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How to live a nearly cash-only life

It doesn't have to mean you spurn all of life's conveniences.

By MSN Money Partner Jan 11, 2012 11:49AM

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


Wise Bread on MSN MoneyAccording 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:

Jan 12, 2012 2:50PM
Uuuugh, yes you can get rid of credit all together. 

My wife and I haven't had a credit card for almost 2 years and haven't used one in close to 3.  Guess what, I do online shopping too.  No, I don't insert cash into the USB port.  I use a Debit/Check card.  The one's that have the Visa/Mastercard logo on them.  I don't put in my PIN, I run it through the Credit Card system so no one knows the difference.  It just debits money from my checking account.

You can live without credit if you want to.

Jan 12, 2012 4:33PM
My husband and I cancelled all of our credit cards back in 2001.  If we don't have money in the bank, we don't buy it.  Sure we use our atm cards as credit cards, but we keep an eye on whats in the bank so we know what we can spend.  You have to have a stash for emergencies or you will never be able to do it.
Jan 12, 2012 4:24PM

we have decided to go cash only to get out of debt and stay that way. I will never again be a slave to the bank and credit cards.  if i need to shop online, i buy a prepaid debit card. set amount, cant over spend, and its not coming out of my checking account. i set up online payments to the utilities through the banks' bill pay system so im not writing and sending checks. everything else is cash. we set an amount for gas, groceries, etc., withdraw that amount, and thats it for the month. if i need more food, then the difference comes from some other expenditure. more food= less gas or whatever. it was hard at first, but its really nice not being beholden to anyone.


Jan 12, 2012 7:44PM

Why are there so many thumbs-down marks on posts that describe the significant benefits of responsible credit card use? 


Obviously, if you can't spend responsibly, ditch your credit card.  But, if you have no problems paying your balance in full each month, a credit card is BY FAR the best avenue.


My wife and I charge everything we are able to our Southwest Visa credit card.  We earn roughly $1,000/yr in free flights.  We've had the account for six years and have paid ZERO in interest and penalties.  We track our credit spending like we would cash spending, and always pay the balance in full.


Yes, we pay $99/yr as an overall account fee, but we still net approx. $900 in benefits.

Jan 21, 2012 11:09AM

Credit Cards are NOT the problem...its unstructured, undisciplined card USERS

Pay your balance off in full every month and it wont matter if the interest was 40%

You should have an emergency fund to cover the unexpected...everything else you either need to be able to pay in full or don't buy(exceptions are cars, education and homes but you need different types of loans for those, not cards)


Poor money managers will probably misspend even with cash, they just can't over spend


I use mine multiple times a day...haven't paid CC interest in years and i always take a vacation or two every year with mostly CC rewards!

Jan 12, 2012 3:17PM
We made this choice about four years ago. Cash only. No credit cards. No car loans. No home loans. If we want or need something we wait until we have the cash. We now own our farm free and clear, own our cars, our farm equipment, etc. We don't use credit and never will again. Not any kind of credit. I know this makes some things difficult.....but it has worked for us!
Jan 12, 2012 4:07PM
I live cash only, almost completely. Have all my life. I have one debit card I use for online buying. And thats it. I dont do credit. Period. Never will either. Not interested in supporting these blood sucking loan sharks.
Jan 12, 2012 3:04PM
Been a cash only my whole life. I use one credit card and pay it off every month and have   my card stop at $2500.00. Never been in trouble and I am 79 years old.
Jan 12, 2012 4:53PM
Guys article isn't to bad. But at the end he goes into the full of **** mode. You can use a debit card so the limited real world application is bs.  Financially savvy people tend to buy a car that's about 6 months old with less than 10k miles on it at FULL depreciated value. You know the 60k car for 30k cash purchase. Housing is different unless you are financially independent. But that's a different issue.

Try making a budget first off and it will help with tracking your finances he doesn't bring that up. If you learn to budget you wont NEED to track where all your money went. You will KNOW> Also it is HARDER to part with CASH for frivolous purchases. It is easier with plastic cause you can reason it out however you like in your mind as opposed to YOU HAVE TO PAY FOR IT RIGHT NOW. Difference.
Jan 12, 2012 6:29PM
I have a 5% cash back rewards credit card that I pay in full every month after making my purchases. It does a budget for me and everything through their online website. Also, this Christmas I received a $400 credit for all the money I charged with them over the year. 

Sure, I could live without a credit card, but why? They pay me to use their system. 
Jan 21, 2012 11:21AM



You mention carrying travelers checks.  The last time I used them (maybe 30 years ago), I discovered that they were harder to cash than personal checks.


What good are they?

Jan 12, 2012 3:21PM
@KD468 That is not true, your bank card (Debit Card) is protected from fraudulent charges when your debit card is used as a bank card.  You might want to check with your banking institution to get the information.
Jan 21, 2012 6:38AM
We do not take credit lightly therefore the following may be helpful to others on the board. We are quite the opposite, using credit cards whenever possible. For us it is the points for air travel in the contiguous 48 states. For any possible expense such as groceries, internet shopping, insurance premiums, auto rental, hotels, auto expenses and fuel we use our credit cards. We live on a pay off the credit card each month credo and if it is not in the budget we forego spending. With actual cash, we spend about $50.00 a month together. Credit cards offer the protection of a questionable issue with a product or service that until resolved is not payable. We are retired and except for a very little part time income we live on fixed income.
Jan 12, 2012 4:13PM
@Someone  WOW the ignorance abounds here in the great U.S.A.  Getting yourself in debt is now Patriotic?  Paying interest, and being a slave to the lenders is your idea of patriotism?  I am dumbfounded.. LOL  God Bless you (You need it)
Jan 21, 2012 8:11AM

I need to add that when I do not use my debit card as described below, I use cash. I have a set amount I take out each month for food, eating out, and misc. expenses. When that money is gone, I stop spending. What a novel idea. That keeps the amount of cash I carry to a minimum, it keeps my spending under control, and I eliminated the need for credit cards.



Jan 21, 2012 10:44AM

Pay cash for everything???? Is the author stupid?? ...... I charge everything except my morning tea, when the statements comes in I pay in FULL ..... use "their money" for free ...... if you know when your card billing cycle closes (check statement) you charge the day after and basically have two months till the bill needs to be paid ..... use credit cards for their rewards, double dipping to speak ..... "cashback" by one company for this year was in 3 figures.......  the key is to know your limit ... dont go nuts or you'll find yourself in debt ........... (oh yeah ..... I've got half a yrs pay in savings following this method)


Jan 21, 2012 10:01AM

This sounds like advise from Davey Ramsey. He recommends paying with cash because it hurts more and you have to stop and think about your purchases before you buy anything. Find out more information by checking out his


I can honestly say his program will only work if you do the steps. There is nothing to buy, no get rich quick scheme here. Just common sense steps. Give it a try, if you don't like having better control of your money, I'm sure there is a credit card company out there ready to take your money!

Jan 21, 2012 9:57AM
Good morning everyone; I own several restaurants across Florida and I need to add to the article the fact that the fees charged to the business by the credit card processor are extremely high. Since businesses are for profit, we, business owners, add back those fees to you, consumers. Do you see the relationship among credit cards and product cost? 40ish woman, even Debit Cards charge fees for processing. So, my advise for you is if you want to see lower prices, start paying more with cash.
Jan 12, 2012 3:22PM

If credit cards companies dont like when you pay off your balances in full then the HATE me... I NEVER carry a balance... They (Chase) get enough of mu money on mortgage interest and the lack of interest paid on bank account...

Jan 21, 2012 10:46AM

In response to 40ish woman and Fan of Dave Ramsey, Debit cards do NOT work like credit cards and this is actually counter to Dave Ramsey's advise.  For the most part Ramsey's advice is sound but in regards to travel particularly, you MUST have a credit card.  Most people do not keep enough money in their bank accounts to fund themselves like the credit line you get with your credit card.   Weekly, we have issues with hotel guests upset about the freeze their own banks put on their money because they don't understand the difference between a debit card and a credit card.  Educate yourself, get ONE credit card, and NEVER use a debit card for travel.  Do what this article advises and pay with credit and then pay it off immediately. 

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