Thinking of going back to cash

[gf1723]

When I was in high school and college I never had a debit card. I did have a CC that I would use to purchase gas with, but that was it. I used cash for everything else. Now that I've been in the workforce for a couple of years, I've gotten a debit card am afraid to keep using it. I've saved a decent amount, but probably not as much as I can be.

I've tried different budgeting software but none of it has panned out for me. It seems like I did alright when I was in college, because if I didn't have any cash in my wallet, I wouldn't spend anything. I always knew how much I had to get me through until the next paycheck. So here's my new plan. I will use checks to pay my monthly expenses like rent and utilities. Then I will take out so much money every two weeks and just use it for groceries, gas, spending money. The rest left-over in my checking account will get dumped into various savings accounts. If I happen to spend less then that's just extra money in my wallet to treat myself to a new video game or something.

Anyone else do this? I guess I live a much more simple lifestyle (26 and single with no debt) than most people who are married and have children. So I can see where it would be hard to do this.

[Aristippus]

For what it's worth, I find that I'm more careful spending with a debit card than spending with cash. As Dean Martin once sang, "Money/Burns a hole in my pocket." But with a debit card, I seem to consider purchases more carefully and hew more closely to my budget. YMMV, of course.

[bjl584]

If you have the disipline to do so, you could use a CC that offers some type of reward and just pay off the bill in full every month. That way you can take advantage of the rewards and have the added security against fraud or ID theft that a CC card provides. You are protected with a Debit Card, but the catch is you could be out the money that was stolen from your account until your bank resolves the issue. With a CC, you won't be out any money at all. You simply just don't pay the bill for the fraudulant charges.

[gf1723]

Originally Posted by bjl584

If you have the disipline to do so, you could use a CC that offers some type of reward and just pay off the bill in full every month. That way you can take advantage of the rewards and have the added security against fraud or ID theft that a CC card provides. You are protected with a Debit Card, but the catch is you could be out the money that was stolen from your account until your bank resolves the issue. With a CC, you won't be out any money at all. You simply just don't pay the bill for the fraudulant charges.

That's a good thought, but I'm not comfortable using a credit card that much. It's there for one reason, and one reason only..in case I get stuck somewhere with not enough cash on me and not enough in my checking account. Good scenario is if I'm on a trip and my car breaks down and needs more than $1000 in repairs, which has happened before.

Yea, for some reason if I have a set amount of cash on me, I know I can't spend much. However, if I have a debit card..I'll swipe that thing as much as possible.

[disneysteve]

Do you have a budget? If not, I'd suggest you sit down and write one out. Then, don't just put $100 in your wallet and say it is for everything - gas, groceries, clothes, spending money, etc. Split up the cash according to your budget. Put the amount for each category for the month into a separate envelope. When that envelope is empty, you don't get to spend any more money in that category that month unless you decide to pull money from another category.

If you aren't sure how much to assign to each category, spend the next month tracking your spending carefully and then use that information to plan your budget for the following month.

[snafu]

gf1723: I think you're more disciplined, experienced and mature than your post suggests having managed monies successfully in HSc & college. If you don't like your last budget experience, I suggest the 50/30/20 split for a 6 month trial. Pay regular monthly bills electronically via your bank's on-line program, transfer 20% into your emergency fund/savings/investment program and give yourself an allowance to enjoy.

[nick__45]

If you want to be super discipline, use a checkbook. It is quite intimiting pulling one out in public these days and will surely make shopping a chore.

[mcfroggin]

Originally Posted by disneysteve

Do you have a budget? If not, I'd suggest you sit down and write one out. Then, don't just put $100 in your wallet and say it is for everything - gas, groceries, clothes, spending money, etc. Split up the cash according to your budget. Put the amount for each category for the month into a separate envelope. When that envelope is empty, you don't get to spend any more money in that category that month unless you decide to pull money from another category.

If you aren't sure how much to assign to each category, spend the next month tracking your spending carefully and then use that information to plan your budget for the following month.

This is a good idea - you need to budget. Credit cards are valuable to build up credit, but they also entice you to spend more. Ideally, you should use credit cards for "need items".

[gf1723]

Originally Posted by disneysteve

Do you have a budget? If not, I'd suggest you sit down and write one out. Then, don't just put $100 in your wallet and say it is for everything - gas, groceries, clothes, spending money, etc. Split up the cash according to your budget. Put the amount for each category for the month into a separate envelope. When that envelope is empty, you don't get to spend any more money in that category that month unless you decide to pull money from another category.

If you aren't sure how much to assign to each category, spend the next month tracking your spending carefully and then use that information to plan your budget for the following month.

I tried out the You Need a Budget software and used it straight for 2 months. However, I kind of fell off the wagon. I really liked it and was starting finally grasp the idea behind it. Maybe I'll give it another go. It probably is the best software choice for me. I like to enter it on my own, and I don't like to use web services.

The past couple of months I've just been automatically transferring so much money into EF, Savings, and Roth accounts, then just spending whatever, whenever. So it's not like I have been saving NOTHING, just not as much as I probably could be.

I plan on starting it again on June 1st. Wish me luck!

[disneysteve]

Originally Posted by gf1723

The past couple of months I've just been automatically transferring so much money into EF, Savings, and Roth accounts, then just spending whatever, whenever. So it's not like I have been saving NOTHING, just not as much as I probably could be.

You've just described our system. We "budget" our savings. We do not budget our spending. I have no idea what we spend each month on groceries, gas, clothing, travel or anything else but I can tell you exactly how much went into each savings and investment account. As far as I'm concerned, it doesn't matter how the money is being spent as long as our savings goals are being met.

What we do, though, is periodically (usually every 6 months), boost the savings rate by 1%. So far, we haven't seen that impact our lifestyle and spending, which means we could boost it more. July 1 I'll be upping it from 22% to 23%. If that is still not a problem, on January 1 I'll up it to 24%.

You could do the same type of thing if that works for you.

[Ronin]

The best thing for me is putting all of my savings, investments, payments on an automatic payment cycle on or around my paydays. That way I only have what's left in my checking account to spend. I don't do well with a strict budget on specific items, but I do well with only being able to spend what's there. That's one option to use opposed to having a strict budget which is hard to stick with. It doesn't mean you have to spend every cent in your account, but gives you a little more flexibility.

[jpg7n16]

Don't know that it matters either way.

If physical cash helps you control spending better, use physical cash.

If a debit card does, use it.


I personally use a CC for the cash back. And cause I'm afraid someone would pull some cash from my wallet and I wouldn't notice it.

[elessar78]

What I like about using my (debit) card is how it tracks my spending by category. I can go online and get a visual graph of where our money is going.

[Ima saver]

I have been using nothing but the cash method for over 40 years and it works for me just great. I have never had a debit card. We use a credit card for my dh's purchases at Home depot (he is a builder) and we pay it off in full each month. They pay us back in cash rewards. We each get an allowance every payday and that is used for gas, eating out, liquor, etc.

[gf1723]

Originally Posted by disneysteve

You've just described our system. We "budget" our savings. We do not budget our spending. I have no idea what we spend each month on groceries, gas, clothing, travel or anything else but I can tell you exactly how much went into each savings and investment account. As far as I'm concerned, it doesn't matter how the money is being spent as long as our savings goals are being met.

What we do, though, is periodically (usually every 6 months), boost the savings rate by 1%. So far, we haven't seen that impact our lifestyle and spending, which means we could boost it more. July 1 I'll be upping it from 22% to 23%. If that is still not a problem, on January 1 I'll up it to 24%.

You could do the same type of thing if that works for you.

Glad to know that I'm not the only one who likes to do it this way. I've always wondered why I have to know exactly how much I'm spending on stuff, as long as I'm saving right? I guess the main benefit of budgeting your spending is to see where you can cut back a little.

I think I'll probably do the same thing as you DS. I find it too much work for me to track every single little purchase. Instead I know that I have $200 going to my Roth payment, $100 into a regular savings, $100 towards EF savings. I also have 10% of my check going into my 401k.

The rest of it, I just make sure I have enough in my checking for bills on a monthly basis and I use the cash I withdrew at the beginning of each pay cycle to spend.

[elessar78]

Doing it a similar was as GF and DS. Savings/retirement are automatic, then bills are budgeted, then everything else goes into a discretionary spending fund. The online tools and graphs are very helpful in keeping track of where we are spending our money.

[dczech09]

I've tried all of these methods. I have done it so that everything is on autopilot and whatever is left over is discretionary spending. The problem I found with this method is that I would spend some money on drinks at the bar but then not have money to fill my tank.

I have been doing the cash method now for a few months. I put money into envelopes and spend X dollars on different categories. I like this method because I always seem to have a little (not too much) left over at the end of the paycheck. This avoids overextending my money and under utilizing my money. Also, its cash so I am more intentional with my spending and tend to spend less.

I think it comes down to personality. What works for one person may not be the way for another person.

[disneysteve]

To be fair, our system only works because a) we make a lot of money (over 100K) and b) we're both pretty frugal and careful with our spending anyway. We're able to do everything that we want to do on a routine basis without coming close to what our disposable income allows for. I always say that we save 25% of our gross but in reality we save more than that because we don't spend all that we have to spend. If having a drink at the bar could leave me unable to put gas in my tank, I'd be using a different system that more closely tracked day to day spending. That just isn't necessary for us fortunately.

[SteveBlissLaw]

I'm with ya man. I used to always use cash until I switched jobs. I miss it so much

[landon.bruno]

I don’t agree. Its better that you spend using your debit card. It’s quite risky and not comfortable to use cash at a lot of stores. You can use a debit card at go.