Everyday Cheapskate

Banks and retailers benefited greatly during past decades by promoting a cashless lifestyle. They convinced us that it's safer and more convenient to carry plastic. Cash, they declared, is old-fashioned and clunky. Plastic is hip and cool. Gradually, we fell for the pitch and, in turn, got more than we bargained for. Going cashless turned us into a debt-ridden society.

But things are changing on the consumer front. Cash is making a comeback.

Some people, including reader Martin B., are moving to cash to avoid paying credit card companies high interest rates. Susan J. and her husband wrote that they've closed their bank and credit accounts because of problems with overdraft charges and identity theft. Still others, including Bill and Jan W., are using money orders to pay bills. They cash their paychecks at their company credit union because it doesn't impose high fees the way check-cashing stores do.

All of these people have gone to cash to avoid specific problems, but there's another reason that individuals are making the shift to a cash lifestyle: to reduce spending and improve savings.

Countless studies have proved this fact: You will spend more when you pay with plastic — from 30 to 200 percent more, depending on which study you read. Paying with plastic makes it a lot easier to make unplanned purchases. Cash, on the other hand, is unbending. You simply cannot spend more than you have.

Making the shift from plastic back to cash doesn't mean closing your credit accounts. It means depending on cash for your day-to-day spending.

It means planning ahead, shopping with a list and paying attention to what things cost. It often means making tough choices because of the amount of cash you have with you at the moment. You do need to have active credit accounts to maintain an excellent credit score, but you don't have to use them on a daily basis.

There are so many benefits to making the shift from a plastic mindset to a cash lifestyle. Living with cash improves your character. It requires personal discipline, accountability and responsibility. Cash promotes delayed gratification and discourages feelings of entitlement.

Here's a simple way to make the switch from reliance on plastic to dependence on cash: Get a stack of envelopes, and label them with your various spending categories, one on each envelope. Cash your next paycheck, leaving enough in the bank to cover those bills you mail or pay online. Divvy up the cash between the envelopes, putting the amount you will need into each for groceries, gasoline and so on. Leave the credit cards at home, and only spend from the envelopes.

At first, you're going to feel as if you've jumped into the deep end of the ocean without your water wings. Slowly, one day at a time, you're going to find your stroke and that gentle rhythm of freedom that living with cash can give.

Mary Hunt is the founder of www.DebtProofLiving.com and author of 18 books, including her latest, "Can I Pay My Credit Card Bill With a Credit Card?" You can e-mail her at mary@everydaycheapskate.com, or write to Everyday Cheapskate, P.O. Box 2135, Paramount, CA 90723. To find out more about Mary Hunt and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.

COPYRIGHT 2009 CREATORS.COM

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