With point-of-sale terminals just about everywhere and one-click ordering, it seems strange not paying for things with plastic.
Debit cards (usually doubling as ATM cards) aren't quite as bad as credit cards, but “it's still plastic,” as Liz Pulliam Weston writes:
Debit cards don't let you spend beyond what you have in your bank accounts — at least, they shouldn't, if you don't have “overdraft” protection that shows up in the form of a consumer loan when your balance goes negative. But they usually don't stop you from getting it down to almost zero, and that's the danger.
So if this is happening, one suggestion is to go to cash-only for most purchases.
This isn't a trivial switch, especially if you use the envelope method mentioned in the article, meaning that you budget by putting so much money in envelopes earmarked for specific purchases, like food, gas, etc. It's tough not to “food up your car!”
The main advantage of a cash-only system is that you physically feel the money exit your wallet as you buy something. Handing someone a credit card or a debit card for a $357 purchase doesn't have the same impact as counting out 18 twenties.
The main tips that the article brings up for making a system like this work are:
- Expect trial and error. Fooding up your car indicates that you missed a little bit on the numbers for what you were going to spend, so don't worry about adjusting a little bit.
- Don't carry big wads of cash. You can't call up the U.S. Mint and have them put a hold on your Jacksons.
- Mind your credit scores. No credit history means higher rates. (But hey — you can probably still get a mortgage anyway!)
Also, if you're in debt, cash-only is one way to reduce your debt. But it's not the only way, so if it just isn't working, try something else. No Credit Needed tried it and had a little bit of a hard time at it, but he's debt free now!
Has anyone else tried the cash-only experiment or frozen their plastic in a block of ice, or something like that? How did it go?
