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."

However...

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?