Yesterday, The Happy Rock posted about his failed cash only spending experiment. Then this morning, Kacie at Sense to Save discussed how much she hates carrying cash. These two posts got me thinking about an all-cash spending plan, mostly because The Happy Rock said he was hoping to save 12-18% by switching to all cash (figures per Dave Ramsey, apparently). I’ve gotten comments here about the benefits of using only cash, too.
I’ve mentioned before that I’m currently in the “charge everything and pay off the balance in full each month” club. Since Free Money Finance and SingleMa do the same thing, I’m in good company. And Marc and I are quite responsible. Not only do we pay off our credit cards in full each month, we contribute to 401(k) plans, pay off debt (student loans and mortgage), and save money. Our spending is definitely not out of control.
But that’s not to say that we couldn’t spend less each month. For Alex, Christmas lasts the whole year – by which I mean, he constantly gets new toys (though many of them are from his grandparents, not us). We eat very well. And now that I’m really trying not to buy things just because they’re heavily discounted, I realize how many things I’ve bought that I really don’t need.
So I’m seriously considering an all-cash experiment. If I decide that I can/want to do it, then I’ll talk to Marc and try to get him on board.
What’s giving me pause? Let’s go through the list:
- Losing credit card rewards. We have one card that we use the most, and two others that we use for certain purchases. All of them come with rewards, and I hate the thought of not getting that benefit.
- I don’t like the thought of carrying a lot of cash. Marc and I both have small wallets. And I don’t like carrying a lot of cash around because it makes me feel vulnerable. I suppose I could only carry what I think I’ll need for the day and leave some at home.
- I hate going to the bank. I haven’t used an ATM in years. I don’t even know the pin for my ATM/debit card. If I need cash, I get it when I go to the bank to make a deposit. I’m afraid that going to all-cash will require extra trips to the bank, and it’s not like I have any extra time these days.
- I don’t want to be caught short. It would be humiliating to go to pay for something, only to realize I don’t have enough money. I suppose I could carry a credit card for these situations, though – and try not to get into these situations in the first place!
- Cash doesn’t carry the same kind of protection as credit cards. We wouldn’t be able to dispute a charge through the credit card company if something we purchased didn’t live up to expectations (though I admit, this is a rare occurrence.)
Finally, I’m not convinced we really will save money. But my gut tells me we would. And even a 10% reduction in spending would be nothing to sneeze at – 10% of our monthly discretionary expenses would be more than we earn each month in credit card rewards. I’m definitely going to have to think about this – maybe as an experiment.