|Kafkan from flikr|
What I'm doing is trying to use cash, instead of my debit card, for day-to-day purchases. As you might have guessed from my recent coupon post, I am trying to do a little better with my finances. Don't worry, I don't need a telethon or anything, I just feel like all of the money is getting spent and I'm not sure where it's going. Most financial gurus would say that the solution is to log all of my expenditures into a spreadsheet or something. Do any of you do that? Doesn't sound like simplicity to me, it sounds more like a cute handbag overflowing with receipts and a bunch more piled up on the dining room table, all waiting to be logged into Quicken.
For me, I think the problem stems from two sources: I have a LOT of bills on automatic deduction and I'm not really keeping track of what I spend on my debit card. The solution to the automatic deduction is pretty easy- most of those bills are fixed amounts, so I need to just create a record of what deducts when (and by that I mean write it on a post-it) and keep it around. The solution to the debit card problem is to use the thing less.
I have done the cash diet before. When I was in nursing school, my spending money was so limited that it was easier to just get whatever was left after bills in cash and use that for extras. It helped prevent overspending, which meant I was not afraid to check my bank balance. I continued the cash habit for a while after I graduated, and I noticed that I spent less money that way. There is something about getting the cash from the ATM, counting the dollars out of your wallet, and watching the wallet get empty that connects you with the amount you're spending in a way that swiping a debit card does not.
Sadly, I have fallen out of the habit and am back to using my card for almost everything. I was embarrassed to buy a newspaper at the gas station for $1.50 and not have enough cash to pay for it. I also overdrafted my account in June because I lost track of what was deducting and what I spent. The bank moves money from my savings to cover it, but charges me an $8 fee (how many coupons does it take to make that up?) and the money never seems to get moved back to my savings. Worst of all, I am usually very disciplined about moving a certain amount money to savings right after I get paid, but lately I wait until right before payday and just transfer some of what's left.
If you look online, there are tons of articles about all-cash diets, like this one and this one (guess who learned how to use the link button!). The second article, which has profiles of people living on all cash, has people saying things like, "we don't feel like we're skating on the edge of a cliff," and "[I] would dread going to the mailbox..." Personally, I am hoping to stop getting nervous when I log onto my bank account webpage because I will actually know how much money is there. Worrying about finances is not the key to a simple life!
Unlike the folks in the articles, I am not giving up plastic entirely. I am still planning to use my debit card for gas- it's just too convenient and I am always out of gas when I'm in a hurry to get somewhere. I will also use a credit or debit card for online purchases. My super low tech solution for keeping track of what I have spent is a little slip of paper in my wallet. I balance my checkbook (including pending deduction), write down what's left, and subtract whatever I pull from the ATM or spend on a card.
The most compelling argument for an all-cash diet might be this: some people find that an all cash diet leads to healthier food choices, which can lead to weight loss. Now that I have my CEN, it might be time to set a new goal. But more on that soon...
Until next time, KISS (keep it simple stupid), and try carrying some dollars in your wallet!