THINK ABOUT IT: cash vs. credit

The Cloud

Today’s THINK ABOUT IT came to me officially (though I didn’t know it) on January 30th, 2009. While on the way home from the airport after spending the holidays with my family in Pennsylvania, my wallet was stolen. The actual event was fortunately non-violent. A man on a crowded bus “helped” me with my giant suitcase, while his friend grabbed the wallet from my purse. I had no idea that it was missing for two hours.

In the two hours that the men had my wallet, they managed to make ten transactions across all five of the cards in the wallet (personal debit card, personal credit card, business debit card, business credit card, and health savings account debit card), spend my cash, and use my gift certificates from the holidays. Fortunately, I called the bank and had the cards closed before they could do any more damage. And over the next few weeks, all of their fraudulent charges were eventually reversed. Besides a lot of tears, headaches, phone calls, and affidavits, the ordeal was pretty much over.

Without a wallet for the first time, I was forced to depend upon cash for spending over the next several days. Up to that point, I rarely carried cash and charged everything on my credit cards, paying in full each month. A delayed debit card, if you will. But living on cash exclusively was an eye opening experience. I found myself ordering differently at restaurants and bars, uninterested in “going shopping,” and generally much more aware of my cash flow. This experience opened my eyes to living a more financially mindful life.

The Silver Lining

I’m proud to say that I’ve stuck with the habit long after the new credit and debit cards have arrived. Sure, my groceries, gym membership, and large expenses still end up on the card. But I’m now pulling $100 a week from my checking account and budgeting my money accordingly. If I want to shop, that might mean I don’t go out three nights a week for dinner. If I’m at a bar with friends, I might forgo the last drink in order to pay for the cab ride home. And I haven’t gotten a professional manicure in 2010 (yet).

What I’ve been surprised by is the lack of resentment I feel towards this informal ‘budget.’ Rather than wishing I could buy whatever I want, I am enjoying each purchase I make, more than before. And this is not to say that I won’t by nice, expensive things in the future (I love Rebecca Minkoff handbags way too much), but now I’m much more thoughtful and purposeful with large purchases. In addition, this new habit is helping me make another intention for 2010 come true, to save more money for my future.

So though the pickpockets initially caused me to lose cash and gift certificates, this experience has now inadvertently helped me to save money and realize to my intentions for 2010.

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  1. I absolutely agree with you here! I live in the Czech Republic which is still a cash-based society at this point and it has taught me how to budget in ways I never could at home using my debit and credit cards. I pull my alotted funds for the week out of the bank and when I’m done, I’m done! I love it!

  2. I agree. We just started doing that. We take out about $300 and budget from there. We don’t use our account and it’s so nice to not have to check our checking account balance and every little purchase to make sure it’s right. I love it. It’s very stress free. I can’t believe they stole your gift cards though. That is not nice at all.

  3. Jenn

    In an attempt to save more/pay off our student loans faster, I recently got a waitressing job. My husband and I are now trying to live off of the cash I’m making, only using our checking accounts for paying monthly bills and that is it. I realized yesterday that I hadn’t used my debit in almost a week and was presently surprised when I checked the balance in my account. It is an eye opening experience to see all the little things that you waste money on (stopping for a soda after work, magazines etc) when the plastic is that easy to swipe!

  4. Anna

    Wow, Jess. I loved how you took a negative experience and changed it into a positive learning experience for you. And I am sorry that your wallet was stolen. I am also only using cash too or a debit card and I only buy things that I need. If my $100 in one week runs out, oh well, I just don’t go out. It’s amazing how creative I can get with items I already have. I hid my charge cards so I won’t use them. So far, so good.

  5. So sorry you got pickpocketed!

    It’s funny because I know so many people who swear by the cash method, but it just doesn’t work for me. Cash evaporates out of my wallet. I’ll stop at vending machines. I make small purchases at stores. It all disappears and then I have no record of where it went (because I never save receipts). I hate putting charges under $5 on my cc, so I will pass up random temptations if I don’t have cash.

    Everyone has to figure out what works for them – cash and I are not friends!

  6. Wow! Way to find the silver lining! I too live on solely cash except for monthly bills. Since quitting my job and being forced to live on a budget while getting my new business up and running I have learned the value of the dollar. No more impulse buys – which I was a HUGE culprit of this… it is a good feeling at the end of the week when I realize how little I have spent ūüôā

  7. Dayka

    You always say and have so many wonderful and insightful comments and speakers–I really love and enjoy reading your blog. Keep up the good work!

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