“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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We have used cash for groceries and eating out for years, and I really have found that we spend less. If the money to pay for an item is not in your wallet, you simply put it back and do without until you CAN afford it!
It’s the “put it back” part that I need to work on. I caught myself trying to scheme in my head how to pay for something if I just shift those funds around. It’s getting easier though.
Thanks for commenting.
I use credit cards almost exclusively. I do it for the rewards and frequent flier miles. I pay my entire balance every month and have no consumer debt. I find the opposite is true when I use cash. I tend to spend it easily and have almost no recollection what I spend it on. This one of the reasons I use credit cards
We were using credit cards almost exclusively and always paid it off at the end of the month too. But we’re using cash to find out if we spend less when using it than with credit cards. It’s been so long since I’ve used cash that I don’t know.
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Great idea. I should try this experiment as I’m carrying more debt than I’m comfortable with. Stopping by from SITSSharefest.
Great idea. I should try this experiment as I’m carrying more debt than I’m comfortable with. Stopping by from SITSSharefest.
Great idea. I should try this experiment as I’m carrying more debt than I’m comfortable with. Stopping by from SITSSharefest.
I’ve gone between cash and credit cards and have now settled on using cc’s. I found cash too difficult to track and seemed to spend more. Good luck, I’ll be interest to see how you do 🙂
Thanks, Laura. I’m going to give it several months and then decide what works best for us.
Thanks for commenting.
Good for you! We started the cash system about 6 months ago. Using cash and having a spending plan (budget) has helped us go from about $1000/mo for a family of 5 to about $350-$450/mo for our groceries. That’s a nice chunk of change that can go towards our debt snowball!! I’ve also lost 20 pounds and hubby has lost 40 pounds. Gooooo cash!!!! 🙂
Margaret @ Live Like No One Else
WOW! Congrats on reducing your grocery spending and your waistline. That’s awesome! GOOOO cash!!!!
Thanks for commenting.
I think paying with cash is a great way to keep perspective on your finances.
I notice that if i can actually see the money being deducted from my account, i will spend less money.
But on the other hand, if i can pay with credit, i will overspend.
I’ve been able to reduce my frivolous spending by about 10% when i switched.
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