Living Entirely on Cash

18 Aug

Oops, I didn’t realize that this didn’t go out this week as planned. I was wondering why there were no new comments. 🙂

If you’ve ever gone through the Dave Ramsey plan or been advised by someone from several generations past (or even been keeping current with  Suze Orman recently), you’ve probably heard that “Cash is King” and the benefits of living entirely on a cash system tooted. (This does include checking accounts, checkbooks and debit cards – as technically it’s still your “cash” on hand. What it doesn’t include is credit of any kind.)

But have you done? Have you thought about it (or is this the first time you’re hearing it)? Have you been tempted to just “buck the norm” and do it? Or do you think this is all crazy talk?

I have to admit that I often wonder if I (and my family) could live entirely on cash. We’re not highly dependent on credit (not including the mounting student loans that my husband is acquiring with his multiple post graduate degrees). We loathe the idea of a car loan. And we only buy what we know we have money for even if we’re using credit (meaning we’ve never held a balance on a credit card we’ve owned to date).

So why do we still use credit and why are we hesitant to use cash and debit cards only. For one, the rewards. Of course, everything is changing right now so this benefit might not be as alluring as it used to be, but my husband and I both get cash back from our cards and it’s a nice “bonus” every once in a while. The other reason is the extra security you get from a credit card. If a purchase is bogus or sometimes even if the purchase just isn’t up to your standards, the credit card company will stand on your side for a refund (or in the case of unapproved transactions, will reverse the charges). I’ve heard (but I could be wrong) that with debit cards, the money essentially comes straight out of your account and once it’s “gone”, it’s gone.

So, if you’ve gone to Cash Only, how did you do it and why? And would you recommend a frugal family like ours (who doesn’t really use credit like “credit” anyways) to go Cash Only too? Inquiring minds want to know.

4 Responses to “Living Entirely on Cash”

  1. corriespondent August 20, 2010 at 11:50 am #

    I think living on cash is helpful if you have a hard time with being disciplined w/ credit cards (e.g., spending more than you can pay off each month). It doesn’t sound like you guys have a problem and keep on top of your finances overall, so I don’t see any reason to move away from getting the credit card rewards. We have three credit cards (not including debit/credit bank card) and use them all regularly … and pay them all off every month.

    • gilspencer August 20, 2010 at 4:25 pm #

      Of course with all the credit card changes, I could see the companies easily trying to “get some money” out of a “good customer” (us) and then making some policy that essentially makes the rewards not worth it. Never the less, I guess we’ll likely keep using our cards but warily watching those new policy brochures that have been coming every couple months.

  2. Kimberly August 27, 2010 at 6:38 pm #

    Considering changing our budget over to this line of thinking…most along the Dave Ramsey program. We are working on getting out of debt and it feels great!!! ~Kimberly

    • gilspencer August 28, 2010 at 8:27 pm #

      For getting out of debt, I think Dave Ramsey’s plan is the best. It makes so much sense. And even though it’s not easy, being debt free is worth it. I congratulate you on working towards that goal.

      We’ll be there in a couple of years (after the hubby is done with school), by then hopefully job prospects will also be better. We plan to then live like we currently do (uber frugal) for a year longer and pay off any debt we might have incurred. One good thing is we’ve always lived frugal and always kept a pretty tight budget (even when we were making a little extra, always easier to stay frugal then having to cinch back from what becomes “normal”) so it really helped last year when our budget was basically in the red and we had to dip into our emergency fund /savings to make ends meet. So we can happily say (and sigh a sigh of relief) that our only debt that we have are school loans (which are deferred interest free while the husband is in school).

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