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Cash Only: One Route Out of Debt

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Cash Only: One Route Out of Debt

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    There are more than a few ways to deal with credit card debt, as well as other financial crunches. More than a few financial gurus recommend making the switch to a cash-only lifestyle: getting rid of credit cards and using only the cash in your wallet to make purchases. There’s a reason that the cash-only approach is so popular. If you stick to only cash, it’s virtually impossible to add to debt. But there are some drawbacks worth looking at before you jump on the cash-only lifestyle.

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    Managing Savings

    Taking a pure cash-only stance is difficult, if only because saving up a lot of cash on your own is impractical. Even if you have a safe place to store your cash, it won’t be insured, like it would be in a bank. You also won’t earn any interest on your savings — while we may be talking about pennies, it’s important to remember that pennies add up. So, for most people, a cash only lifestyle still involves a bank. It doesn’t necessarily involve a debit card, however. Because one of the benefits of cash only is the fact that making it harder to spend your own money usually translates to less spending, a debit card is out. If you’re planning to make a large purchase (and you’ve got the cash in the bank), checks are generally considered a good compromise.

    Using Checks

    You can use a credit card virtually anywhere, but it’s much harder to use a check. In some cases, it can actually be harder to use cash, rather than a credit card, as well. Want to rent a car? You’ll be asked for a credit card. Offering cash will only flummox the guy behind the counter. You’ll find yourself jumping through some hoops to spend your own money if you switch to using only cash.

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    There’s an argument that because it’s so much harder these days to use checks, you’ll be less inclined to go out and spend money. That may be true, but for some people, the ease of renting a car and making other payments is far more important than sticking to a cash only approach. That’s not a reproach on such individuals’ approaches to money: it’s a fact of doing business in the modern world. It’s a more than reasonable objection to the cash only system.

    Building Credit

    Credit reports are crucial for a lot more than getting a new credit card these days. Employers look at the credit reports of prospective employees, landlords look at the credit reports of prospective tenants and even utility companies look at credit reports before deciding to connect someone’s electricity. And that’s assuming that you don’t want to buy a house — while mortgage may not be a bad kind of debt, it’s hard to get one with no credit history whatsoever. If you go cash only and eliminate your credit cards, it’s much harder to build a solid credit history.

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    It’s not impossible: you can take out a loan that you have the money for and pay it off quickly or take a similarly roundabout route. You can also point those individuals who would otherwise check your credit score to the FICO Expansion service — essentially a credit score for those individuals who use cash only. You can also use services like PRBC, which reports your bills that you pay on time (such as telephone) that aren’t reported on your credit report, to build up your credit. There are fees involved in using such services, however.

    A Credit-Based World

    The simple fact is that living a cash-only lifestyle these days is a rarity. Many companies just aren’t set up to help anyone planning to pay cash with the process. If you walk into a car dealership and try to pay cash for a new car, for instance, you’ll have a much harder time completing the transaction than if you finance it. It’s not because car dealers don’t want your money: it’s because that situation is so unusual that a dealership’s staff really doesn’t know how to handle it.

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    Sticking to cash for all your transactions can end up costing you more time than you might expect. If you feel that your time is more valuable than the money you can save by using only cash, that approach just may not work for you.

    Pros and Cons of Cash Only

    There are definitely plenty of drawbacks — as well as benefits — to living a cash-only lifestyle. But the thing about personal finances is that they’re personal. Using only cash works really well for a lot of people. But it doesn’t work perfectly for everyone. You may find that a complete conversion to cash only doesn’t work for you, but a modified approach — like limiting your eating out budget to the cash in your wallet — works out great. It is worth at least checking out the cash only approach and seeing if it can at least save you some credit card fees.

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    If you have gone cash only, successful or not, please comment on your experiences. What worked? What didn’t? What tips can you offer to someone thinking about going cash only? I know what my experiences have been, but I’m always interested in seeing why someone else has an easier or harder time with relying more on cash and less on credit.

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    Last Updated on November 18, 2020

    15 Tips to Restart the Exercise Habit (and How to Keep It)

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    15 Tips to Restart the Exercise Habit (and How to Keep It)

    It’s okay, you can finally admit it. It’s been two months since you’ve seen the inside of the gym. Getting sick, family crisis, overtime at work and school papers that needed to get finished all kept you for exercising. Now, the question is: how do you start again?
    Once you have an exercise habit, it becomes automatic. You just go to the gym, there is no force involved. But after a month, two months or possibly a year off, it can be hard to get started again. Here are some tips to climb back on that treadmill after you’ve fallen off.

    1. Don’t Break the Habit – The easiest way to keep things going is simply not to stop. Avoid long breaks in exercising or rebuilding the habit will take some effort. This may be advice a little too late for some people. But if you have an exercise habit going, don’t drop it at the first sign of trouble.
    2. Reward Showing Up – Woody Allen once said that, “Half of life is showing up.” I’d argue that 90% of making a habit is just making the effort to get there. You can worry about your weight, amount of laps you run or the amount you can bench press later.
    3. Commit for Thirty Days – Make a commitment to go every day (even just for 20 minutes) for one month. This will solidify the exercise habit. By making a commitment you also take pressure off yourself in the first weeks back of deciding whether to go.
    4. Make it Fun – If you don’t enjoy yourself at the gym, it is going to be hard to keep it a habit. There are thousands of ways you can move your body and exercise, so don’t give up if you’ve decided lifting weights or doing crunches isn’t for you. Many large fitness centers will offer a range of programs that can suit your tastes.
    5. Schedule During Quiet Hours – Don’t put exercise time in a place where it will easily be pushed aside by something more important. Right after work or first thing in the morning are often good places to put it. Lunch-hour workouts might be too easy to skip if work demands start mounting.
    6. Get a Buddy – Grab a friend to join you. Having a social aspect to exercising can boost your commitment to the exercise habit.
    7. X Your Calendar – One person I know has the habit of drawing a red “X” through any day on the calendar he goes to the gym. The benefit of this is it quickly shows how long it has been since you’ve gone to the gym. Keeping a steady amount of X’s on your calendar is an easy way to motivate yourself.
    8. Enjoyment Before Effort – After you finish any work out, ask yourself what parts you enjoyed and what parts you did not. As a rule, the enjoyable aspects of your workout will get done and the rest will be avoided. By focusing on how you can make workouts more enjoyable, you can make sure you want to keep going to the gym.
    9. Create a Ritual – Your workout routine should become so ingrained that it becomes a ritual. This means that the time of day, place or cue automatically starts you towards grabbing your bag and heading out. If your workout times are completely random, it will be harder to benefit from the momentum of a ritual.
    10. Stress Relief – What do you do when your stressed? Chances are it isn’t running. But exercise can be a great way to relieve stress, releasing endorphin which will improve your mood. The next time you feel stressed or tired, try doing an exercise you enjoy. When stress relief is linked to exercise, it is easy to regain the habit even after a leave of absence.
    11. Measure Fitness – Weight isn’t always the best number to track. Increase in muscle can offset decreases in fat so the scale doesn’t change even if your body is. But fitness improvements are a great way to stay motivated. Recording simple numbers such as the number of push-ups, sit-ups or speed you can run can help you see that the exercise is making you stronger and faster.
    12. Habits First, Equipment Later – Fancy equipment doesn’t create a habit for exercise. Despite this, some people still believe that buying a thousand dollar machine will make up for their inactivity. It won’t. Start building the exercise habit first, only afterwards should you worry about having a personal gym.
    13. Isolate Your Weakness – If falling off the exercise wagon is a common occurrence for you, find out why. Do you not enjoy exercising? Is it a lack of time? Is it feeling self-conscious at the gym? Is it a lack of fitness know-how? As soon as you can isolate your weakness, you can make steps to improve the situation.
    14. Start Small – Trying to run fifteen miles your first workout isn’t a good way to build a habit. Work below your capacity for the first few weeks to build the habit. Otherwise you might scare yourself off after a brutal workout.
    15. Go for Yourself, Not to Impress – Going to the gym with the only goal of looking great is like starting a business with only the goal to make money. The effort can’t justify the results. But if you go to the gym to push yourself, gain energy and have a good time, then you can keep going even when results are slow.

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