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The Real Debate: Cash vs. Credit Cards

Guest post from Kathryn of Bond Musings

Discipline is a noble thing. Crystal strives for it. The Proverbs 31 woman is lauded because of her discipline. Succesful people everywhere credit their success to discipline.

So when I was reading the comments on this post about saving money by switching to cash and one reader commented that the real issue was not which spending system is the most effective but was rather why we tend to lack discipline and overspend, I knew she hit the nail on the head.

Yes, discipline is what keeps us from overspending our income.

Crystal has a whole slew of ways to increase your top line/income. Here are a few ways to decrease your bottom line/spending as well.

1. Shop less frequently.

Make a menu for the week with a corresponding grocery list. Stick to that, and don’t go to the grocery store more than once or twice a week. The fewer times you walk through that store’s doors, the less likely you are to impulse buy.

2. Take a break from the deal sites.

This is a hard one, but if you are running out of money by the end of the week/month, you must stop reading about all of the great deals out there so you’re not tempted to buy something you don’t really have the money for.

3. Find a spending system that works for YOU.

Many people spend more money when they use cash because there is no accountability. Others say that they spend like crazy if they use debit or credit cards but that cash puts the brakes on their spending. Honestly evaluate your spending habits and determine where you find more accountability in spending.

4. Clean out your house.

This may seem non sequitor, but hear me out. When you go through your entire house and become intimately knowledgeable about what you have, you realize how much you don’t need.

For me, I am totally set on things like scarves and travel mugs, for which there are numerous deals this time of year. Disciplining yourself to clean out your house can save not only your sanity but also your pocketbook.

5. Make some things yourself.

Homemade cleaners and detergents cost pennies on the dollar compared to even the best deals you could find on the cleaning aisles at the store. Making bagels and English muffins at home is far easier than I thought and costs just a fraction of the store’s prices.

This homemade facewash (that works so well!) cost less than six dollars to make and will last more than a year. All of those recipes take only a few minutes (less time than it would take to run to the store for them!) and will save you money.

The bottom line of our bottom lines really does center on discipline. If you are already disciplined in your spending, I applaud you. However, if you have some room for improvement in this area (like me!), add just one of the above suggestions to your spending habits, and watch more of your money stay right where it should, in your bank account!

For me, switching to cash was a huge help, as is staying away from the deal sites when I run low on cash. For you, you may find that cleaning out your house reveals not only a source of income in the form of a garage sale but also saves you from spending money on items you already have.

Many thanks to the inspiring readers who commented on the post about switching to cash— Money Saving Mom® really does have the best and brightest readers on the Internet! Together, pursuing discipline and saving money can be easy!

Kathryn keeps her hands busy during the day as a stay-at-home mother to two precious girls. She attempts to occupy her mind as well by reading and by blogging at Bond Musings.

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  • Siobhan says:

    I agree that it depends on the person. I use my Discover card so I get cash back on all of the money I spend. I know how much I am spending every month and just have the account automatically set up to pay the whole bill off every month. You can easily get a few hundred dollars in cash back every year.

    You just have to realize that it is not free money and the bill has to be paid each and every month without fail.

    • Angie says:

      I do a combination of the two systems: Our credit card is used for everything, but I still keep track of my budget with envelopes and Monopoly money. Best of both worlds!

  • Jennifer says:

    I get that different approaches work for different people, and I have no doubt that using credit/debit in certain circumstances may work well. But I have to say, using a cash only envelope system is AMAZING. If some people would take a moment from talking about how great and careful they are with their budget already and just try it our, I think we would have significantly less of these articles and comments, honestly. I tried an envelop system even after I had been following my budget and saving money and couponing and doing a great job! And it still make a difference! Don’t knock it til you try it!!!!! Just try an envelope system, if even for a month!!

    • Emily says:

      I’ve been debating trying a cash system just for my groceries and eating out category, but I’ve been hesitant. I’m not really sure why….I just am. I’ve often thought that maybe I should just try it and see what I think, but then for some reason or another, I don’t. Your comment has made me think about it again, and I am inspired to talk to my husband tonight and see what he thinks about it. You really are right in that, unless you’ve tried something, you really don’t know if it works. Thanks for the inspiration.

      • Lisa says:

        I’d strongly encourage you to try the cash system, even if just for groceries for 3 months! About 10 months ago, went to the cash envelope system (after 16 years of marriage without a cash system) and although there was an adjustment period at first, overall, we love it! We weren’t over-spenders with our debit card, and rarely used a credit card, but going to cash not only helped us save so much every month, but it was also freeing to know there is a set amount for each category. Because we’ve been able to save so much more by using the envelope system, we just paid cash for our daughter’s braces! (and received a discount for paying in full with cash!) Talk to your husband and give it a try!

    • K* says:

      I’ll be honest, the envelope system did NOT work for me! I tried it a few times, for a few months each time. Electronic budgeting software and a card worked better for me, and I don’t feel safe carrying cash in the city I go to school in.

      I’m afraid of getting mugged. A Dave Ramsey fan once told me that Dave says the credit card companies are “mugging” us every month with interest. Of course, I don’t use a credit card, but a debit as a credit. Much different. I also really disagree with that analogy, as I don’t have to worry for my safety with CCs.

    • erica says:

      I recently switched to the cash system(I use my credit card for bills only). We use cash for our fun money, groceries, gas. I was one of those people – I pay off my credit card in full every month, I get awesome rewards from my card. BUT I never realized how much I was overspending every month. I know it depends on the person but I think me and my husband will save at least $500/month switching to cash! Thats $500 towards debt, savings, whatever! Im so happy I switched and tried this out.
      One of the best things that has happened recently, my husband went out for a friends birthday (we each get $100/month or $25/week for our ‘fun money’). My husband did not spend any money!! He drank diet coke all night. He said he didnt want to use his fun money for the week for one night. I have no doubt that if my husband had his credit card, he would have spent over $100. Now that he can see the money leaving his hands, it makes the world of a difference!!

    • Jenn says:

      Cash doesn’t work for me and honestly I don’ t like the idea of it. If I lose it–which I am likely to do, then it is gone. Self control works for me, don’t spend more then you have.

  • Anna says:

    I tried the envelope system for 6 months and it was far more stressful for me than anything else. I travel for work far to much not to have/use a credit card. What worked for me is that I have 2 credit cards, first an American Express that I use for work, and it’s the kind you have to pay off every month. Our second card is our Discover where we get cash back. Once a week I sit down and review our spending and pay whatever was charged on Discover right then. I am not stressed over cash that seems to run through my fingers, and when we travel there are no hassles with hotels, rental cars, etc that now require a credit card or they put you through the inquisition. Just my 2 cents worth.

  • amber says:

    Cleaning out your house is so true. I cleaned out my very mess bathroom closet a few weeks ago. I found 5 unopen bottles of contact solution I did not know I had. I also found a lot of shampoo samples. I went ahead and opened all of them and squeezed them into the shampoo bottle I was using.

    • Stephanie says:

      So true! We’re moving in 1 week. I have found so many bottles of lotion in my closet that I just HAD to have when they were on sale…. 🙁

  • Meredith says:

    Yes, I would agree discipline is the key factory. Having said that, we switched over to cash when we started Dave Ramsey’s program and we’ll never go back. I suggest that people who use the CC for cash back, etc… try a cash-only budget for 3 months…. you’ll probably have that cash back because you will not have spent it on unneccesary things in the first place… also, we save our change and end up with about $300-$400/year. That’s great cash back, without ever using CCs in the first place.
    I plan on trying some homemade cleaners this year to try and save even more money!

    • lyss says:

      We save most of our change in a big money jar, too. This past Christmas, we had limited funds for Christmas gifts. I noticed our jar was nearlly full, took it to the bank, and came home with $245 to buy Christmas gifts. Woot!!!
      I know some people like to carry around change and count out the correct coins when making purchases. I prefer to keep my wallet lighter and then end up with some big bucks every once in a while! 🙂

    • Heather says:

      Unless you treat your credit card like a cash envelope – which is what we do. Only so much to spend in each category – and we don’t always spend X amount in each of the cateogories so sometimes we spend less. When we used the cash in the envelope it tended to all get spent or moved to another envelope. So we now spend less and we earn rewards from using our CC. For us – a win/win.

    • erica says:

      totally agree!!

  • Victoria says:

    I am in total agreement with point number 2. I am signed up for all the deal sites (groupon, eversave and such) and I am finding that months that I do go over budget these sites are usually the cause. I know use a measure of discipline when I open my inbox each day and if I don’t have money left in the budget, I delete all the deals without even viewing them.

    • Camille says:

      Me, too! I am now SUPER picky about deals I buy. If I won’t use it in the next 30 days, I don’t get it.

    • BethB says:

      Yes! I’ve even stopped playing the drugstore game because I was spending more to get A Deal than if I just waited until we needed something and bought a tube of toothpaste for full price.

  • Debbi says:

    I agree 100%. Discipline is discipline no matter what form you use. I think using my debit card is easier and takes less time to manage.

  • Jennifer says:

    Discipline is the key. We use our Debit card, but our money tracking system is an envelope system -albeit an electronic one. When the Grocery money is gone, we just don’t buy anymore groceries.

    • Shannon says:

      Do you use EEBA? I just set up a budget yesterday on my iPhone app and I’m wondering if it’s effective.

  • Jenny says:

    Shopping less really can save you alot of money! I’ve found that there really is RARELY a time when you absolutely need something right at that moment. I usually just keep a running list of all the random things I’m out of, and hit Target and the grocery store once a week 🙂

  • Amanda T says:

    I’ve recently gone back to using Cash for groceries and started menu planning and shopping for two weeks at a time with a planned stop at the Produce Stand during the 2nd week…I found this week I had to make a call between that case of chicken breasts(good deal) or a trip to the bread store,and produce for two weeks. I chose the breadstore and two trips to the produce stand instead b/c I knew we needed to go that route. As far as spending I’m stumbling a little as we are MERE days away from having all our consumer debt paid off with the exception of my student loans and I find myself checking out the forums on cloth diapers.(We recently made the switch) and I have bought a few things that are *REALLY* good deals but can’t stop checking the forums :/

  • cathy says:

    THANK YOU for this post. I often feel like the naughty child who just can’t follow the rules because we use a credit card. Honestly, if I have cash in my wallet, I buy more frivolous items. When I use my credit card–which we pay off in full at the end of each month–I do a better job of sticking to the budget. I still track where every penny goes and we do enjoy the perks of our rewards card (but that’s not the biggest reason we use it), so that’s what works for us. We still have to be disciplined, no doubt about it, but it’s how we roll.

    • Sam says:

      Same! When I have cash, I’m like “oh I’m thirsty, let me get some juice from the vending machine” or something equally silly. But using credit cards, I track every single penny in Mint and scrutinize every purchase. My budgets in Mint also make sure I stay on track.

    • K* says:

      I like how you’ve said this! Plenty of people (not Crystal, ever!) seem to feel quite smug about the cash envelope system and Dave Ramsey in general. It’s almost like you’re not frugal enough if you aren’t doing it by the book.

      There are 2 of us in my home, and the cash system is just a mess for us. Then again, one of us is in a technical field, and the other (me) is a grad student … the more online access, the better.

  • Roxanne M Jones says:

    I agree that discipline is the issue, not the form of payment. I internally roll my eyes when people blame the debit card for their overspending. No debit card jumps out of your wallet and grabs items off the shelf.

    That logic reminds me of the diet advice that the best way to lose weight is to purge your house, office, etc of all high calorie food. That may work for some. But most people have to feed athletic spouses and growing kids, or have frequent business meals. You lose weight through disciplining yourself to eat less. Sure, having less junk around helps some. But that is a tool. The heart of the issue is discipline, the same as with the spending ‘debate.’

    • Kayla says:

      Great analogy!

    • BethB says:

      I think there’s a difference between blaming the debit card and acknowledging that you (the general You, not you personally :)) are more likely to overspend if you use a card vs. cash. I know I am whereas my husband is the opposite. So I need to be much more on my guard when using the credit card than he does.

  • heather says:

    I was one of the people who commented the first time around about spending wisely no matter what system you use. We never use cash for anything and it works for us. The key is to live below your means no matter what system you use. We are able to save each month have and have no debt besides our home. I think the key is to remember that each person has a method that works for them and I if that method works I think we should applaud that person even if it is usuing credit cards. The envelope system does not interest me because what I am doing works for my family but I see how it would be hard for some people to do. I just bought a whole new set of paula dean cookware using my cashback bonus. Yeah for me! Keep up the good work to everyone who is saving no matter what method you use.

    • Krysten says:

      Heather, you said what I’ve been saying for years (minus the Paula Dean cookware set). =) Frankly, I get tired of people telling me that I should get rid of the system that works best for my family. We keep some cash around for various things that come up, such as special offerings in church, since we don’t carry our checkbook with us. Other than that, we use our credit card for everything and the only debt we have is our house payment.

      We’ve been married for 4-1/2 years and have paid cash for 2 vehicles, and we also made a down payment on a nice little house after being married for just under 2 years. We don’t have high-paying jobs, either. My husband was still finishing his Master’s when we first got married, and he’s now a teacher at a small Christian school. And we did it all while using credit cards – gasp! =)

    • Julie says:

      Another one to agree with this here. We have an American Airlines card b/c we travel almost every year to Australia. We put everything on credit card. Granted, we have to pay a fee for this card (which I hate), but $60/year and paying for stuff I would normally pay for anyway has afforded us 3 tickets to Australia and we have two more free flights coming up by the end of this year for our Christmas trip. Considering flights are about $1500 each from where we live….not bad. And we have no debt except for our house either and are great savers. I have no doubt we have room to grow, but I really don’t feel that switching to a cash system would help us at all since we are so bad at recording things we buy. We are just better off not overbuying and having it all on record automatically. We track through mint which makes it all so easy. I see (and track and graph) where all our money goes each month. What works for one, doesn’t necessarily work for others.

  • I love that this article is not saying that one way is better than the other, but that the root of overspending whether with cash, debit or credit is lack of self discipline. Kathryn, you hit the nail on the head.

  • Jen says:

    I have tried a cash system, and as someone else just said, it was too stressful for me. I didn’t spend any less than when I use my credit card. And my husband actually spends more when he has cash. It seems to burn a hole in his pocket, especially once he breaks a large bill, it’s so easy to just blow the rest on small things like coffee, vending machines, snacks, lunches out, etc, that he would never use a credit card for.
    I applaud everyone who uses the cash envelopes and I have nothing against it, but for me, using a credit card works (and yes, we pay it off every month).

  • Ruth says:

    Another Discover card person here. Credit cards are not evil. We work the system to our financial advantage. Pay the bill off every month, rack up Discover cash back bonus money & buy a necessary household item(s) when the bonus money builds up enough.

    Similar situation w/ ebates. Also Just in smaller amounts since they are smaller purchases.

    • Kendra says:

      This is us also. We buy only what we need and save splurges for Christmas, birthdays and anniversaries. Discover card and Chase MC (pays 1% on all purchases) PAYS us $$$ to use their credit card. We pay the entire balance on our bill every month. This is another way we are frugal, we have found we can get free money just by buying our necessities (and living within our means) using those 2 credit cards.

  • Lyn says:

    I started using and set up budgets, goals and all my accounts. WOW! By reviewing my accounts each day, I can split my credit card transactions and follow my budget more closely and still get my cash back! No more forgetting to enter items. I love the email reminders about upcoming bills and budget caps. And I can set it to carry over my unspent budgets from month to month, save for long and short term goals and have an accounting of savings for occassional expenses. When my American Express bill comes due, I have plenty of cash to cover it because it’s already been accounted for in my system and my thinking. The bottom line is to use what works for you, be committed to it and tweak it often to make sure you’re meeting your goals.

  • Stephanie says:

    Thank you for a very common sense approach! I have a lot of work to do in the prioritizing/discipline aspect of my life, and I am going to implement each of your suggestions.

  • Shannon says:

    We use a combination cash and debit card budget system. For things like groceries where I have a problem overspending I use cash. For things like bills we use our debit card or online bill pay. It gives me a bit of extra security knowing that I can not spend any more money than we have since I have the overdraft for the debit card turned off. It really makes us think about what we spend if we go to the store with say the 50$ we have for whatever we need be it groceries or clothes or whatever and I know I can not no matter how great a deal it is get more than I have budgeted. It saves on the temptation 🙂

  • Leighann says:

    The cash-only system was so stressful for me that it brought on near-constant panic attacks that almost landed me back in the hospital! I was always terrified of losing the money: leaving it at home while I was grocery shopping, someone picking my pocket, my daughter taking things out of my purse while I was distracted. I was also terrified to spend the money, because then it would be gone.

    I have found that cash works great for me when it comes to savings, because that intense uncomfortableness spending that pile of cash translates well into saving that pile of cash for some big-ticket item like repairs, new appliances, etc. Otherwise, we use our debit card and I just don’t spend more than has been budgeted. We don’t have credit cards, so we already can’t spend beyond our means there, but carrying cash…. No thank you, I do not need to go into the hospital again! lol Any money in my bank’s savings account, though, tends to get transferred into checking when we get low, which means that our savings account balance is always very low (not that we can save a lot, anyway, but it doesn’t help when you’re always transferring funds from savings into checking to help cover bills, repairs, etc).

    I’ve tried doing all the things the OP listed and they DO work. My New Year’s Goal was to declutter my entire house. Let me tell you, that took some work! 5 of us in a small 2 bedroom house with stuff piled on top of stuff. We went through and threw away or donated probably a third of everything in our entire house – books, clothes, toys, tools, and so on. I’ve switched to only buying books for my Nook so that we don’t bring more clutter into the house, and we’ve increased the amount we borrow from the library. The hardest part for me is staying away from the deal sites (like this one! I probably check this site a dozen times a day!).

    Each person has his own method and what works for him. If it isn’t working for you, try another method. We should all be supportive of one another; what works for Sue doesn’t work for Jane, because they have different approaches, different needs, different values, different resources, etc.

    Discipline is important, and just as important is HAVING A REALISTIC BUDGET. If you don’t have a budget that takes into account all regular spending, you’re not going to be able to get anywhere. Last year, I realized halfway through the year that we had a lot of doctor visits (because of me) and doctor copays that weren’t being accounted for in the budget, so we kept coming up short because we thought we had more money than we did. When I budged in a certain number of doctor visits per month, I found that we weren’t scrambling at the end of the week to come up with money because I had ANOTHER copay to pay and forgot about it. Taking realistic stock of your expenses, making a realistic budget…those help with the discipline!

    Excellent post, thank you for sharing!

  • Liz says:

    I love 99.9% of what’s on this site – the 0.1% I don’t like is this oft-raised topic of credit vs. cash. I have gotten to the point where I typically no longer read the comments on posts like this because, like someone else said, I feel like a naughty child getting scolded for using a credit card! But, I ventured into this comment section after reading Kathryn’s statement that it’s not cash or credit that affects a person’s spending habits, it’s discipline. And I’m so encouraged by the many other people that have commented on this post who, like me, are able to responsibly manage their spending, save for the future, and give generously while using a credit card – all while enjoying the perks that come along with it!
    To all of you who love the cash/envelope system – great! I promise not to encourage you to “give credit cards a try for just 3 months” if you will stop telling me to give cash a try! 🙂

    • rmw says:

      I agree with the “feel like a naughty child getting scolded” part!

      I’ve followed this (and Crystal’s previous blog) for years. Almost all of the advice is positive and uplifting, and with the expressed with an “I hope this helps, but do what works for you” attitude. For example…Paper or electronic planner? Do what works for you. Sippies or regular cups? Do what works for you.

      I’m sure it’s not the intent, but the cash only advice is dogmatic and comes across as chastisement not encouragement.

      I too usually ignore the cash-only posts. But I’m glad to know others have to resist being hurt by them too.

      • Crystal says:

        I try to be very careful in how I approach this subject so that it doesn’t become a controversial, hot-button topic that is just divisive. There are so many hundreds of thousands of families whose lives are being changed by learning the self-discipline that comes from using cash only and there are so many hundreds of thousands of families whose finances are being destroyed by unrestrained use of credit cards, so I cannot in good conscience personally endorse credit card usage here.

        However, as I’ve mentioned here before and wrote in my book, I know there is a very small percentage of people who can use credit cards responsibly. If that’s you, you are more than welcome to just skip these posts. 🙂

        • Stacey says:

          I don’t think you need to “endorse” credit card usage, but thanks for the acknowledgement that not every one is undisciplined and needs the reality discipline of cash only.

          I think this post of Kathryn’s is extremely wise. It’s not that one way is right or wrong (cash vs credit), it’s that folks need to learn to live within their means. Her point about avoiding deal sites is a wise one. I honestly think some people think they need to get in on every deal because it’s posted here. $5 off of $12 may be a good deal, but unless one really NEEDED the item in the first place, they are not saving money but rather spending it needlessly. Deals and the inability to resist them can destroy a family’s finances as much as the misuse of credit cards. Yes, the concept of “when you run out of cash you are done spending” seems logical, but for the really undisciplined they’ll take out more cash to meet the NEEDS when the cash runs out.

          More posts like this one are helpful as they help folks get to the heart of the matter, not the symptom. Thanks for letting Kathryn share today.

          • Crystal says:

            Yes, and that’s why I repeat over and over again that just because something’s a good deal doesn’t mean it’s a good deal for you! Self-discipline is imperative and necessary for financial success. And that’s why I’m constantly talking about it. If you don’t “get” self-discipline, you’re likely never going to get very far financially.

            That said, one of the blessings of using cash only is that even if you’re really undisciplined, if you don’t have any more cash to take out, you can’t take any more out! For many people, this reality check can make a tremendous difference–and can give you a complete financial paradigm.

    • Krysten says:

      I love your last sentence! 😀 And I think that this is probably the best cash/credit card post that I’ve ever seen on MSM.

    • I am in 100% agreement with you, Liz! I, too, get frustrated with the “credit card bashing” from so many people. This post today was fantastic – it’s not about credit cards vs. cash — it’s about discipline!

    • K* says:

      I love your last sentence! That’s exactly how I feel!!

  • CultOfMoney says:

    About the only thing that I use the cash system for is lunches at work. I usually bring a lunch, but when I want to go out I know that I limit myself with a certain amount such that if I went out earlier in the week, then I don’t really have enough for another meail out that week. Of course I use this more as a way to keep my diet healthy and trying to lose weight more than a system of saving money.

  • Brooke says:

    Does anyone out there have good experiences with Mr Rebates?? I’m thinking about creating an account, but don’t want to get spam emails and such from them if they’re not a good site. Thanks!!

    Kathryn, what a great post!! I definitely love the cash-only system…makes life a WHOLE lot simpler. 😉

  • BethB says:

    I think it really boils down to what works best for each family. We’re all in different situations and have different personality traits.

    I agree that discipline is a huge key in any money management system. However, I also think there are a lot of societal and cultural issues going on that contribute to many people having large amounts of consumer debt. I’m more and more fascinated with the connection between how we perceive social class and status and how we manage money.

    My husband and I have a higher standard of living than either of our parents did at their corresponding stage of life and we are very aware of how fortunate we are. We have many friends and colleagues who seem to take for granted their middle to upper middle class status and live accordiningly. One friend recently was disgusted when he found out a vacant store in his neighborhood is being turned into a Dollar Tree. I know a lot of people who shop at certain stores, buy certain kinds of cars, or take fancy vacations every year because they percieve themselves as the kind of people who do those things. It would never occur to them to cut back on those expenses even when they start racking up debt. Shopping at The Gap makes them feel rich whereas buying clothes at Target would be shameful (Nothing agains either store, I’m just throwing that out there as an example).

    Just last week a friend of mine was bemoaning her family’s financial situation and expressed she didn’t understand how they were in debt because her husband makes a good salary. But from what she’s told me they’ve made one poor financial decision after another to the point they’re drowning. Her assumption was that since they were educated middle class people they should be able to afford a certain kind of lifestyle. Completely ignoring the basic math that if more money goes out that comes in even a “good salary” just isn’t going to cut it.

    I even see it in myself. We’re preparing for an income group and going over last year’s receipts I narrowed in on my spending at Target and clothing as areas to slash. Realizing how much less I needed to spend on my own clothing made me a little tense because it changed the way I thought of myself. Having a stricter budget made me feel less affluent. Then I gave myself a good internal smack and Got Over It.

    Yes, discipline is important. I just think we need to go deeper if we’re really going to change the approach many Americans have to money.

    • Andrea says:

      When I start thinking that I need material goods like some of my acquaintances, I try to stop myself and think of all the frugal older couples I know that avoided those things when they were younger. I know several that retired at 60 and are living large these days, but 25 years ago, they were pinching pennies and working two jobs.

      We can pretend to be affluent now, or we can be wise with our money and be very comfortable later!

  • Kristen says:

    Great post! I think going shopping too often for one of two items is what gets me! I rarely am able to walk out with ONLY those couple of items.

  • Lina Zussino says:

    I’ve recently gone from using my credit card for purchase to cash only system. I do not have any debt and did not think I would benefit because I always paid my credit card and manage money very well. HOWEVER… using cash forces you to be very specific with your purchases and not to over spend. I also noticed that I ended up not using all my cash just in case I need something later in the week a forced saving system that I’m also benefiting from cash only system.

  • I’ve recently been looking at areas that I am able to save just by being more disciplined. I’ve given up the deal sites and even couponing because even with coupons it encouraged me to spend more so that I saved more. Now I avoid trips to the store and use cash when I go. I’m hoping that we can cut our already low budget a little bit more to give us more money to throw at our debt.

    We do still use credit for gas. We started a few months ago when our bank started charging for debit card use. They have back off on the charge but we are finding that our combo of credit for gas and cash for everything is working well.

  • Katrina Page says:

    ha. It’s seriously amazing how these blogs are always posting what I’m thinking. I’ve been living paycheck to paycheck and this time of year, my hours get cut at work. Severely. I’m talking 10 hours a week and a $130 paycheck. That’s less than $300/mo. And that is HARD. Have you seen gas prices lately??? Just getting to work costs me tons of money. So when I looked to see what it was I was spending money on, it was my COUPONING. I am spending so much money getting all of these great deals. That I DON’T NEED. And don’t even get me started on clearance sales. I’m a sucker for a clearance sale. It’s awful. So I’m amazed that you posted this today. Just 5 minutes ago, I had a container of “gourmet cinnamon” in my cart for an online deal where I would only pay $2.99 for it! And then I thought, I have 3 containers of cinnamon in my cupboard. Why the heck do I need more? So I exited. Quickly. And came here. And found this. And laughed. So thanks guys, for reading my mind once again. And sorry about the LOOOOONG post. 🙂

  • Lesley says:

    I agree that everything depends on the person. I am a hostess at a Long Horns and I come home with cash daily. If I don’t put it in the bank, I spend it, even if I budget it. It doesn’t matter. To me, the money is there and I don’t have to think about spending it. If I put it in the bank and use my debit card, I have to sit and think about it. Do I have enough money? Am I going to over draw my account? Do I really need this? Can it wait? After asking these questions, I generally don’t spend the money. I know for others, they have the out-of-sight-out-of-mind mentality. I actually asked some people today at work how they feel about cash over debit and almost everyone said the cash they bring home burns a hole in their pocket if they don’t put it in the bank.

  • Katy says:

    The best financial decision I have made this year was to take Crystal’s advice and leave the debit cards at home. I was always going over budget when I saw a deal I couldn’t pass up. Taking a calculator to the grocery store was second best. Last week I went with only $100 left in my budget and stayed within it because of the calculator. The kids were mortified!

  • Sarah says:

    Finally! An article saying that credit cards are not the devil!! After reading some of these comments, all I have to say is I am so happy I’m not alone. To me, I feel like I’m being guilted into using cash because I’m a bad kid using my credit card. It has driven me crazy whenever I read money-saving articles because I constantly hear “cash is good, credit cards are bad, no one has the self-discipline to use credit cards so no one should.”
    I do like this article because it really does say it’s a DISCIPLINE problem, not a credit card problem. Credit card companies get rich off of people making bad money decisions, but it’s really not their fault. Yes, they offer crazy incentives and will tempt you to carry a balance, but ultimately the decision to use credit cards unwisely is ours-the consumers. If you choose to max out your cards and carry a balance (hence paying high interest) then yeah, I’m sure cash will be better for you. But really, it doesn’t matter which method you choose (cash vs. credit) because if you can’t discipline yourself to manage your money at all, you’re going to be broke either way. Will cash systems help some if not most people? Sure! If cash works wonders for your budget, by all means keep it up, but know that credit cards are not the devil if you are responsible with them.
    We use cash occasionally, but our credit card works great for us. Let me share some ways it actually helps us. First, we get our statement every month showing exactly where every dollar went. Then at the end of the year, we get a booklet from Capital One showing exactly how much we spent for certain things (dining out, groceries, health, etc.). Seeing it in black and white helps us realize if we need to cut back on some areas or what not. With cash, it’s gone and there’s no way to track it unless I want to save every single receipt (which I don’t have the time for and it would drive me crazy keeping track of thousands of tiny papers). Plus, we do get rewards points which we use to get account credits (yay for free money). We pay our bill in full every month (no interest charges) and never get near our credit limit so there’s never any fear we’ll max out our card. I’m not saying this to brag, but to show that there are people who can manage credit cards and maybe to be so bold as to say that cash is not the only way to budget and and manage your money.
    Thanks for posting this article- I’m hoping for more like it! It does get highly irksome for us who are good with credit cards to constantly feel berated just because we prefer them to cash.

  • Tonya says:

    I find that I definitely spend more when using cash and it all comes down to accountibility. Cash just slips through my fingers but knowing my husband will see every single thing I charge to our credit card when he looks over the statement is very helpful!

    I tried the envelope system when we were first married and personally I found it to be completely frustrating. Shopping at Walmart, for instance, might require money from the clothing, food, gifts, and personal spending envelopes all in one transaction.

    It all comes down to finding a system that works for YOU. For me that means putting almost all our spending on one credit card and recording all our receipts on our computer budget spreadsheet when I get home. I can see at a glance how much is available in each column and I don’t have to deal with the temptation to hide purchases from my husband because it’s not possible!

    • Alisha says:

      Amen! I was starting to think I was the only one who thought this! We use quicken and pay off everything we charge on Fridays (everything we charge/spend has to be accounted for with a budgeted category so we’re never charging something we don’t have the money for.) We stay on track and on budget and get lots of cash back at the same time.

  • Alisha says:

    Finally!! Someone is talking about the real issue!! Thank you!! As much as I enjoy reading MSM I am so tired of hearing people saying over and over that cash is THEE best system for everyone when the reality is that overspending is a stewardship and discipline issue.. Different methods work better for different people based on their personalities and situations. If you struggle with spending more than you have, of course using cash makes sense, but not everyone struggles with going over budget and therefore needs the cash system for accountability.

  • Julie in IN says:

    Agreeing that the key is discipline and living within your budget!

    We have a cash envelope system but use our credit cards while shopping and must pay out of the envelopes–into the the credit card envelope when we get home from shopping. It is simple and gives me great peace of mind to not carry cash while shopping; we are earning wonderful cash rewards with our credit card.

    I know we’ve earned thousands of dollars in the 17 years we’ve used this system! I love the companies that will pay me an extra $100 just to put $500 on my card within the first 3 months of using it. We have a savings, only 5 years left to pay on our home and live happily on one income while I stay home and educate our 7 children.

    You’d be shocked how little you can live on when you pray over your budget! God loves to shower His children with blessings when we honor His Word.

    • Julie in IN says:

      Oops, forgot to share that I have not paid a late fee or any other fee on any of my credit cards as we pay in full each month. That part is essential.

  • Tonya says:

    I am not afraid to say that I’m an exclusive credit card user. I still track every penny that I put on the card as we have a household budget to keep and when we’ve maxed out on any given category, that’s it. No more spending in that category. If we run out of the grocery budget on the 22nd of the month, well that’s 8 days of creative eating we’re going to be doing. We can put our dining out budget to one really nice meal per month or several smaller meals off the dollar menu here and there, but when we’ve maxed out for that category, that’s it. As Kathryn noted, it’s all about discipline. My husband whines “but we don’t have anything to eat in the house” and I tell him “You should have rationed it out better.” There’s no grabbing the card and running to the store for chips and cookies.

    I rack up my points on my credit card, pay the card in full on time every month and enjoy the benefits of the cash back reward system or the gift card rewards. I funnel that cash back into traveling or gift cards into Christmas gifts. If you’re disciplined enough to track every penny and stick, like really really STICK to your budget, your CC can be a great tool to stretch your dollars, provided you have one with a great reward setup.

    I’ve also found that if I have cash, I’m more apt to burn through it on stupid impulse buys, like an lottery tickets, apple soda or a pack of m&m’s. I am less likely to make those impulse buys if I’m using a credit card due to the small amount of the purchase.

    Different strokes for different folks and I’m glad that most of us can agree on that. A system that one person swears by is a system that another person fails with. Play around with it, figure out what works best for your family and rack up your savings from there.

  • Hattie says:

    This post was so refreshing! I second the comments from other people about feeling scolded for using a debit card or credit card.

    My husband and I use our debit card for everything except groceries and cash–and I’m actually thinking of going back to our debit card for groceries because I haven’t seen any decrease in our grocery spending after using cash for the past year!

    We use a credit card for gas purchases (horrors!):). But, we get the Discover 5% cashback and then use that for giftcards worth more than the value we exchange them for ($25 giftcard for cashing in $20 worth of cashback bonus, etc.).

    And gas isn’t exactly something that you impulse buy–I’ve never found myself thinking “oooo, it would be fun to swing into a Sunoco for some of *their* gas!” to us, the Discover card is like a gas station rewards program–like a CVS or Rite Aid card, if you will.

    We were able to buy my maternity wardrobe almost entirely with our Discover cashback reward giftcards to Motherhood Maternity–one of those $25 giftcards for $20 cash rewards deals, done several times over!:)

    We keep our checking account 1 month ahead of our budget–the paychecks coming in in February will be placed in our ‘”savings” budget category until it is redistributed for “resetting” our budget in March. So the money to pay off the Discover bill for February is already sitting in our account. And our budget is extremely detailed–21 categories, with an additional 6 subcategories under “Housing.” We tithe and give generously, have no debt other than our house, live beneath our means–and we use our debit card or a credit card for almost everything.:)

    • Crystal says:

      We used to use our debit card for all gas purchases. We experimented with using cash and found that it made us more mindful of our gas usage: we were more apt to stay home, combine trips, or take the car with the best gas mileage when we used cash. So even though you don’t usually “impulse buy” with gas, we found that we spend less when we have a cash gas budget because we’re more thoughtful and careful in how we spend the money versus when we just swipe a card and consider gas purchases a “necessary evil”. I know it’s not like this for everyone, but I heartily encourage people to consider if cash versus debit cards might make a difference in how much you spend.

      • Andrea says:

        Combining trips is really important!

        This evening, my husband mentioned that the IRS mileage rate is 55.5 cents per mile (which covers gas, insurance and maintenance). While I think it is an overestimate, I used that figure to calculate the cost of my usual trips. It costs around $3.30 to go to the grocery store or CVS and $4.40 to go to Target (roundtrip). Driving to the library or to my daughter’s school costs $6.70!

        By hitting all three stores in the same day (instead of one errand per day), I can save at least $5 per week.

        • Crystal says:

          Since I pay mileage to my employees, I’ve started thinking in those terms, too, and it’s amazing how it changes your mentality about shopping trips out! Gratefully, most of the stores/places we shop at/go to are within five or eight minutes of our house, but I still try to combine at least three errands into one outing, even if everything is just five minutes away. The little things add up!

          • Emily says:

            Combining trips also makes a lot of sense in terms of efficient time management. I think it’s something to really think about.

      • Hattie says:

        We’ve pretty much always been mindful of how much we spend on gas–because we only budget a certain amount of money for it each month, and we can’t go over that!:) I am a stay-at-home mom, and I make our grocery run (two stores) on the same day, and fit in any errands that I can on that path and in that time frame with two little ones.:) The kids and I go to the library another day each week, and I usually run other errands to places on the path to or from the library. We live in LA (fresh transplants), and my hubby drives to the nearest train station, parks, and takes the train into work even though it means a slightly longer commute because his employer reimburses train tickets.

        Prior to kiddos and when I was still working, my husband and I commuted together, because my work was on his way to his then “job”–grad school. I am an RN, and I worked both 12 and 8 hour shifts–so if I worked 12 hours, he just kept on workin’ until I got off and he could pick me up on the way home.

        My hubby just finished grad school and started his first “real” job, so we’ve never taken vacations, really…but we would wait for the extra bits in the gas and entertainment categories to accumulate, and then plan a trip to somewhere within driving distance for fun…and my hubby would calculate the mileage that our car would get with the miles to the location and current gas prices to make sure that we wouldn’t go over-budget…he’s detail-oriented, that one.:)

        Just sayin’…just because we use a credit card for the gas doesn’t mean we don’t think about how much gas we’re using…:)

        Thanks for replying! It’s kind of exciting to sort of have a conversation with Crystal Paine!:)

  • Christina says:

    I thought the oil cleansing thing was a little strange, but I tried it and totally loved it! I definitely recommend trying it!
    Not only was it cheap, it was so simple to make and makes my skin feel amazing!

  • Crystal says:

    I guess everyone has to make their own choices about credit cards, but I have decided to forgo using them because of their unethical business practices. I was a victim of college student credit cards and now I’m 40 and still in credit card debt. When that debt is gone…those cards will be gone. I feel it is wrong to try to beat the credit card companies at their own game…credit cards shouldn’t exist at all. I feel bad for the millions of American in consumer debt and I’m not going to support the companies that so willingly put them there.

    • Andrea says:

      I’m sorry you feel like a victim. The credit card companies gave you credit, but they didn’t force you to use it.

      • Emily says:

        I agree. No one is truly a victim of credit cards. We make the choices to apply/not apply for them and then we make the choices to carry a balance/not carry a balance. I, too, got my first credit card in college. I, too, racked up a small debt while in college. I learned my lesson, paid off my credit card, and haven’t carried credit card debt in over 10 years. I do not think of myself as a victim.

        • Tonya says:

          Ditto this. I racked up debt because I wanted to live outside of my means in college. I wanted to take trips for spring break and have cool new gadgets (my Nokia cell phone was THE BEST! HAHA!) that I didn’t need. It helped that it was so easy to get a credit card. Plus hey, I got a free t-shirt for signing up! The only thing I was a victim of was my own ignorance about how to live within my means. I carried that debt all the way into my marriage and my husband and I spent 7 months very aggressively paying off both my debt and his while living on absolutely as little as possible to get by. We finally wrote the last check to the last creditor and were able to start funneling those thousands of dollars into savings, retirement, and now my daughter’s college.

  • Kerry says:

    I always thought I was “strange” because a cash based system never worked for me. The cash goes faster and with less accountability- I have no idea why but it just does! I use a credit card for everything but document it in my check book as you would a check or debit use. Then when the statement comes I go through and check off everything. Rarely does anything slip by and I can quickly see how much money we have.

    I just wanted to thank you though for realizing not every way works for everyone!! Kudos!


  • Tiffany says:

    I have to make a comment that I didn’t see above: One thing to think about when using credit cards, is how much it costs the merchant to allow you to use the credit card, thus driving up prices in general. I read once where an owner of a gas station would give people free coffee if they came in just to buy coffee and then wanted to use a credit card. He said the cost to him was actually more than the cost of the coffee. Now, I don’t know if that’s exactly true as I believe the rates range from 3-6% that credit card companies charge their merchants. So that 5% cash back that you are getting is actually just a reimbursement of the over-priced merchandise you bought with a credit card. It’s illegal to charge customers more for using credit cards, but you can give a cash discount. Our local gas station does this. Now that we try to use cash only, we always ask for a cash discount on big purchases, and sometimes it works! I don’t mind using a card every once in a while, but when I go to swipe for a $1 purchase, then I feel really cheap.

  • erica says:

    I think its interesting, the people who swear by credit cards should TRY the cash system for 3 months before they start talking negatively about the system. I have done both and can speak from both sides, just like Crystal. Im just saying that if you havent tried it, you dont know the other side! I was one of those who used a credit card for everything (since I was 16) and paid it off in full every single month. I used amazon rewards to buy birthday and Christmas presents, it was awesome. I decided to try out the cash system because of the testimonies I have heard on this blog. I had nothing to lose. I decided to do a half cash half credit card system. I use the cc for bills. I use cash for groceries, fun money, and gas. It works for us and now that I have done both, I can say that the cash system has saved us $500/month. I cant say the same for the cc system, even with the rewards.

    • erica says:

      Crystal is trying to help and encourage people to save money. I dont think commenting negatively and getting offended about her statements is right. There are many people (like me!) who really appreciate her advice and experience and if you are doing great on your budget, this post isnt for you. Its for the people who would like to try something out because their system isnt working.

    • Mrs. Jones says:

      There are several posters above, myself included, who stated they have tried the cash system.

      We tried for 12 months and it was a failure. We spent more money and didn’t have good records. I do believe cash keeps many people accountable, but that is not us. There are people who after careful examination of their habits and motives have determined that using debit/credit is still best for their situation.

      I’ve yet to see a credit/debit person bash those who claim they spend less and find more accountability with the cash system. It is still baffling to me why the cash spenders spend so much energy trying to convince plastic users their method is wrong.

    • Tonya says:

      As is the point of this blog post, it boils down to discipline. What are you buying when you swipe your card? Did you go into Target to buy 1 thing and end up buying 9 other things you didn’t need? That’s where people who need help with discipline and accountability do well with a cash system. If you can walk into Target and get your 1 thing you need and nothing else, then whether you use a cash or credit system, your discipline is still the same. If I have to run to the store because we ran out of a loaf of bread, assuming there is room in my grocery budget, I’m a lot more likely to buy the bread and a package of Twix and a Pepsi to wash it all down with if I have cash at the checkout. I can’t explain why or how, but using credit just works for me. I go in, I buy my bread, I get out. Obviously I need help in the food discipline department because no one should ever eat a Twix and a Pepsi at the same time lol. Hello sugar! Money discipline, I got down, food discipline, well that’s probably why I’m 10 pounds overweight.

      And if the cash system didn’t work for me for the 1 month I tried it out in, I’m certainly not going to keep losing money trying it out for 2 more months. The only area where it worked well for us was dining out, but we have those impulses under control.