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Cash is not evil!
By Daphne | September 26, 2007
Cash is not evil. There I have said it.
Really though, how many of us make daily purchases like coffee, groceries, and miscellaneous items with cash? The commercials that irritate me the most are those that show people making purchases for fast food on a credit card. When I was in college I decided that I was not going to buy food with credit cards. I had a friend freshman year at Loyola who ran up about $25,000 in debt. This was in the late 80s. She didn’t have parents who could bail her out and she returned some of the items that she had purchased but that really didn’t help lessen her burden of debt.
Whenever my friends and I went out to get food, we would buy what we could afford. Some had credit and some didn’t. Those who didn’t, thought the novelty of charging food would be so grown up. I didn’t. I too was lured in by a free t-shirt or bag on campus and signed up, but whatever I bought I paid for. I made sure that I had the money by the time the bill came or I didn’t but the item. This also helped me learn to use credit wisely. Food is something that I  pay for. I have only used a credit card for groceries less than a handful of times - mainly because the purchases I was making were gourmet items from a specialty store and I had budgeted for the items out of my Christmas fund.
The reason that the commercials irritate me so much is that most people do not pay off their credit card bills in full at the end of the month. I was raised that way, actually my parents are more cash users than I am. I use a credit card when I don’t want to carry cash or want the rewards point on my favorite card. [BUT I pay the balance in full every month.] Food is a temporary thing - not something that I want to charge. What difference does it make if I am going to pay it all off at the end of the month anyway? None really but it’s a position that I stand by. Plus, if the purchase is less than $10 or $20 it can be paid for out of the cash I carry. Since the majority of credit cardholders carry a balance, wouldn’t it be easier in the long run to make that extra effort and pay cash for your lunch or magazine or coffee?
Try it. Carry a reasonable amount of cash with you for the week. Use this for those small mindless purchases that make during the week. If you want to save money that’s cool; but it doesn’t mean you have to do without everything. Paying cash for certain things will make you think about what you are buying and whether or not you really need the item. If you decide on $100 or $200 a week for incidental expenses try to stick to it. Then if you do carry a balance on your credit card you are not paying 14% more for the paperback or Mexican dinner you bought.
Why cash and not a debit card? When you use cash you physically have to touch the money and count it out. When you are swiping a card you are detached from the amount you are spending. Swipe after swipe after swipe, unless you have great will power or mathematical prowess, you still can lose track of your spending. Try it when you are at the store next time, which feels more real, using cash or swiping a card? No matter how you try to justify it, a debit and credit cards remove you from being in touch with your money and having greater power over your finances.
Topics: September 2007 |