“Debt is Dumb, Cash is King” – Dave Ramsey
Dave Ramsey has built quite a business around that quote. He has successfully inspired thousands of people to a life free of credit cards and debt.
My husband and I always thought we were different.
It just seemed easier to us to carry and use credit cards versus cash. We used them for everything, from groceries and restaurants to gas and clothing and everything in between. And we always paid the entire balance at the end of the month. We were using the cards to earn cash back on purchases that we needed to buy any way, so we were being smart about our spending. Right? Or so we thought.
But Dave Ramsey and Financial Peace University challenged us to think about credit cards & cash differently.
According to Dave, you actually spend 12-18% less when using cash. That caught my attention. If we could reduce our spending by 12-18%, we could put that money towards our debt. In 2012, we spent almost $8000 on groceries and 12% of that is $960. The most cash back we’ve received from our visa has been $250 a year. We have the potential to save almost 4 times that just by using cash instead of our visa.
So in March, we started using cash or our debit card for 3 spending categories: groceries, restaurants, clothes.
This has been a huge adjustment for us. We’ve been handing over our visa for most of our purchases for our entire marriage. We didn’t even have ATM cards at the beginning of March, so I had to order them.
Switching to cash definitely will take more communication and coordination between the two of us so we don’t overdraw an account. We are trying to figure out a system for when my husband needs to make a purchase. I do most of the shopping for groceries and household purchases, but what if he needs to pick something up on the way home from work or he needs to stop at Lowe’s for a household item? He will now need to bring me receipts immediately after a purchase rather than wait until the credit card bill was due.
After one month, we both like the feeling of paying with cash. We felt like our purchases were more intentional and less impulsive, but there were some hiccups in March. I did use my credit card for a few things that I knew I could find the cash for by the time the payment will be due. And I could hear Dave Ramsey barking in my ear each time. My credit card is like a security blanket that I’m not ready to give up.
We took the first step to cash in March and each month should get easier, because “debt is dumb and cash is king.”
Do you use credit cards or cash? Let us know in the comments.
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