How to live a nearly cash-only life

This post comes from Kentin Waits at partner blog Wise Bread.

According to Time magazine, the current average annual percentage rate on credit card debt is 15.22%. For folks who aren't disciplined about managing credit card debt or paying off their balances aggressively, the rate is a real eye-opener. All the cash-back rewards, airline miles, and perks in the world can't justify the financial hit consumers take in long-term credit use and interest repayment.

With interest rates on the rise and credit card companies devising ever craftier and creative ways to score a few bucks here and there, isn't it time to consider going cash-only? In 2010, I wrote an article on "6 reasons why cash is still king." Now it's time for a more pragmatic discussion on how to make a cash-only life work for you. Here's how to give a big thumbs down to the credit card companies and go (almost) cash-only. (See also: "5 ways to give cash as a gift.")

Carry cash. Surprise! The first step in going cash-only is to actually get your hands on some of the stuff. It's still green(ish), and it still works like a charm. Take a look at your credit card statements for an average week and see where/how you're spending your money. Take a similar amount out in cash at the beginning of each week, and dispense it to yourself on a daily basis. Consider experimenting with the amounts a little and see if you end up spending less when you're spending paper vs. plastic. Post continues below.

Save receipts. One of the convenient things about using credit is the electronic trail it leaves behind. You can easily track transactions and refresh your memory about expenditures you've forgotten. But cash is a different animal. Get used to saving your paper receipts. I dump all my cash receipts in file folders divided by month and year. A shoe box and a binder clip for each month works just as well. It's not the sexiest way to stay on top of what you're spending, but it works like a charm.

Hold with credit, pay with cash. Going cash-only doesn't have to mean you spurn all of life's conveniences or that you can't leverage the power of credit from time to time. Using your card to reserve a hotel room, a rental car or other service is quick and convenient. Just remember, when you arrive at the hotel or car rental agency, pay in cash -- and get that receipt.

When you do use credit, make it work like cash. We live in the modern world and there are times (unfortunately) when cash just won't work. For online shopping or other cash-adverse transactions, think of your credit card as a friend who's spotting you a few bucks for the very short term. Pay him back quickly. Who says you need to wait until you get your monthly bill to make a credit card payment? There's nothing credit card companies hate more than getting paid back in full each month. I say, embrace the hatred and wear it like a crown.

Don't trade credit card interest for ATM fees. Whether you're paying interest on a credit card or getting pinged by debit card withdrawal fees, using plastic usually means more money out of your pocket. Don't trade longer-term interest for shorter-term ATM fees. Withdraw cash at the beginning of each week from your bank or an affiliated ATM and let that amount of cash guide your purchasing decisions -- without the need for frequent, spur-of-the-moment trips to the ATM.

Remember: Safety first. Cash gets attention. Sometimes that attention is good (ask for a modest discount when you pay for your next car repair using cash instead of credit -- it works). But at other times, pulling out a wad of twenties isn't the best idea. Use your cash wisely, be smart about how much you carry at any given time, and be discreet about who sees it. Organize the cash in your wallet from lowest to highest bill, and keep anything higher than a $50 tucked away in a separate compartment.

There's no question that credit cards can be a great convenience. Anyone who tells you to give up credit completely and permanently is trying to sell an idea that has a very limited real-world application. The key is to use credit responsibly and reserve its use for those occasions when cash simply won't work or will work only through complex and onerous measures (with online purchases, for example). For 95% of the day-to-day stuff, try skipping the fees, late charges, and interest. Rediscover cash.

More on Wise Bread and MSN Money:

• How to live a clutter-free life
• The best low-interest-rate credit cards
• 6 awesome credit card tricks that will save you money
• How long to pay off my credit cards?
• Talk your way to a better credit card
• 7 secrets of credit card companies