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Cash Only: One Route Out of Debt

Cash Only: One Route Out of Debt

cash

    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.

    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 May 12, 2020

    8 Steps to Continuous Self Motivation Even During the Difficult Times

    8 Steps to Continuous Self Motivation Even During the Difficult Times

    Many of us find ourselves in motivational slumps that we have to work to get out of. Sometimes it’s like a continuous cycle where we are motivated for a period of time, fall out and then have to build things back up again.

    There is nothing more powerful for self-motivation than the right attitude. You can’t choose or control your circumstance, but you can choose your attitude towards your circumstances.

    How I see this working is while you’re developing these mental steps, and utilizing them regularly, self-motivation will come naturally when you need it.

    The key, for me, is hitting the final step to Share With Others. It can be somewhat addictive and self-motivating when you help others who are having trouble.

    A good way to have self motivation continuously is to implement something like these 8 steps from Ian McKenzie.[1] I enjoyed Ian’s article but thought it could use some definition when it comes to trying to build a continuous drive of motivation. Here is a new list on how to self motivate:

    1. Start Simple

    Keep motivators around your work area – things that give you that initial spark to get going.

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    These motivators will be the Triggers that remind you to get going.

    2. Keep Good Company

    Make more regular encounters with positive and motivated people. This could be as simple as IM chats with peers or a quick discussion with a friend who likes sharing ideas.

    Positive and motivated people are very different from the negative ones. They will help you grow and see opportunities during tough times.

    Here’re more reasons why you should avoid negative people: 10 Reasons Why You Should Avoid Negative People

    3. Keep Learning

    Read and try to take in everything you can. The more you learn, the more confident you become in starting projects.

    You can train yourself to crave lifelong learning with these tips: How to Develop a Lifelong Learning Habit

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    4. See the Good in Bad

    When encountering obstacles or challenging goals, you want to be in the habit of finding what works to get over them.

    Here are 10 tips to make positive thinking easy.

    5. Stop Thinking

    Just do. If you find motivation for a particular project lacking, try getting started on something else. Something trivial even, then you’ll develop the momentum to begin the more important stuff.

    When you’re thinking and worrying about it too much, you’re just wasting time. These tried worry busting techniques can help you.

    6. Know Yourself

    Keep notes on when your motivation sucks and when you feel like a superstar. There will be a pattern that, once you are aware of, you can work around and develop.

    Read for yourself how the magic of marking down your mood works.

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    7. Track Your Progress

    Keep a tally or a progress bar for ongoing projects. When you see something growing, you will always want to nurture it.

    Take a look at these 4 simple ways to track your progress so you have motivation to achieve your goals.

    8. Help Others

    Share your ideas and help friends get motivated. Seeing others do well will motivate you to do the same. Write about your success and get feedback from readers.

    Helping others actually helps yourself, here’s why.

    What I would hope happens here is you will gradually develop certain skills that become motivational habits.

    Once you get to the stage where you are regularly helping others keep motivated – be it with a blog or talking with peers – you’ll find the cycle continuing where each facet of staying motivated is refined and developed.

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    Too Many Steps?

    If you could only take one step? Just do it!

    Once you get started on something, you’ll almost always just get into it and keep going. There will be times when you have to do things you really don’t want to: that’s where the other steps and tips from other writers come in handy.

    However, the most important thing, that I think is worth repeating, is to just get started.

    Get that momentum going and then when you need to, take Ian’s Step 7 and Take A Break. No one wants to work all the time!

    More Tips for Boosting Motivation

    Featured photo credit: Japheth Mast via unsplash.com

    Reference

    [1] Ian McKenzie: 8 mental steps to self-motivation

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