While credit cards can be great if you use them properly (responsibly), they can also prompt us to spend more. That being said, we must add that we love our plastic and have even compiled a list of 7 reasons why we use them for everything.
But this article is about an all-cash diet, so let’s dig into it, shall we?
What’s an all-cash diet?
An all-cash diet presumes buying everything with cash. It starts with a budget to help you determine the necessities — costs like rent/mortgage, utilities, debt payments and so on — then other things you can’t live without like food, and finally everything else.
Costs in the first category you can pay however you like, say by moving money from your bank account to the utility company, and use cash to pay for everything else.
If you’ve been a credit card junky this won’t be an easy exercise but at the end of the road, you could save big and potentially get out of debt (if that’s your plan). Here are 4 benefits of an all-cash diet:
1. Helps cut spending
Numerous studies have shown that people are more frugal with cash than with their credit cards. And it kinda makes sense when you think about it. When you’re dealing with cash, you can see the moment when money leaves your pocket, whereas the similar feeling is unavailable with credit or debit cards. The price tends to be the same — though there are situations when “cash is king” — but it feels very different to swipe the plastic than to part ways with a bunch of bills.
As part of an all-cash diet, you should develop a budget and — arguably — more easily follow through on its commitments. Simply put, it should be harder for you to go on a shopping spree knowing that when you come to the cashier, you will have to count the paper money to pay for the goods.
2. Reduces fraud and charging errors
We don’t see this as a major benefit since most credit cards offer some purchase protections, but still — it’s worth noting.
By using only cash, you are safe from double charges that occasionally happen at stores and restaurants. Also, you don’t have to worry about your credit number being stolen and used to pay for stuff online. You’re using cash, after all. And the only way someone could get the money from you is to physically steal it.
3. Streamlines store returns
Again, not a major benefit but when you need it — very important.
Say you bought something in a store with a credit card and then you want to return it. In many cases, you will have to carry the exact card with you in order to do so. For some folks that’s not an issue, but for those juggling multiple credit cards, it is definitely a pain once they realize that particular card was left home.
That, of course, doesn’t happen with cash transactions and you can always get your money back.
4. Removes other fees associated with credit card use
When you’re using cash for everything, you won’t have to “deal” with various credit card fees such as cash advances, overdraft fees, ATM charges and so on.
To be fair, if you use your credit card responsibly, you won’t have to deal with these fees — but for some folks it could be the problem. And I guess, it’s the same folks who could benefit from an all-cash diet the most.
You will still need/want to use cards
How else are you going to shop online? Cause there are some really amazing deals on the web.
Also, how else are you going to build your credit score? A credit card makes that process easier — as long as you can regularly pay off your balance.
And let’s not forget other benefits like rewards and shopping protections that come included with some better cards.
As we have noted for a few times in the past — we love our credit cards, but we do realize they are not the best tool for everyone. That being said, we want to know – are you going to try an all-cash diet? Have your tried it before? And how did it work for you? The comment form below is all yours…