I listen to The Dave Ramsey Show almost every day when I am walking to work. One of his favorite phrases is that “Cash Is King”. He also argues (with good references) that people spend more when they use credit. He states that a recent study found that individuals typically spend 12-18% more when they use credit vs. cash. It’s hard to argue numbers like that, but I am going to try!
Cash Burns a Hole In My Pocket
Yeah, you read that right. Cash burns a hole in my pocket and I always find something to spend it on. Whenever I carry cash, I just think of it as play money. It’s something that I can just take into a convenient store and spend until it’s gone. It’s just begging me to spend it! So, in the past few months, I have stayed away from cash and it’s devilish qualities. But why was I like that with cash? According to Dave Ramsey, it was supposed to help me curb my bad spending habits. 🙁
Credit Is Just As Bad
Back in the days when I was still using credit cards, my problems were just as bad as they were with cash. Everyone knows that easy access to credit can get you in deep trouble. To be honest, it got me in trouble quite a bit. I was buying things I didn’t need and adding things to the cart because I could. I guess you could say that I did spend more because I used a credit card. I spent more because I knew it wasn’t coming out of my checking account.
What’s The Answer?
I knew there was no way that I could handle the cash envelope system. It was just too tempting to grab some cash out of another envelope and spend it on something else. I know a lot of you are going to say that I had no self control, and I can tell you that you are probably right. However, I wanted to fix the money problems and I took the necessary steps to correct them. Today, we solely use our debit card and checks. We also are using a software program that allows us to spend all of our money on paper before the month is even over. Ever dollar is accounted for and if we spend more money on another category, we have to cut back on something else. It’s working for us and it seems like the ways of the past are gone!
Do you see a difference when you use cash vs credit? What works best for you when it comes to spending temptations?