Feeling like the Titanic!

[noppenbd]

My wife and I use cash for all of our non-bill spending. We withdraw a certain amount at the beginning of the week and make it last. We set aside some of it for groceries and gas and the rest for entertainment and miscellaneous purchases. The reason we went to this system is, we used to just use a debit card, but between the two of us using it all the time, it was really hard to stick to any kind of budget or limit; you can very quickly lose track of spending when two people are swiping that card every day. We found that for us, it was a lot easier to save when we did this. I know some people feel the opposite; that if they have cash in their wallet, they spend it immediately. I think it just depends on your personality.

Sure, with a credit card you do get a nice electronic record of your spending, so there are benefits there as well. But you can do this pretty easily with a little notebook, just mark down all your cash purchases with the amount and category (grocery, gas, etc). Try that for a few weeks and see where everything is going!

[scfr]

tcrocker - If you think the envelope system with cash will work for you, then by all means give it a try for awhile and see how it works. The "best" system for developing and sticking with a budget is the one that works for you!

[aida2003]

Originally Posted by safari

I never understood why people like paying with cash. I withdraw $200 and it lasts a couple months. I only use cash when credit cards are not accepted, to pay for things like parking, etc. I put everything else on a credit card and pay the balance in full every month.

I think plenty of people are advised to use cash because they have "compulsive shopping disorders" (I think that's the term to describe them ). When they have cash only, they probably can handle their 'wants' better, IMO.

We carry no more than $30 cash each and everything else goes on the AmEx CC. Maybe it's embarrassing for others, but I've noticed on the statements that DH has used CC for even 80 cent purchases at supermarkets. He doesn't care and me neither. No change to carry around and lose

[disneysteve]

Going cash only cuts down greatly on impulse purchases since you can't spend money that you don't have with you. If there is only $30 in you wallet when you go to the store, you can't decide to pick up that new boxed DVD set of your favorite TV show for $75, for example. With a credit card, of course, you could just charge it and worry about it later. So if you are prone to doing stuff like that, cash may be the way to go until you get your spending under control.

[noppenbd]

I think that cash-only is the best for those who have never been on a budget, like the original poster. In my opinion, there is no way to control your spending when you have husband and wife spending on a credit card all month. Then you go over the statement at the end of the month (which OP admits is not her strong suit) and try to cut down for next month? It seems a little backward to me.

There is also the psychological advantage of cash. You feel the pain of spending a lot more with cash. Swiping a credit card for $54 is just so much easier than counting out all those bills. It really does make a difference. Studies have shown that you spent a significant percentage more when using a credit card over paying with cash.

For those that have been on a budget for awhile and have predictable spending patterns I think credit cards are perfectly fine. But for those just getting started, cash is the way to go, IMO.

[skruggie]

Originally Posted by tcrocker

Yeah, we were in that $100 package as new customers but it ended this billing cycle. .

I am on Charter - when I called them at the end of my promotion, they told me that if you call back every 6 months, they will adjust you rate to whatever current promotion you are available for.

This is not something they advertise, but will admit to if asked.

[disneysteve]

Originally Posted by noppenbd

Studies have shown that you spent a significant percentage more when using a credit card over paying with cash.

References to those studes always drive me nuts. I'm sure there are SOME people who spend more when using credit. I think most don't. I certainly don't. When I get gas, I fill the tank. That will cost the same amount whether I pay with cash, credit or gold doubloons. I use a CC to pay the cell phone bill, the home phone bill, the cable bill, the internet bill, the alarm company fee, groceries, AAA membership, magazine subscriptions, auto insurance, auto registration... All of these things would cost the exact same amount no matter how I chose to pay the bill. Using a CC is just far more convenient, safer and earns me nice rewards from the CC company.

[noppenbd]

Originally Posted by disneysteve

References to those studes always drive me nuts. I'm sure there are SOME people who spend more when using credit. I think most don't. I certainly don't. When I get gas, I fill the tank. That will cost the same amount whether I pay with cash, credit or gold doubloons. I use a CC to pay the cell phone bill, the home phone bill, the cable bill, the internet bill, the alarm company fee, groceries, AAA membership, magazine subscriptions, auto insurance, auto registration... All of these things would cost the exact same amount no matter how I chose to pay the bill.

disneysteve, I am not questioning your use of a credit card. You have probably been on a budget for years, and are probably very intentional in your spending. But my point was for those that are just beginning to try to control spending, cash is a much more direct and transparent way to budget.

Most of the examples you mentioned are not the types of expenses I am talking about. I am not talking about bills, I am talking about purchases.

When a family goes into a restaurant with $40 in their pocket and no credit cards, you don't think they are a little more conscious about which items they get? How about going to the grocery store with $40? Sure, they are giving up 40-60 cents in rewards, but they know they are not going to spend $41 or $42 or $49. It may seem old-fashioned or severe to limit yourself this way, but the fact is, if you are like the OP, this is exactly what the situation dictates. Credit card reward points are a nice extra, but they are not going to solve the OP's situation.

The fact is, Dunn & Bradstreet did a study and found people spend 12-18% more when using credit cards than when using cash. McDonald's found that the average transaction rose from $4.50 to $7.00 when customers used credit cards over cash. On a case by case basis it is not always true, but on the whole there is a differential.

[anonymous_saver]

Originally Posted by noppenbd

about purchases.
The fact is, Dunn & Bradstreet did a study and found people spend 12-18% more when using credit cards than when using cash. McDonald's found that the average transaction rose from $4.50 to $7.00 when customers used credit cards over cash. On a case by case basis it is not always true, but on the whole there is a differential.

As for the McDonald's study, there are other explainations I think that could be used. There is the possibility that people who go to McDonald's don't have $7.00 or more in their pockets, that can be a lot of money to some. Then the only way to pay for their meal would be their CC. Thus, the higher transaction costs. Just an idea anyways.

Since they didn't interview each person who purchased things, there is really no way to interpret these results.

[disneysteve]

noppenbd - I agree with you. It is just a pet peeve of mine when people use those studies to generalize too broadly (not saying you did, but people do).

A nice compromise might be to use a good rewards credit card for regular, recurring bills so you get the benefits there and use cash for everything else.

[SnoopyCool]

With all of this good advice, I don't have much to add. But I know you can reduce your grocery bill because there are 6 in my family and we do it on about $100 per week (that includes toiletries, household cleaners and diapers/wipes, as well). Of course that means we usually by store brand (I don't clip coupons - I should, I guess, but no one around here doubles them).

Your job for now is to look for any way to reduce your spending. When I became a SAHM I made it my 2nd job to find bargains and become frugal so that my family didn't fall into any hard situations that we couldn't handle. I can't say it has been pleasant to have to give up some of my wants, but it certainly has been worth it.

Good luck. Hang in there and hang out here often.

[maat55]

Originally Posted by noppenbd

When a family goes into a restaurant with $40 in their pocket and no credit cards, you don't think they are a little more conscious about which items they get? How about going to the grocery store with $40? Sure, they are giving up 40-60 cents in rewards, but they know they are not going to spend $41 or $42 or $49. It may seem old-fashioned or severe to limit yourself this way, but the fact is, if you are like the OP, this is exactly what the situation dictates. Credit card reward points are a nice extra, but they are not going to solve the OP's situation.

The fact is, Dunn & Bradstreet did a study and found people spend 12-18% more when using credit cards than when using cash. McDonald's found that the average transaction rose from $4.50 to $7.00 when customers used credit cards over cash. On a case by case basis it is not always true, but on the whole there is a differential.

I hear these facts on Dave Ramsey's radio show, I have no reason to doubt them. Using credit cards for any reason takes much discipline. I'm in that in between stage of being DR fanatic and CC savy, so I only use them on a very limited bases.

[CouponAddict]

After reading the thread, I am sure you got alot of ideas on small ways to improve. Can you give a heads up down the road on how you are doing, so we may offer new & additional ideas.

I wonder do you have life insurance on your husband and yourself? I did not see it as part of your list of bills. If your husband were to die and you dont have any insurance what would you do??? If you were to die and your husband had to pay for all the things you are currently doing at home, how would he manage? I know this is hard to think of at this time but if possible I would try to make sure you had atleast enough life insurance $ to pay for daycare for all four children for a year.

By the way...How old are your children? Are they old enough to help watch your other children if you were to get a night job? Or is it possible for you and your husband to work different hours so that you do not need daycare? Are your children old enough to maybe mow lawns, shovel snow, etc to pay for some of their wants (not NEEDS-but expen$ive wants).

[DebbieL]

I definitely tend to spend more when I'm using cards than cash. It's psychologically more difficult to part with cold, hard cash out of your wallet than to sign your name, IMO. I do pay my bill in full each month, but sometimes it's been a bit of a shocker I'll admit.

[CreditExpert]

I would try to cut down on the expenses as far as possible. The food and the phone bill looks like it might be the best place to start.
It will be terrible to sell your house, but if the 1st method doesnt solve your problem, and finding a job is not panning out, it might be the only way to go.
Good luck!