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March 5, 2012 / Sarah

Financial Fast: Leave the Credit Cards at Home

Last week, Tracy asked: One of the two rules of the Financial Fast is to pay for every necessity you buy with cash, not credit cards. How has this been going for you? Does counting out dollar bills when you go to the store make you more cognizant of the fact that your purchases are having an impact on your finances?

I’ll make a confession right away: my financial fast has been messy, and we’ve broken some rules. I planned to walk side-by-side with Tracy as we both embarked on the 21-day financial fast, vowing to spend money only on essentials and forgo using credit cards. And  though I was excited to take on this challenge and use it as a jump-start to organize my financial life, the rest of my life has kind of gotten in the way. A series of events in my family has necessitated a certain amount of travel, and my financial fast went largely off track in exchange for ease during a rough few weeks.

But even though I haven’t been hard and true with the fast, my best efforts have definitely taught me about my spending habits, helped me to develop some great alternatives to spending, and start important conversations in our house about budgets. And it’s also taught me about the importance of cash!

I’ve been meaning for a while to tuck away my credit and debit cards and start using cash, and I know I’m not the only one. As we’ve learned through our popular Break Up With Your Mega-Bank campaign, a lot of those credit cards are owned by megabanks that use our fees and interest payments to invest in dirty energy and unfair lending practices. And as I try my best to support local businesses struggling through this recession, handwritten signs they’ve posted on cash registers often reminds me that each credit card purchase means additional fees out of their bottom lines.

And using cash instead of credit cards can make a purchase feel more “real,” and makes it easier to think carefully about the importance of each purchase. So, if using cash keeps money out of the hands of the Mega-Banks and can help me make better financial decisions, let’s go for it!

This is how my family did it: We collected every receipt for every purchase for a few weeks, and looked at how it all added up. We did some analyzing—can we cut out some of stops for coffee and food? Can we consolidate some of these little purchases into our weekly grocery shopping trip?

Then we picked an amount and said, “This is the cash for the week. Period.” When it’s gone, it’s gone. For small trips out—bike-rides within 5 miles of our house— I leave my cards at home in the receipt/credit card jar. Life feels so much simpler without them in my wallet; I can accept the simplicity of the day, value the snacks I packed at home for the kids and I without thinking about what else we could grab on-the-go, and trust that I can work my way out of any small jams we might encounter along the way. For longer trips out, or when I’m in the car, one credit card is tucked in my bag for emergencies.

And while using cash helps me be more disciplined about what I spend every day, I think it’s also helping teach my son, who is 4, that money is real. A dwindling or empty wallet is pretty easy to understand, and I’ve noticed that since my switch to cash, he has cut back on his daily pleas for random toys and food whenever we are out.

Using cash also means I am forced to incorporate the “outlier” items we buy into our budget. I feel like every month, we’re really proud of how we budgeted, except for that one thing—the oil change, the fancy new bike light, the splurge of a dinner out when we scored free babysitting. This month, one of my fasting cheats was to buy an ink drawing by a local artist friend for my sister’s birthday.  I paid the artist $75 in cash from our month’s cash supply—which means that I now need to budget any other expenses for the month with that in mind.

I’ll be honest—I’m not sure I’ve actually spent less money on my cash-only diet, but I’ve always been very conservative with credit card. I strive to pay off any balance every month (and have been blessed with a job and am employed partner), so a credit card has never really been a way to overspend. But by switching to cash, I am more in touch with my spending and my budget, and for that I am grateful!

What about you, readers? Have you traded in your credit cards for cash? Whether you’re committing to a hardcore 21-day financial fast or using these weeks as a way to be more introspective about your spending, how is it changing some of your financial habits?

We first reported on the “financial fast” concept in the Jan/Feb issue of our Green American.
We’re finishing up the  March/April issue (all about GMOs) right now.   Subscribe today to either the 100-percent recycled paper print edition, or the digital edition  >>

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