Wednesday, April 20, 2011

How Will You Pay For That?

I don't know about you, but I go through phases with the blogs I read. I mean sure, I read my blog friends all the time, but as for the extra blogs I read, those change a bit. I used to always focus on healthy living and food blogs, but sometimes I'm just in the mood for something different. You'd think I'd be a major sucker for Travel Blogs...and sometimes I am, but lately my biggest obsession is Money blogs. Not like serious investment blogs necessarily, but blogs about using your time and money well. My favorites are The Simple Dollar and Budgets are Sexy. Clearly I take my money blog reading very seriously haha.

I would say that among personal fiance bloggers, there is the belief that using cash instead of credit/debit cards will help you be more aware of your purchases and therefore spend less. Is this true for you?

It is NOT true for me. Why? I'm of the debit card generation. I've been using my debit card for my purchases since I got one at age 18. I will happily use it for a $3 cup of coffee, or a $50 dress and a $100 grocery trip. One of the arguments for using cash is that supposedly it's much easier to swipe a card then actually pull each dollar out of our wallet and part with it. I'd argue that those in the debit card generation consider a debit card "real money" and know the consequences of using it for a purchase.

Why do I love debit cards?

1. My thoughts on ATMs are very similar to my thoughts on coffee. I enjoy coffee, but I like that I'm not dependent on it every morning before I start my day. It gives me a lot more flexibility in my morning. I don't want to be dependent on an ATM. If I run out of cash, I'll have to search for an ATM. Most likely it won't be my bank which means I'll be charged some kind of insane fee to withdrawl a simple $20 to pay for that $3 cup of iced tea Some would argue that maybe I will think twice about spending $3 on a cup of iced tea if I have to search for an ATM and pay more to withdraw money. This could be true, but you also may be underestimating how much I want that Iced Passion Tea from Starbucks. Maybe.

2. Loose change drives me crazy. As a kid I LOVED change because my dad always had a lot of it (my dad = the anti debit card person- he hates people like me who charge $3 at Starbucks, oops). I loved my dad having a lot of it because my mom would convince us to roll it for her over vacations. Then, we'd bring it down to the bank and get to keep the profits. Those $10 rolls of quarters were like gold to a 10 year old. But now that I'm no longer 10, I really don't want to spend my vacation day rolling quarters, nor do I want to go into the bank and use the machine designed for a 3 year old while everyone else in the place stares at me and giggles to themselves. I'd rather just have that money in my bank account, safe and sound, like it will be if I use my debit card.

3. To me, debit cards are not like "free money", but cash kind of is. If I take out $40 because I'm going out to dinner with a friend, but then only spend $25 of it, I consider that $15 money that is up for grabs. It doesn't bother me to spend it because it's already out of my bank account and therefore off my radar. When I check my accounts online, I don't say, "oh good, I have $200 dollars in my checking account, plus the $15 in my wallet."


I have never actually tried the envelopes filled with cash system. This would probably change my spending quite a bit because I suffer from "but what if it runs out?" syndrome. For example, I feel the need to charge my phone, computer, ipod all the time because I always fear it will run out of batteries. I'm guessing if I had $300 to spend on food in one envelope, I probably wouldn't even spend the full $300 because I'd be scared of running out. Speaking of, why have I not tried this year? haha.

Also, I think debit cards are a bit different than credit cards. I always pay my credit card in full at the end of each month, so I don't feel like it's "free money" by any means. However, I also have my accounts set up so that money goes to savings each month, meaning that I don't have a ton left the day before I get my next paycheck. I do sometimes find myself saying "I don't have enough money for that in my account right this minute, but I will in a few days, so I can just charge it." This type of thinking is why I am back to mostly using my debit card again, I figure credit card rewards probably aren't great enough to make up for those extra purchases I feel like I can make.

Do you tend to use cash, debit cards or credit cards the most? Which way helps you to spend less and which way encourages you to spend more?


  1. We put everything on one credit card and pay it all off at the end of the month. And we only buy things we have the money for. We don't charge things and think, "oh, I'll have the money in a few days." Overall, it's a system that work for us and I think that's all that matters.

  2. I totally do #3 all the time. Whenever I need cash for something I could rarely tell you where the leftover money went. I use my debit card for everything so I can account for every single penny. I have no problems using my bank card for a $3 coffee.

  3. Ah, good point Amber- I forgot to mention that on a debit card you have a nice list of where all the money went after :)

  4. I hate using cash! And when I do have cash, I am ridiculous with it. Oh, I have a $20, let me take a cab instead of the T. . . I feel like the action of paying with a debit card, putting my pin in, the fear that there will be nothing there. . . make me think a little more!

  5. Every time I get paid I take out $60 cash for "spending money" over the next couple of weeks. This is for things like coffees/drinks after work/lunches out etc. I like this system because then I won't go crazy spending money on stupid small things (which I would so do if I used my debit card).

    I like to always have cash on hand also because I HATE paying for things that are like $1.50 with debit! Lol. I also got in this habit when I only had 10 debit card purchases a month and if I went over I got charged. I have unlimited purchases now though.

    The cash for grocery things works SO WELL for us. For example, our fridge is pretty empty right now but I know there are a lot of things to make in the cupboards and our April envelope is running low. So I'm going to make do with cupboard/freezer food for the next three days and then go grocery shopping this weekend for one more weeks worth of food before we get to start fresh for May!

  6. I am much better spending on a debit card than cash. Cash, I seem to spend super fast. Debit card? Not so much. We use our debit cards for every day stuff and we rack up our points. We use our credit card for all car related things (gas, oil changes, problems) and since it is a Marathon card we rack up points on that as well. We pay our credit card in full every month as well. We don't buy it unless we can afford it. We have money coming and going all throughout the amount in our checking account but we know how much and when (we split our bills throughout the whole month) and it may come down to a don't spend any money until Friday on some weeks, but we are good with it and make due. Because, I always have food stocked in the cupboards if we get desperate! ;) Oh, and our children have had a savings account since we got married. We are nerds.

  7. I mostly use credit cards and then pay it off every month. I do this so I can get the points on my credit card. My debit card only gives me a point for every $1 I spend... so it's better to use my credit card. And then I earn interest (very little, but something) on the cash in my checking account that accumulates between when i pay my credit card bill. I haven't always been like this, it's a habit that my ex boyfriend actually sort of encouraged. But it works well for me. So I guess something good came of that relationship. ;)

    I prefer check/debit cards to cash. I just can't carry cash on me consistently. Too much of a hassle. And it's quicker to swipe my card. I'm impatient! ;)

  8. I tried the money envelope thing and it helped me keep grocery and coffee purchases in check, but I found that something "big" came up often and I knew I had enough money to cover it so I would just charge it and it kind of defeated the point of being so careful. I should try that system again, but I felt like I was worrying so much about not spending more than like 30 bucks at the grocery store (I can keep it cheap since it's just me) but then I would just buy any book I needed for class or mats for the car or stuff like that without batting an eye....

    PS We're totally "blog friends" right?

  9. I'm a debit card girl. If I have cash, I'll use it, but I prefer the debit card. I know it's MY money, that it's REAL money and I know how much I have and when.

    I've tried the money in envelope thing and it didn't work for me... I think I actually spend cash faster than I use my debit card. Perhaps I'm in the minority though..!

  10. I think #3 is spot on and one of the biggest reasons why I don't carry cash on me. It seems more like free money than a debit card. Plus, I feel a little clench in my gut every time I swipe my debit card so I'm very aware of the money I'm spending.

    I would like to try the envelope system someday, because I think it would be the perfect way for me to have some semblence of control over my finances, lol. I'm not *out* of control, but I think it would make me look at finances in a different light.

  11. I never go to the ATM anymore, I ONLY use my debit card! In fact, sometimes I think about how strange it is that I do not EVER see money!! It's so rare. After being a waitress for so long, and always having cash, it's strange to rarely touch it. For me, using cash helps me save, but I can see your arguments against that concept! Bottom line, I only spend what I have, and nothing more. And only with my debit card!