – for me, for whatever reason, it doesn’t hurt to pull out bills and hand them over.

    What does hurt is the fear of how big the bill will be at the end of the month when I’m using my card. I don’t swipe it mindlessly – it feels like real money to me, because we commit to paying it off at the end of every month and always always have. The other thing I do to remind me of how much everything is costing, whether I use a debit card or credit card, is to write down the amount of each thing in a little notebook after I leave the store and before I start my car. It’s just a little mental accounting that says, “Okay, you did spend money, even if it was $2 here and $2 there.” I don’t really use credit cards for most of our purchases, though, unless they are big ones that have a decent reward. For example, when I ordered my contacts through VisionDirect, I got a 15% cashback discount, which was significant since the order was close to $150. My dad also gave us cash to buy a tv for Christmas, and at Sears.com through our card, they had a 15% cashback discount which added up to an extra $100 off. We had the money already, and wouldn’t have bought it if we didn’t, but just between these two purchases we saved close to $125.

    Just as a sidenote, I did get a promotion from our credit card company recently that announced they were giving a $250 cashback bonus for people who put $1500 or more in purchases on their account each month for six months straight. That kind of thing bothers me, because I know it’s their goal to get people to carry a balance they can’t pay off. And there’s no way our budget could afford such a thing – $1500 is almost the sum of our monthly budget! ;)

    • Jen says

      Well thought out post Jenni. You can see our story down further, but will also say here that we’ve gotten 5% cashback on gas because of two difference promotions over the course of the last 6 months. We’ve saved $90 that way.

      I also agree with the cash not being painful for me, but the bigger card bill makes me cringe.

      • melissa says

        Same here… I write everything down that I spend… but I do put it on a credit card each month. I’m pretty sure if we had $40 a month in an envelope for eating out, we’d spend $40 a month eating out. If I have $300 in grocery money, I’ll probably spend all of it. When I’m putting it on my credit card, I’m consciously trying not to spend as much because I am trying to keep my bill as low as possible. I know everyone’s different, though. We are considering trying it, just with groceries, just to see.

        • says

          Oh, I do spend every penny in every budgeted area. I’m a budget nightmare. LOL And when I’m not using hard cash, I tend to do things like, “oh, that was about $20 and about $10, so I have $10 left to spend.” When in reality, it was $24 and $15, and I only have $1 left to spend.
          I’ve gone over my budgeted amount too often, cause when it’s to my favor, my math skills get weak. :) I can’t argue with cash.

  9. Carrie says

    We currently use credit cards and pay them off each month, but want to switch to cash only. Any suggestions for the transition? For example, we are trying to figure out how we pay last months credit card bills this month, plus have the additional money to pay cash for this months expenses. Thanks :)

    • erica says

      I have always struggled with that too! I would say start small. Just take out enough to have spending money the first time. Then keep doing that. I really like my credit card for paying bills so I have switched to cash this month for the first time but I will be paying bills with the credit card and everything else (groceries, going out to eat, gas, spending money) will be cash.

    • Rachel says

      We had this same problem when we took the baby step to paying cash for our groceries/eating out. That first month when we were paying off the credit card bill amount for the previous month, we had an “eat from the pantry” month and only bought bread, milk, eggs and butter. It might not be an option for you, but wanted to mention in case it is.

    • beth b says

      We are in the middle of this transition too. I’d suggest starting with groceries. I’ve been doing this for years. Our next step is Target (or drugstore) money and clothing because those are the areas I overspend.

      I went through our monthly expenses and figured out which things will still go on the credit card ( gas, instrument rental for our son, my husband’s online comic order) and which paycheck will cover that payment. Those expenses are areas we aren’t likely to overspend. Then I decided how much cash comes out of each paycheck.

      One of our problems is yearly or several times a year bills we fail to plan for even though we see them coming. We added them up and divided that number by 12 so that amount goes directly into savings each month. The monthly total was $315 which explains why we felt like there was always *something* coming up!

      No idea if this helps you. Or how well it will work for us as we only recently tweaked the system. :) We’re preparing for an income drop so are taking the next six months to develop a good system.

  10. says

    We started using cash, there have been some major challenges, but we are doing our best. One thing that was hard was a friend of mine went shopping with me, we both bought our purchases together to use a coupon and some store cash credit. She forgot her checkbook and I ended up paying my grocery money for her purchases as well as mine, now I have to wait until her check comes in the mail, because she lives in another town…luckily it’s all good. I had just bought groceries and stuff…but I kind of panicked for a second there. :D haha

    On a completely different subject…does anyone know where a good place to start a link-up party on your blog is?

      • Leighann says

        So how do you come up with over $100,000 to purchase a house? Just save for 30 years until you get the cash?

        • says

          Well, in Crystal’s case, her income combined with her husband’s allowed them to save enough money fairly quickly.

          If that’s not the case in your life (it’s not in mine) then, yes, you’ll have to establish credit. And I don’t know the answer to how, without credit cards or financing something. Seems to me that you’d have to do something.

    • Melissa N says

      Get a card and only charge gas on it. Pay it off every month. That will establish credit. Should be fine as long as you have enough money to pay for your gas every month! Or just charge a pack of gum on it and pay it off. Even that will establish credit.

      • says

        But still go against the “cash only” principle.

        It’s a great question and one I’m not sure of the answer, too, as most of us don’t have the ability to pay cash for a house, which is what most of us need to establish credit for.

        But, not everyone thinks that buying a house is necessary, either.

    • says

      I have a section in my book that talks about how to build credit without getting burned. I think it’s an important thing to consider in this day and age.

    • Andrea says

      An acquaintance of mine just got a “build your credit” loan for $500 from a local bank. I don’t know the details, but he is young and has no credit and only works 16 hours each week. Perhaps something like that would work for you.

      When I wanted to establish credit 20 years ago, I got a store credit card (JCPenney). The credit limit was very low ($200, I think). I used it once every few months for a couple of years for small charges. After a year or so, I qualified for a regular Visa card (also with a low limit). Granted times have changed, but I was able to get an auto loan from a dealer a few years later without a co-signer.

  11. Jen says

    We are not a cash only family. In fact, I actually spend more and have a harder time keeping track of it. I will not let myself use it unless absolutely necessary.

    We have one hard and fast rule that we have NEVER broken – we pay it off every month. We are VERY disciplined with it – always have been so I can see where it could be hard for some. We have used Crown Financial’s concepts and software since before it was Crown and was associated with Larry Burkett and Money Matters.

    In fact, My husband gets paid every two weeks – so I make payment every two weeks. I actually do something now that REALLY helps us keep things in our budget lined up. I keep a running entry in our financial software for the upcoming payment. Whenever I use the card, I enter what I purchased under my Chase payment in our checking account. Even though I won’t make the payment until next week, the running total has been subtracted out of our envelope system.

    For example, the doughnut I bought as a surprise for my hubby and left on the seat of his car (no he didn’t sit on it!): I added the total of the doughnuts (bought a dozen and gave them out to several people) to the total of my impending Chase payment. Our software uses the envelope system, so I also had to change the amount deducted from our “eating out” envelope. It may sound like a lot of work, but it works for us.

    We are only 10 months into our new normal (hubby working/NOT in school and me at home/NOT working). We have 6 mths of my hubby’s salary liquid in savings. We have paid down $5000 of his student debt. We sold one home (had to b/c of a out-of-town move) and put 20% down on a different house. We toyed with the idea of renting, but a 2 bedroom apt in our current area is $1500 a mth. We were able to find a 4 bedroom 2 1/2 bth home on 2/3 of an acre with a mortgage of only $800 a mth. No car payments. We also had $7000 in medical bills and $2000 in auto mechanic bills that were paid as they came in during the last 6 mths. We also tithe and support two different missionaries.

    I don’t mention any of these figures/items out of pride. God gave us wisdom and direction. God honored our obedience and surrender. Hubby does not make 6 figures, but God provides when you are faithful and wise with your money.

    • betty says

      I have always been disciplined with my crdit card, paying off every month. I think the one thing that cash budget has that cc doesnt, is that you spend a lot more when you have a credit card instead of cash. Maybe you dont but I know most people do.

    • Tammy says

      Crown Financial’s concepts and Larry Burkett -shows the generational difference in who to read and learn from when learning about finances! I wonder who will be the next name after Dave Ramsay is not the guru!

  12. erica says

    This month I have started the cash budget. I have had a credit card since I was 16 and always paid off the entire balance every month. Recently we got behind and havent been able to catch up. Since I am in charge of the finances and my husband is terrible at it, I decided to try something else. I have decided to do half and half, we use cash for groceries, eating out, we each get our own fun money (my husband calls it his allowance), gas and family time. I use the credit card for bills and thats it. I know seeing the money leave our hands will impact us greatly.. its so easy to spend money with a credit card! I have already seen more conscious spending.. Im guessing it will save me between $500-$1000 a month!!

    • Rachel says

      We do the same thing and have found it works for us as well. Our automatic bills (phone, internet, trash, etc) go to our one credit card. We then pay it off every month but are still building some credit for the future.

    • Ginger M. says

      I do this same thing, after much trial and error. It’s working well for me. I’ve learned the hard way that groceries, eating out, clothing, and my “running the roads” money :) have to be cash for me, but I can pay my utilities, auto gas, doctor bills, etc., with my CC and snag the 2% cash back. I pay the CC immediately, sometimes before the charge even hits the account.

    • Andrea says

      What is the advantage of paying bills with a credit card?

      I pay online electronically with our checking account.

      • Rachel says

        The advantages for us is that we don’t have to remember to pay the bills each month and we get discounts for autopaying with the credit card. Also, this is allowing us to build credit by demonstrating we can hold a credit card responsibily over time and pay the balance off each month.

        This was our compromise. We use cash for many things, but the credit card on monthly auto bills to build our credit but eliminate some of the temptation of overspending and getting in over our heads.

  13. says

    Oh, meant to add. My husband always buys the gas (what a great guy!), and he does use a credit card. It’s set up to come out of our checking register, so when the bill is due, it is already set aside for that. Honestly, in our case, that works very close to how a debit card works. He prefers carrying the credit card and keeping the account current.

  14. Melissa N says

    I will agree that is is harder to spend cash than to swipe a card. I currently us Mvelopes to keep virtual envelopes of my “cash”. When my hubby’s paycheck is direct deposited, I can immediately divide the income into various virtual envelopes, so I know how much is allotted in each category ($150 per paycheck for groceries, $20 per paycheck for gifts, $100 per paycheck for gas, etc.) There’s an app too, so I can check my “envelopes” at the store to see how much I have left. Granted, I can still overspend, although if that happens, I always “borrow” from another envelope, so I don’t really spend more than I have, but it can eat into other savings goals (I might have to take $20 out of “gifts” to cover something, so I have less to spend on presents for birthdays or savings for Christmas). I guess that could happen with cash too, though. It imports credit card charges and you assign them to whatever envelope they belong.

    The downside is there is a fee for this program – the 2 year plan is $7 a month, but it’s payable upfront (free trial, though). But I have about 30 envelopes going, including savings for college, each individual utility instead of one “utilities” envelope, separate envelopes for Gas savings, Electricity savings, and other savings when I don’t deplete an envelope at the end of the month, etc. This comes in handy when my summer electric bill is 4 times higher than winter – I have the money available from my “savings” envelope.

    A year ago, I tracked every single expense for two months straight (no easy task) and then finally came up with a budget for the first time. I tried cash for two months after that, but carrying so much was just not working for me. I felt weird sorting through stacks of bills while everyone was watching me in line. Plus I had change rolling everywhere!!! At this point in time, I am willing to pay the fee to have all my envelopes safely on the computer with records of all my expenses for months. This is just what works for me, though, so I can use my credit card while already have the cash assigned to it.

  15. Blythe says

    A CC is safer to use. If it is stolen or fraud it is much easier to deal with than if you lose money. I had someone use our card and the company caught it and re issued us card keeping our credit the same n not paying for the false charges…. We also use the same system as if it was cash. We don’t buy it unless we have the cash to pay for it!! Every month our credit card gets paid in full. Plus we get points. I just cashed in and got $650 at hobby lobby. I could have gotten cash but got more doing it with gift cards. Which I had to make some custom frame purchases that amounted to this. So this was great!

  16. YOUNGMOM says

    I AGREE . I AM A YOUNG MOM OF 3. WE HAVE NEVER HAD A CREDIT CARD AND I AM PROUD TO SAY WE HAVE NO DEPT !!!!! A BIG PART OF REASON FOR THAT IS THANKS TO MONEYSAVINGMOM.COM . THE MAIN REASON WE HAVE NO DEPT IS BECAUSE WE USE CASH FOR EVERYTHING WE EVEN BOUGHT CARS WITH CASH ! ITS POSSIBLE IF YOU WONT IT BAD ENOUGHT !

  17. says

    I went to the grocery story for the first time holding cash….well since before debit cards. Does that age me?

    Anyway, it was kind of an interesting change. I had to “think” about what I was buying and how much it was. I didn’t go to the register with no idea how much it was going to be. Plus, I saved $18.00 on my first trip going cash and using coupons. I know it’s not thousands of dollars like the extreme couponers on TV, but I am very proud of myself.

    I plan to blog about my adventure in paying off debt and going to “cash only” per the book… The Money Saving Mom’s Budget.

  18. coupon woman says

    I never used to be a fan of credit cards (we always had one, but only kept it to be used for emergencies, never regular spending put on it), but once we got a system set up that works for us, it’s been great. We are getting so many points for all purchases that we make on it so we use it for everything and it is paid off in full (auto-withdrawn from our checking account) each month, so we treat it like a debit card. Our credit card company mails us a check (most recently it was $500), so I look at our credit card as actually making us money, not costing us money. It’s extra cash in the bank, not a crazy reward program that we will never use. We’ve never paid one cent of interest to the company. I actually have a harder time with cash. I take cash out and then it gets spent without me knowing what exactly it was spent for (a soda here, a candy bar there, etc). I keep all my credit card receipts and enter everything in item by item into our budget/accounting software so I know exactly where every penny was spent. It works for us!

  19. Bobbie-Jo says

    We set aside a checking account that we use like a credit card – we only put so much money in it for what we need and use it as a debit. It keeps our main checking safe yet gives us the flexibility to shop online.

    We recently made a committment in our home to be completely debt free – no mortgage -no car loans….NOTHING. We were/are in ministry and wanted to know for sure it was God giving us the direction in life and one way that confirms a step to us is whether God will provide in that area or not (if we don’t have the funds, we don’t go or do:) We even went so far as to sell our home and buy something for cash so we could really be chain free! God has honored our committment to stay free and clear in amazing ways. Not only were we able to sell our house in a horrible market – we sold it within a COUPLE of weeks and made a profit! Our realtor was floored :) Since then I have been amazed at the ways God has provided……even a free minivan! (insulation, windows, computer printer…). God really does take care of all our NEEDS (and He definitely throws in a few wants too ;)

  20. Stacey says

    I wish Christian authors and speakers would promote the “cash only/envelope” thing less and instead address the real issues…SELF-CONTROL and CONTENTMENT. If one is self-controled it shouldn’t matter if they use cash or credit. If one is content, the “things” of this world that can be purchased would be less enticing.

    In over 20 years of marriage we’ve never had “a boatload of debt, fights over money, and stress about our finances.” In fact, with the exception of our mortgage, we have always been debt free. No, we were not always flush with cash, in fact we lived well below the poverty level for the first 6 years of our marriage. The key for us was always to live within or below our means.

    We have always had the cash in our bank accounts to pay off our credit cards in full each and every month (in the “lean” early years there wasn’t much cash, but we were self-controled enough to spend less than the cash in the account….lawn chairs that were wedding gifts were our living room furniture for a time until we saved up enough to buy a couch, which we paid for with a credit card and paid off in full). We have never paid a nickel in interest or service fees. Instead, our credit cards have given us cash back and additional discounts (plus additional benefits like insurance for travel booked on the card, etc.). Our cash doesn’t do that. Again, the key for us (and many others) is *living below our means*.

    When I read or hear of people “saving xxx a month” when they go to an all cash system, I can’t figure out how they do that unless they had very little self-control when they were using credit cards. I can’t save that same “xxx a month” that they talk about because we were never spending that much to begin with, even though we were paying with credit cards, not cash.

    • says

      I so agree about discipline and contentment–those are two of the key points I discuss in-depth in my book (as well as here in my blogging) as I believe they are foundational for financial success.

      Thanks so much for sharing your perspective!

      • Stacey says

        Thanks.

        Honestly, Crystal, I think you and your family would be debt free even if you had chosen the route of using credit cards (and paying them off, of course!) instead of cash for everything because you already had the self-control and contentment. Either method or philosophy works for some people.

        For those for whom impulse buying and recreational shopping is problematic, the cash-only system gives them a discipline in place of self-control. Running out of cash for groceries is a form of “reality discipline”. Going hungry once because of overspending in another category teaches a lesson. Not everyone needs that lesson. :)

    • beth b says

      Of course discipline is a big part of financial success but what I think is important about cash vs. credit cards is how your thinking about money changes. Since I’ve been married we’ve always paid off our credit cards every month (I made mistakes when I was single and had to dig myself out of quite the hole), always had savings, and never had an expense come up that we couldn’t cover. Including a new furnace and air conditioner. So one could say we’ve been disciplined. However, as we are preparing for an income drop we are switching to cash to make sure our spending stays in line with our income.

      No matter how disciplined we each think we are most people do spend differently with a credit card than with cash. Studies have repeatedly shown this yet we all think we’re the exception to the rule. Yes, I do think my generation (I’m 38) has problems with credit and living beyond our means. Yes, many of us could use more discipline. And yes, I do think it’s possible to use credit cards responsibly. But the fact is that *most people* are going to spend more using a credit card over cash. There are psychological reasons for this that go much deeper than self control.

  21. Rachael says

    We do use credit cards sometimes, but I’m tired of them. There is so much upkeep with deadlines and hidden fees and it’s very easy to get taken advantage of.

  22. Becky says

    Perhaps you discuss these topics in your book, Crystal, but I’m interested in learning more about the security/logistical issues of switching to cash only. We use a credit card and YNAB software to set aside funds to pay it off each month, but I do like the idea of our young children seeing us pay cash for groceries, eating out, etc.

    Do you make a weekly trip to the bank to withdrawal enough cash for that week’s groceries, etc.? Whenever I think about this method, I get uncomfortable envisioning us storing significant amounts of money in our home. The weekly amounts aren’t as much a concern as the envelopes that accrue savings for vacations, gifts, clothing, etc. Perhaps you or others have strategies or perspectives to share about this.

    • sarah says

      We keep our big ticket savings in our savings account and have an amount automatially transferred into the account every pay period to reach those goals. I wouldn’t like large amounts of cash like that in my home either!

  23. says

    I see the value of both. I use a credit card that offers % back to pay for what’s already in my budget to begin with. For instance, gas, bills, etc are put on my card. I don’t wait for the bill, I pay it right away (my balance has been known to be negative sometimes cause the purchase has not even posted yet, :) ) I then use the cash/envelope system for other things.

    I agree Stacy’s point that it’s an issue of contentment and self control. In my case, it’s also an issue of trust. Who do I trust to provide for my needs, almighty God or Visa?

    • Lyn says

      Amen on that last sentence! We do not use credit cards. It’s not because we don’t have the discipline, it’s because I don’t want to give any of our money to these companies, not even for a second. They are not there to help, they will stab you in the back given the chance. They prey on people and wait for them to fall. Many of these are the same banks/companies who received government payouts. Why should I make them even $1 richer? Personally I don’t care about credit card perks because I’m not into material things/shopping/stuff in general and don’t feel as if we are losing out in any way.

      It may be easy to say that the bill can be paid off the next month, but what if a spouse loses a job? Or both do? It might not be so easy to pay that bill. I have seen people spiral from having money to not having money all because life dealt them some hard hits. It can happen to anyone.

      We are doing just fine without using credit and haven’t suffered at all.

  24. Christy says

    We use a credit card for almost everything we buy. We go online and check the account every 1 or 2 days, and we pay the balance in full at that time. We only make a purchase if the money is in our bank account, and we pay for the purchase as soon as it posts to our credit card. By checking the account regularly, we never carry a balance and we are able to catch any fraudulent charges right away. It only takes about 3 minutes to log on, check the balance and make a payment. It’s well worth the benefits we receive!

  25. Katie says

    Sometimes you have no choice in having a credit card as some people need them for work. My husband has a credit card which he uses to pay for air tickets, hotel accommodation etc for work then in expenses the items. In some jobs you are expected to either use a company one or have your own.

    Sometimes it is a cheap way to get a loan i.e. with the O% for 24 months cards. Obviously would not agree to this unless you had the money in your account to pay the credit card off in full. Sometimes it takes awhile to release money from savings – or you lose interest. By buying something in the interim on a credit card and then paying it off can in fact save you money as you will not lose interest on the money in your account. Obviously to do this you have to be extremely disciplined.

  26. Danielle Hull says

    Once we had a working (agreed to by both of us and on paper) budget and our only debt was our mortgage, we signed up for a Kroger credit card. We use it as a debit card, meaning we keep every receipt and enter it in our checkbook register. We earn $80-90 in free groceries (which are truly free since the card is paid off every month), and save on gas at the Kroger gas station.

  27. Koree says

    I see that cash/debit is ideal, however I use my credit card to pay for needs like gas (to get to work and school) and groceries. What would someone in my situation do then? The checking acct. money is saved for rent, water, electric, and internet (must have for school assignments).

  28. denise says

    Of course if my spouse was able to garner a lawyers wage, we would also laugh and ridicule those that need credit. Let them eat cake we say!!

    • celina says

      before he was garnering a lawyers wage..he was a law student with no income…things were lean for them…for a LONG time..and most of us were reading as it was happening. I’m not a die hard Crystal fan..I don’t always agree with her (or anyone else) but I’ve not seen her ridicule anyone. However, she does challenge the fact that credit is a NEED. It can be a tool, but for some of us…we are not disciplined enough to use it as such. (speaking for myself) If I envy anything about them, it isn’t the lawyers salary…it is the financial discipline they’ve learned and stuck with all these years.

  29. Dineeen says

    I read your article over at Simple Mom and many pages of the comments regarding your question to enter the giveaway about what would you do if you mysteriously found $100 in a pocket. I was surprised how few thought of it as money that had been lost and from their accounting or even thanked God for finding it.
    Anyway, another way to pay by cash online is to use eBillme. I’ve used it a few months now (about 6 I would say) and I’ve been very pleased with it. When you tell a merchant who uses it that you want to pay by eBillme, eBillme generates an invoice for you and you pay it with your bank’s online bill-pay feature. What’s a nice bonus is that eBillme offers cashback incentives for shopping (not unlike ebates) that you claim by generating coupon codes to use when log-in to eBillme to have them create your bill.