Author Topic: Is cash-only the answer?  (Read 19468 times)

lifejoy

  • Magnum Stache
  • ******
  • Posts: 3923
  • Age: 31
  • Location: Canada, eh
  • Lovin' the Mustachian life!
    • Not Buying This
Re: Is cash-only the answer?
« Reply #50 on: June 24, 2014, 02:09:07 PM »
That must be specific to Canada, if it's true.  I've heard rumors like that before on MANY personal finance sites ("charge a pack of gum, or it'll go inactive") for our credit reporting system as well, and I used to believe it, but I have cards that I've held for years without using them and they still all report as active, paid on time.

/shrug

But again, maybe that rumor is true in Canada.

I thought it was just a rumour too, until I started house shopping :) There are basically several levels of reporting that lenders have access to depending on what info they need.

I also learned that while credit unions are suppose to report regularly for their credit products, some don't. I still love my Credit union, but something to ask about.

Good tips! Thanks for talking to your friend, Swick! I will have no problem putting a few charges a year on my credit card. But in general I will be pretending I do not have one ;)

That must be specific to Canada, if it's true.  I've heard rumors like that before on MANY personal finance sites ("charge a pack of gum, or it'll go inactive") for our credit reporting system as well, and I used to believe it, but I have cards that I've held for years without using them and they still all report as active, paid on time.

/shrug

But again, maybe that rumor is true in Canada.
@ a rebelspy: speaking as someone from the US living in Canada - the banks very credit cards slightly different here.  They require more information to open one, for starters (probably a good thing, since I was able to get a cc at 18 with no job and no real assets), and it's common for cc companies to set minimum and maximum transactions per month - exceeding these triggers fees (for me I get charged $0.95 per transaction after 25.  I remember in the fine print that I also get charged if I make no purchases, and they can make the card inactive if this goes on for several months).    Credit limits also seem to be much lower, all else being equal.  Banks in general ask for more personal information - mine calls me every year to "update my dossier" which is code for me proving I still am a student and that I still am getting paid.  I'm not saying these things are good or bad, just differences I've encountered.

@ libraryjoy:  Some good advice in this thread.  One suggestion I had is to consider letting someone you trust hold on to your cc.  then you have to actually go to them and tell then why you need to use the card to make a purchase.  For everything else, take out a set amount of cash each week.  If you run out - well.. then you're stuck with no money for a while. 
this suggestion only works for some - you need a special sort of person who understands you, and it involves being subordinate to someone else with your own money, which can be demeaning.  And you need to know that person isn't going to steal your card and go on their own shopping spree.
Just a possible method.

Good idea, Nereo. I'm looking for an easy fix, but I'm afraid I have to come to terms with the fact that I need to learn to spend less. Pretending I don't have a visa will be my first step, but exercising the frugality muscle will have to come next :)

mpg350

  • Stubble
  • **
  • Posts: 150
Re: Is cash-only the answer?
« Reply #51 on: June 24, 2014, 03:07:04 PM »
Well I think the real question is what are you spending your money on that is causing an issue?

I personally feel a credit card makes me spend less because I don't like getting a big bill at the end of the month.


Cassie

  • Walrus Stache
  • *******
  • Posts: 5903
Re: Is cash-only the answer?
« Reply #52 on: June 24, 2014, 04:43:13 PM »
It is important to use what ever method works for you. It does not matter what works for others. From reading the posts it appears that you would do better using all cash. The TV show with Gail that someone mentioned always has people use that method.  Actually what works the best for me is using my debit card.  I only use a CC for big purchases that I may want it to be easy to return/have more protections if I need too.  I find it easier to overspend if I use a CC and pay it off at the end of the month which is why I use the debit card & then subtract it from the amount that I have decided by my budget that I will spend.  Like always the solutions are different for people-use what works best for you.

lifejoy

  • Magnum Stache
  • ******
  • Posts: 3923
  • Age: 31
  • Location: Canada, eh
  • Lovin' the Mustachian life!
    • Not Buying This
Re: Is cash-only the answer?
« Reply #53 on: June 24, 2014, 07:13:03 PM »
Well I think the real question is what are you spending your money on that is causing an issue?

I personally feel a credit card makes me spend less because I don't like getting a big bill at the end of the month.

Jewellery for me (bad) and gifts for people (marginally less bad).

It is important to use what ever method works for you. It does not matter what works for others. From reading the posts it appears that you would do better using all cash. The TV show with Gail that someone mentioned always has people use that method.  Actually what works the best for me is using my debit card.  I only use a CC for big purchases that I may want it to be easy to return/have more protections if I need too.  I find it easier to overspend if I use a CC and pay it off at the end of the month which is why I use the debit card & then subtract it from the amount that I have decided by my budget that I will spend.  Like always the solutions are different for people-use what works best for you.

I loooooove Gail Vaz Oxlade!! Cash only works best for me :) It helps me budget, AND spend less online.

NonprofitER

  • Stubble
  • **
  • Posts: 165
  • Location: Texas
  • Reaching FIRE w/ High Purpose (Low Pay) Nonprofit
Re: Is cash-only the answer?
« Reply #54 on: June 25, 2014, 07:49:39 AM »
We had friends down the street with this problem (one spouse spent on CC's despite their commitment not to) and what worked for them was having the spendy spouse lock the CC's in a fire safe in the closet and the other spouse kept the key.  That way they could still get it out to charge a tank of gas on it once a quarter to keep the accounts active for credit score purposes, but not have it readily available. 


rmendpara

  • Pencil Stache
  • ****
  • Posts: 602
Re: Is cash-only the answer?
« Reply #55 on: June 25, 2014, 08:09:49 AM »
I've been overspending. I would like to cancel my visa. If I'm using my fiance's visa for big-ticket purchases (to get rewards points) and if I'm building up good credit from paying my bills on time... Would that work?

The last time I asked a similar question, people suggested I work on my frugality muscle. Well, I feel like I need to go cold turkey. I have a hard time spending cash, but plastic makes it soooo easy. Too easy.

Am I missing something, or can I go ahead and cancel?

Whatever it takes to train yourself to make better decisions. For some people, it's reading a book. For others, it could be drawing a $ sign on the front of the credit card, putting a sticky note inside their wallet, or like you mentioned just cutting up the darn things!!!

Spending less is infinitely more important than any amount of reward points/cash back you could ever obtain, especially if you are prone to such things.

I avoid cash, mostly because I like to have a thin wallet with just ID, bus pass, credit card, debit card, but I also have frugal habits and know if I am starting to get off track.

neo von retorch

  • Magnum Stache
  • ******
  • Posts: 3477
  • Location: SE PA
    • Fi@retorch - personal finance tracking
Re: Is cash-only the answer?
« Reply #56 on: July 09, 2014, 09:23:39 AM »
So on the same page as libraryjoy and bluehouse.

A brief history of my use of credit cards:
  • 1997 Got one at one of those college things... along with a frisbee or slinky. Started using it only for groceries/gas and paying it off again. Eventually started building up a bunch of debt. Got additional cards for who knows what reason
  • 2000ish Noticed I had built up a huge amount of CC debt and was paying obscene amounts of interest. Started 0% BT hopping and paying it off
  • 2008 For the first time all cards paid off! Geez that took a long time. Continued to use them and pay them off each month. Started pursuing rewards
  • 2014 Several rewards cards. Kept trying to juggle where I spent money to get the most rewards. Discover that while *hiding* money in multiple accounts helps me avoid spending it, *hiding* debt on a bunch of cards does the opposite
  • 2014 June/July decide to go cash-only except for a handful of monthly utilities (debating switching most of these to my bank's bill payer service though

I tend to buy online much more, spend more at restaurants/bars and possibly spend more on gifts when spending on credit cards. Even if I have a "budget" in my head / on paper / on mint / in every conceivable place, I don't stick to it with credit. With cash, I plan on taking out ~$160 each week and using it for gas, groceries and other food. Since I know I won't have much left for eating lunch out, I'll make more effort to do smart grocery shopping and pack lunches.

RyanHesson

  • 5 O'Clock Shadow
  • *
  • Posts: 69
Re: Is cash-only the answer?
« Reply #57 on: July 09, 2014, 10:30:41 AM »
If you can't hold on to the credit card without spending then you probably just have a problem of wanting too much. I don't know how to fix that problem, maybe someone has advice. You get rewards from the card, so if it's possible for you to figure out a way to just not overspend on it, it would be best to have the card. Also more convenient. No coins to lose. But if it's not possible, and it's still not possible even if you try this freezing the card method, then I guess canceling it is the thing to do.

Quote
That must be specific to Canada, if it's true.  I've heard rumors like that before on MANY personal finance sites ("charge a pack of gum, or it'll go inactive") for our credit reporting system as well, and I used to believe it, but I have cards that I've held for years without using them and they still all report as active, paid on time.

I've been reading the terms and conditions of all credit cards I get. Some of them say there must be a charge every 6 months for the card to remain active, others don't say anything. It varies by card.


nordlead

  • Stubble
  • **
  • Posts: 146
Re: Is cash-only the answer?
« Reply #58 on: July 09, 2014, 10:42:43 AM »
That must be specific to Canada, if it's true.  I've heard rumors like that before on MANY personal finance sites ("charge a pack of gum, or it'll go inactive") for our credit reporting system as well, and I used to believe it, but I have cards that I've held for years without using them and they still all report as active, paid on time.

/shrug

But again, maybe that rumor is true in Canada.

A CC company can shut down a card for inactivity in the US, it just isn't very likely. I had my Sunoco MasterCard card shut down for inactivity after a year, and it doesn't show up on my active credit report as an active card. I believe they sent me a letter saying they were going to deactivate the card so I just let it go as the cash rebate wasn't worth it any more. However, I still haven open cards for Ashley Furniture, Sears, and Lowe's that haven't been charged in 3-4 years.

frugaliknowit

  • Handlebar Stache
  • *****
  • Posts: 1673
Re: Is cash-only the answer?
« Reply #59 on: July 09, 2014, 11:14:19 AM »
Here's 2 different approaches neither of which "work for the masses".  At first, you might need to send yourself a reminder to do it everyday for the first week or so (google calendar).  Once you are well into it, you may skip a day or 2:

1.  Get a receipt for everything you buy, whether cash or not.  At the end of the day, enter the item on a spreadsheet or a budgeting program.  Look at your budget and what you are spending, whether it's gum at the gas station, a new tv on Amazon, etc.

And/or

2.  Set up bill pay for your credit card (stick to the one that pays the most rewards and freeze the others to only be used a few times per year).  Each time you make a purchase, zero the card out via billpay.  This keeps your perspective and no surprises on the statement due date.  Your checking balance is a "plumb line" of sorts (as if paying with cash or a debit card).  As for the float you surrender:  It's really not worth anything significant.  It kind of makes your credit card a debit card.  It requires discipline.