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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: lifejoy on June 22, 2014, 09:25:59 AM

Title: Is cash-only the answer?
Post by: lifejoy on June 22, 2014, 09:25:59 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?
Title: Re: Is cash-only the answer?
Post by: frugaliknowit on June 22, 2014, 09:35:08 AM
Whatever gets you spending less.  You could take your card, put it in a small plastic container, fill it with water and put it in the freezer if you think you can control yourself. 
Title: Re: Is cash-only the answer?
Post by: Rezdent on June 22, 2014, 09:40:27 AM
You could take your card, put it in a small plastic container, fill it with water and put it in the freezer if you think you can control yourself.
+1 for freezing your card.  That makes you think and work hard if you decide to use it.  No longer so easy but saves the hassle of canceling only to realize that it was a good tool and having to open another one.
Title: Re: Is cash-only the answer?
Post by: expatartist on June 22, 2014, 09:53:43 AM
Wow, I love the card-freezing idea. I can sympathize with easy spending of virtual $ - my holiday renters pay via PayPal, and recently I've been using eBay Italia to purchase supplies and appliances for a renovation project - it's hard to restrain myself from getting nice things that cost 3x the regular price like vintage electrics!

I cancelled my credit cards years ago - have since regretted it since I no longer live in the US! It's hard to get credit where I've lived since. At any rate, I pay my bills first every month, and keep my monthly spending pretty much 100% in cash. It helps me keep things in check. Visually. In China we have a domestic debit card system but I try to avoid using it; seeing a dwindling red pile of 100RMB ($15) bills helps keep any impulses in check :)
Title: Re: Is cash-only the answer?
Post by: renaite on June 22, 2014, 10:00:07 AM
Whatever gets you spending less. 

Agreed. For me, cash flows through my fingertips like it never existed. You have to do what works for you, and if that means old school envelopes, then go for it!
Title: Re: Is cash-only the answer?
Post by: Grid on June 22, 2014, 11:18:13 AM
I've been overspending. I would like to cancel my visa.

The last time I asked a similar question, people suggested I work on my frugality muscle.

I profess to feel the same sort of twang when I pay with a credit card vs. paying with cash.  All you need is a frame of reference for each purchase.  For me, I convert the transaction cost to  an amount of time worked to feel the necessary tug at letting some money go.  For example, a meal out could cost a half hour of your life, regardless of the way you pay for it. 

Another option, if cash is what you don't like to let go, is just imagining the bills in your hand before you pay with a credit card.  $45 for groceries?  You've got 2 $20s and a $5 coming out of your wallet.  Feel that twang and swipe your card.  You'll get cash back and avoid wasting your time at an ATM.

Perhaps you don't feel a twang at all, in which case my whole system of frugality is an awful example for you.  :/
Title: Re: Is cash-only the answer?
Post by: rpr on June 22, 2014, 11:26:28 AM
For me, it is the reverse. I find with credit cards, I can obsessively track every little spending. With cash it is much harder. I have to make a serious effort to write it all down.
Title: Re: Is cash-only the answer?
Post by: milesdividendmd on June 22, 2014, 11:34:47 AM
I would not cancel your account, particularly if it is the oldest account you have.

This will negatively impact your credit score.

I love the credit card Popsicle idea though.


Title: Re: Is cash-only the answer?
Post by: LeighinCT on June 22, 2014, 11:38:06 AM
I have switched to cash only and it has helped immensely for all the reasons you suggest. It's real, it's tangible, it hurts me to part with it. I am growing a stronger frugality muscle but in the interim using cash has been a big step towards reducing spending.

If you are a regular cc user like I once was then you might have the cc number(s) memorized which makes online purchasing all too easy. Through a bit of serendipity my bank needed to issue me a new card. The change to a new cc number (that I hadn't yet memorized) has made it that much easier to keep money in my pocket. No impulse purchases. It's a pain to dig the card out and look it up. If you're not yet ready to part with your cc altogether then you might request a new card from your bank and cut up the old ones to help get you started.

Title: Re: Is cash-only the answer?
Post by: arebelspy on June 22, 2014, 11:48:32 AM
Agreed with the don't cancel or lower the limit, it'll hurt your credit score.  Put it away and don't use it.

Keep working on that frugality muscle when you can, because ultimately cancelling a card or not will only get you so far.  GOing all cash could just mean you buy stuff in cash.  In the end, the mental battle is what you have to overcome.

Use short term stop-gap solutions (freezing, cancelling, etc.), but continue to work on the frugality muscle while you do so.
Title: Re: Is cash-only the answer?
Post by: taekvideo on June 22, 2014, 04:39:34 PM
I profess to feel the same sort of twang when I pay with a credit card vs. paying with cash.  All you need is a frame of reference for each purchase.  For me, I convert the transaction cost to  an amount of time worked to feel the necessary tug at letting some money go.  For example, a meal out could cost a half hour of your life, regardless of the way you pay for it. 

This is exactly what I do... gives the numbers more meaning and lets me assess the worth of the purpose rationally/objectively.  Works great.
Title: Re: Is cash-only the answer?
Post by: forward on June 22, 2014, 05:29:50 PM

+1 for not cancelling.  Freezing in a container is a good idea.  You also need to delete the card from any of your online shopping spots, so there is no easy charging. 

The next step is only taking out a set amount of cash for a week or two weeks, whatever.  Limit your spending to that.  Start at a reasonable level, don't try to go to 0.  Give yourself a limit and then Do Not get more cash until the next set date.  Then reduce that amount as you move ahead. 

I have found when I am pushing myself to spend less, it helps me to divide the amount I have to spend (my limit) by the number of days I have until my next paycheck.  That way each day I spend less than that given amount I feel successful and as the days add up I am further ahead of my goal.  I usually come out ahead of my goal by the end of the set time period.   It becomes easy each day to say - do I need it - no, and if I don't buy it I stay under my limit - success!
Title: Re: Is cash-only the answer?
Post by: NewStachian on June 22, 2014, 06:25:16 PM
I have a hard time spending cash, but plastic makes it soooo easy. Too easy.

This is interesting. I'm the exact opposite. To me, cash is too easy because I know it doesn't show up on my expenses. When I take my card out I know I'm going to have to stare that purchase in the face on my financial tracker at the end of the month.

I think you should acknowledge that the credit card isn't the root cause of the problem. Find the root cause and correct it instead of aiming for the card.
Title: Re: Is cash-only the answer?
Post by: Will on June 22, 2014, 06:34:16 PM
Maybe I am wrong, but to me the overspending is coming from not having a budget.  If you have decided you have $X for groceries and $Y for housing and $Z for whatever and so on, it shouldn't matter if you pay for it with Visa, MasterCard, or cash as long as you don't spend more than you budgeted (as long as you didn't budget more than you could afford in the first place).  So I wouldn't cancel the card or even freeze it; I would just make sure that I wasn't spending more than I had budgeted.
Title: Re: Is cash-only the answer?
Post by: aj_yooper on June 22, 2014, 06:37:15 PM
I love the very cold credit card idea!  Don't cancel the cards.  Using cash is fine.  Just don't buy shit.

Our house is full of stuff that we have accumulated.  When I look around, I wonder whatever were we thinking.  Now I simply enjoy accumulating index funds an ETFs.  They are way better. 
Title: Re: Is cash-only the answer?
Post by: Zikoris on June 22, 2014, 07:28:12 PM
Cash-only might be a good temporary band-aid fix, but long term I'd really try to work on the mental aspect - dig down and figure out why you overspend on certain things, and address those directly. Otherwise you're stuck trying to "trick" yourself in one way or another for the rest of your life.
Title: Re: Is cash-only the answer?
Post by: lifejoy on June 22, 2014, 07:30:42 PM
I find it very interesting that some people have the opposite problem! I agree - I don't have a credit card problem, I have a spending problem. However... You can't use cash to shop online. Online shopping is one of my biggest weaknesses right now. I've tried freezing my card in water. I've tried obtaining a new card so that me or amazon etc. hasn't memorized my number. To no avail. I need to act like an overweight person cutting out junk food - having the cc around is just too tempting. I need to remove it from my life. However, I do not want to hurt my credit score. How debilitating would that be, to have a bad credit score? Part of me resents that the society I live in is "forcing" me to have a credit card. Thoughts?


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Title: Re: Is cash-only the answer?
Post by: arebelspy on June 22, 2014, 07:45:31 PM
I find it very interesting that some people have the opposite problem! I agree - I don't have a credit card problem, I have a spending problem. However... You can't use cash to shop online. Online shopping is one of my biggest weaknesses right now. I've tried freezing my card in water. I've tried obtaining a new card so that me or amazon etc. hasn't memorized my number. To no avail. I need to act like an overweight person cutting out junk food - having the cc around is just too tempting. I need to remove it from my life. However, I do not want to hurt my credit score. How debilitating would that be, to have a bad credit score? Part of me resents that the society I live in is "forcing" me to have a credit card. Thoughts?


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Change the number then cut it up when you get it.

Title: Re: Is cash-only the answer?
Post by: Grid on June 22, 2014, 07:50:18 PM

This is exactly what I do... gives the numbers more meaning and lets me assess the worth of the purpose rationally/objectively.  Works great.

Yes, I think you put it better there.  It's a way of getting an objective cost/worth of the transaction in question.
Title: Re: Is cash-only the answer?
Post by: BlueHouse on June 22, 2014, 07:51:34 PM
I've been doing cash-only for one month per year ever since I used that method to cure my (mindless) spending habit 10+ years ago.  My bank card is ATM only, not a debit/credit card (no visa logo on it - you have to ask special for this at the bank).  I actually laminated one card and kept it in my wallet for emergencies and the rest I did the freezer method.  I don't have to use those tricks anymore, but I do still do a "refresh" once per year.  It helps me to rethink all of my purchases.  When I'm cash only, I sometimes do a "shop and drop" where I spend an hour or more in Target or Marshalls, then walk out without buying anything in my cart because I realize I don't really even want it.  I have had to leave supermarkets when I don't have enough money and I have to go into gas stations to pay for gas with cash.  It makes buying things a pain in the ass and it makes it so you start counting and keeping track in your head - which I think is very important for everyday life.  You plan ahead so when you're going to the grocery, you stop by the ATM first to get the cash you need and then you stop buying impulse items.   When I pay with plastic, the cost doesn't seem to register with me.  I have no idea what I've paid for something after I leave the store, so my yearly exercise kind of resets the "pay attention" mode.  I'm a big proponent of the cash-only method for however long it takes. 
Title: Re: Is cash-only the answer?
Post by: lifejoy on June 22, 2014, 08:43:53 PM

I've been doing cash-only for one month per year ever since I used that method to cure my (mindless) spending habit 10+ years ago.  My bank card is ATM only, not a debit/credit card (no visa logo on it - you have to ask special for this at the bank).  I actually laminated one card and kept it in my wallet for emergencies and the rest I did the freezer method.  I don't have to use those tricks anymore, but I do still do a "refresh" once per year.  It helps me to rethink all of my purchases.  When I'm cash only, I sometimes do a "shop and drop" where I spend an hour or more in Target or Marshalls, then walk out without buying anything in my cart because I realize I don't really even want it.  I have had to leave supermarkets when I don't have enough money and I have to go into gas stations to pay for gas with cash.  It makes buying things a pain in the ass and it makes it so you start counting and keeping track in your head - which I think is very important for everyday life.  You plan ahead so when you're going to the grocery, you stop by the ATM first to get the cash you need and then you stop buying impulse items.   When I pay with plastic, the cost doesn't seem to register with me.  I have no idea what I've paid for something after I leave the store, so my yearly exercise kind of resets the "pay attention" mode.  I'm a big proponent of the cash-only method for however long it takes.

This resonates with me. BlueHouse, we are similar in our dealings with money. I am VERY intrigued by the lamination idea! I tried putting a post-it note with my goals written on it, but that didn't do it for me.

I also like areblespy's idea of just cutting it up. I can remove the number from amazon etc. This will help a lot! Also, to get my bank to waive baking fees, I have very minimal transactions allowed per month in terms of withdrawals. The combination should be good for my stash, and it won't hurt me credit score! Is it ok to have a visa and not use it? Is that ok for credit scores?


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Title: Re: Is cash-only the answer?
Post by: arebelspy on June 22, 2014, 10:17:43 PM
Is it ok to have a visa and not use it? Is that ok for credit scores?

Yes.
Title: Re: Is cash-only the answer?
Post by: BlueHouse on June 22, 2014, 10:17:52 PM
One other thing that has helped me:  I made up my mind probably 20 years ago to never ever pay another fee to a bank for any reason.  No late fees. No interest (except mortgage). Even when I screw something up, I call and ask them to remove the fee. I have spent hours on the phone to get three dollar fees waived or reversed. That's just my thing. It doesn't come up anymore since I've gotten my act together, but when you decide on something, have an iron will about it.  So pick something like never ever paying interest again and stick to it.

I don't think lack of activity on an open account would hurt your score.  I've got a bunch of accounts that are still open that I haven't ever used except to get the initial 10% off just for getting the card.
Title: Re: Is cash-only the answer?
Post by: lifejoy on June 22, 2014, 11:00:13 PM
One other thing that has helped me:  I made up my mind probably 20 years ago to never ever pay another fee to a bank for any reason.  No late fees. No interest (except mortgage). Even when I screw something up, I call and ask them to remove the fee. I have spent hours on the phone to get three dollar fees waived or reversed. That's just my thing. It doesn't come up anymore since I've gotten my act together, but when you decide on something, have an iron will about it.  So pick something like never ever paying interest again and stick to it.

I don't think lack of activity on an open account would hurt your score.  I've got a bunch of accounts that are still open that I haven't ever used except to get the initial 10% off just for getting the card.

Kindred spirits! I haaaaaate paying bank fees!! I refuse to pay them, and I will do just about anything to achieve that goal. It's the principle of the thing. I'm about to combine finances with my fiancÚ, and I am a wee bit concerned a new/different account will mean bank fees... Thank you for giving me the motivation necessary to avoid them at all cost! Pun intended ;)
Title: Re: Is cash-only the answer?
Post by: lifejoy on June 22, 2014, 11:01:19 PM
Is it ok to have a visa and not use it? Is that ok for credit scores?

Yes.

Very cool. Thanks for weighing in! This is the plan, then: keep the visa "active" but live life as though I do not have one. I can still go cold turkey :)
Title: Re: Is cash-only the answer?
Post by: dragoncar on June 22, 2014, 11:55:24 PM
Agreed with the don't cancel or lower the limit, it'll hurt your credit score.  Put it away and don't use it.

Yes, and if just putting it away isn't enough for a hypothetical person, that person may have an actual spending addiction.  Then it may be time to cancel the cards.
Title: Re: Is cash-only the answer?
Post by: Sunnymo on June 23, 2014, 12:18:08 AM
If you are about to combine finances have you considered handing the replacement card (with the non memorised numbers) over to your fiancÚ? I presume you have discussed financial goals and he is on board. This would mean that any card related spending is discussed and agreed before happening, maybe he already has that strength or discipline that you are still working on.

Another way might be mutual agreement on a guilt free allowance and each have a card with that amount as the limit. Once you hit the limit that is it for the month, if either needs to go over the limit that comes out of a joint account but must be discussed and agreed first (possibly with a reduction for the following month so annual budgets are not compromised).
Title: Re: Is cash-only the answer?
Post by: Left on June 23, 2014, 12:39:35 AM
why not preload the credit card so it is like a debit card (with whatever benefits-rewards/protections credit cards have) and set a text/email reminder when you spend $.01 into the "credit" amount so you know to stop spending money that isn't yours? and every purchase after will keep texting you and you'll get the message to stop spending if each time you spend you get an annoying message about it. I like preloading cards vs debit card since if the card gets stolen your bank account isn't locked up because of investigation. You maybe able to call up the credit company and tell them to not allow you to spend credit, ie freeze account? I'm not sure if this is possible though without setting your credit limit to $0 (don't do this) but couldn't hurt to ask? This is my method of getting something like AMEX's prepaid card without the monthly fee.

I set text to about $100 so I know when I make a "big" purchase for me and it lets me know if someone else uses my card (hasn't happened but this is main reason I set up the notification). I also have one when I spend $1,000 into credit so I know not to spend more ( I don't hit this either since I only spend about half that each month but just in case I go crazy).

Freezing the card seems odd to me, it doesn't freeze your cash so you'd keep spending it until you run out of cash, you can do something similar like I said above with the text notifications. And using cash you lose out on the rewards and such too, and harder to track spending for me if I pay cash.
Title: Re: Is cash-only the answer?
Post by: Nudelkopf on June 23, 2014, 01:28:00 AM
Just don't buy shit.
That sums up pretty much every thread :P
Title: Re: Is cash-only the answer?
Post by: alsoknownasDean on June 23, 2014, 04:13:20 AM
I ditched my credit card a few years ago, and just use a debit card. Each fortnight I'll set myself an allowance for minor expenses and the rest gets transferred to another account. I'm looking at reducing my fortnightly allowance too :)

Not missing the credit card one bit. The debit card even lets me buy online.
Title: Re: Is cash-only the answer?
Post by: EK on June 23, 2014, 05:42:12 AM
I used to struggle with this too... I agree with the others don't cancel the card.

Why not budget with cash envelopes for a few months to limit your available spending money?  Worked a charm for me.
Title: Re: Is cash-only the answer?
Post by: Villanelle on June 23, 2014, 07:44:41 AM
Don't cancel.  Freeze it or even cut it up if necessary.  The important thing is that the account will still exist.

Personally, I wouldn't switch to a debit card either.  The issue of it not feeling liek really money is still going to be there.  And if someone gets ahold of your debit card or card info, they can pull money directly from your accounts.  That's much harder to deal with than credit card fraud, where you still have your money while the bill is disputed. 
Title: Re: Is cash-only the answer?
Post by: lifejoy on June 23, 2014, 07:55:05 AM
If you are about to combine finances have you considered handing the replacement card (with the non memorised numbers) over to your fiancÚ? I presume you have discussed financial goals and he is on board. This would mean that any card related spending is discussed and agreed before happening, maybe he already has that strength or discipline that you are still working on.

Another way might be mutual agreement on a guilt free allowance and each have a card with that amount as the limit. Once you hit the limit that is it for the month, if either needs to go over the limit that comes out of a joint account but must be discussed and agreed first (possibly with a reduction for the following month so annual budgets are not compromised).

We're going to have combined assets and then each get the same amount of fun money per month. Right now we're in limbo - things need to settle down before we draw up a solid plan. Very good suggestions though!
Title: Re: Is cash-only the answer?
Post by: lifejoy on June 23, 2014, 07:57:47 AM
Just don't buy shit.
That sums up pretty much every thread :P

Yup. Why is something so obvious and simple, hard to put into practice sometimes? I seem to do ok unless emotional turmoil catches me off guard. And then I let me emotions govern my spending :/

Well, NO LONGER.
Title: Re: Is cash-only the answer?
Post by: lifejoy on June 23, 2014, 07:59:57 AM
I ditched my credit card a few years ago, and just use a debit card. Each fortnight I'll set myself an allowance for minor expenses and the rest gets transferred to another account. I'm looking at reducing my fortnightly allowance too :)

Not missing the credit card one bit. The debit card even lets me buy online.

I love the word "fortnight". We don't often use it in Canada :)

I used to struggle with this too... I agree with the others don't cancel the card.

Why not budget with cash envelopes for a few months to limit your available spending money?  Worked a charm for me.

Yes! Cash envelopes is a great idea. I've been there/ done that. It was kind of annoying but VERY effective!

Title: Re: Is cash-only the answer?
Post by: MrsPete on June 23, 2014, 08:12:51 AM
Overspending isn't caused by the VISA card.  The VISA card is simply the mechanism through which you are overspending.  Credit cards are neither good nor bad -- they are simply a tool. 

Having said that, I have heard that the average person spends as much as 30% more -- thinking of a situation like the grocery store, Target, a restaurant; that is, places where it's easy to feel that it's okay to splurge just a little, to order a soda instead of water, to pick up a $6 magazine or an expensive steak -- when they're spending with plastic instead of cash.  Think about that and decide whether you're prone to that particular issue or not.  You said you find it "sooooo easy" to spend plastic -- you may be one of those people.  A person to whom spending on credit doesn't feel like real spending. 

The real issue is to control your spending, and towards that end I'll give you several ideas:

- If you think cash only will help you, try it for one month . . . and then decide whether it was a good choice.  Personally, I don't see much point in that --  not when the real issue is to learn to spend more wisely -- but we all have this or that little trick that works for us.
- Don't just spend -- work out a budget for yourself.  Allow some wiggle-room for things upon which you know you'll spend, and make "saving" a big line item in the budget.  Then no matter what form of currency you're using, stick to that budget.  Based upon what you're saying, I suspect that impulse buying is one of your issues, and a budget will help you learn to control it.
- Start recording your spending.  For some people -- and I suspect you're one of them -- buying with plastic doesn't "feel real", so they don't tend to "mentally count" what they've charged, and then suddenly a BIG BILL arrives in the mail.  We started our oldest daughter with a small credit card ($300 limit) when she was a senior in high school; we encouraged her to use the card, but we had her attach a post-it note to the back of the card and every time she used it, she recorded how much she'd spent.  Then when the bill came, she'd pay it and stick on a fresh post-it.  She's now a college junior and is managing her very limited funds well. 

As for credit scores, don't focus on them.  Your goal should be financial stability, which is NOT the same thing as a good credit score.  A person with financial stability is living within his means, is either out of debt or is working towards that goal, and is increasing his net worth each month.  In contrast, a person with a good credit score can be up to his eyeballs in debt, living paycheck-to-paycheck, but is paying at least the minimum each month.  It's critical that you understand the difference between these two situations. 

Finally, pointing out the obvious:  Using your fiancÚ's VISA card will not build up YOUR credit score, though it may help hers. 

Title: Re: Is cash-only the answer?
Post by: MrsPete on June 23, 2014, 08:33:35 AM
Online shopping is one of my biggest weaknesses right now.
Okay, you've identified one weakness.  That is progress towards fixing it. 

Suggestion 1:  Budget. Allot X amount for whatever it is you like to buy online, and when you reach that point . . . you're done.  This really is the beginning, middle and end of the whole conversation.  I love shopping online -- it gives me access to good prices and items that aren't available locally, and it's so easy.  But I can see that it's easy to over-do. 

Suggestion 2:  Ask yourself WHEN you're doing all this online shopping. Do you do it while you have downtime at work?  Late in the evenings when you're just relaxing?  Do you do it when you're anxious or upset?  Or do you do it when you notice that your bank balance is looking good, and you figure you deserve a treat?  The more details you can pinpoint about your bad habit, the easier it is for you to gain control over it.  If it's a matter of boredom, find another activity to fill that timeslot -- ideally something inexpensive and positive like working out or reading, but it could be as simple as working Soduku puzzles. 

Suggestion 3:  Impose a rest period. Here's an example.  When I was younger, I had a problem buying too many clothes.  I'd get the item home and realize that it didn't really look that good on me, or it was very similar to another item I already owned.  The result was too much money spent, and an over-packed closet.  So I made a rule:  When I bought a new item of clothing, it had to stay in the store bag (with the receipt) for two weeks.  After two weeks I'd take it out and try it on again at home.  If I still liked it /wanted it, I'd remove the tags and wear it . . . but often as not, I realized it'd been an impulsive buy, and I'd take it back to the store.  It's a system that works.  I didn't have to worry about whether my size would be sold out, and I never minded returning things.  You can do the same thing online: Place the items you think you want in your cart . . . but don't finalize the purchase.  Come back in a week or so, and if you still want the items, you can still buy them. 
Title: Re: Is cash-only the answer?
Post by: lifejoy on June 23, 2014, 09:15:00 AM

Online shopping is one of my biggest weaknesses right now.
Okay, you've identified one weakness.  That is progress towards fixing it.  [...]

Suggestion 3:  Impose a rest period. [...] Come back in a week or so, and if you still want the items, you can still buy them.

I really, really like these ideas. Thank you!

And it's a good thing I didn't cancel my visa :) I just set up an amazon seller's account, and it requires a visa :)

And for this part:

 Do you do it while you have downtime at work?  Late in the evenings when you're just relaxing?  Do you do it when you're anxious or upset?  Or do you do it when you notice that your bank balance is looking good, and you figure you deserve a treat?

Yes, yes, yes, and yes. *hangs head in shame*

When I lose sight of my goals, or I feel like everyone gets to spend money except me, the result is not good. Thankfully, I have some new ideas under my belt! And I just requested some books from the library. Online shopping is not a valid hobby.


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Title: Re: Is cash-only the answer?
Post by: simonsez on June 23, 2014, 09:55:06 AM
Online shopping is one of my biggest weaknesses right now.
Do you have an online problem?  If you only have problems with credit cards when you are online, then the root is possibly being online and not a credit card problem per se.  Are you going online to pass the time and then all of a sudden you black out and wake up with multiple items in your amazon cart?  Hard to shop online when you aren't online (as much).

Walk, bike, do extra chores, read a paper book, schedule limited online time, etc.
Title: Re: Is cash-only the answer?
Post by: MrsPete on June 23, 2014, 10:32:55 AM

Online shopping is one of my biggest weaknesses right now.
Okay, you've identified one weakness.  That is progress towards fixing it.  [...]

Suggestion 3:  Impose a rest period. [...] Come back in a week or so, and if you still want the items, you can still buy them.

I really, really like these ideas. Thank you!

And it's a good thing I didn't cancel my visa :) I just set up an amazon seller's account, and it requires a visa :)

And for this part:

 Do you do it while you have downtime at work?  Late in the evenings when you're just relaxing?  Do you do it when you're anxious or upset?  Or do you do it when you notice that your bank balance is looking good, and you figure you deserve a treat?

Yes, yes, yes, and yes. *hangs head in shame*

When I lose sight of my goals, or I feel like everyone gets to spend money except me, the result is not good. Thankfully, I have some new ideas under my belt! And I just requested some books from the library. Online shopping is not a valid hobby.


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Hey, pick your head up!  The shame would be in continuing on and on in a habit that is bad for you!  You've recognized a problem and are searching for solutions.  That's a positive. 
Title: Re: Is cash-only the answer?
Post by: DoubleDown on June 23, 2014, 10:54:51 AM
I've never suffered from a compulsion to spend money, but that Gail-lady, on the show about people with spending problems, puts them on a system of paying for everything with cash in jars or envelopes. Each jar (clothing, food, transportation, etc.) has a budgeted amount for the month, and is filled with the corresponding amount in cash at the beginning of the month. That is the only source that can be used to pay for things all month. If you run out before the end of the month -- well, tough. I think at most you're allowed to pull from another jar if you have some excess in another category, but never can you exceed the total amount in the jars.

I think such a system makes sense for several months until one can get a handle on their spending. Maybe once you get used to the idea of sticking to an allotted amount each month, then you could see if you can safely handle smaller and smaller uses of a CC (still following the same controlled spending amounts, not extra on the CC)!
Title: Re: Is cash-only the answer?
Post by: Spartana on June 23, 2014, 11:05:01 AM
I haven't read all the replies yet but one thing I do is to only bring in the amount of cash I am willing to spend when I go into a store or where ever. If I'm hitting the grocery store and have my list, I guestimate what that will cost and just bring that amount of cash with me and leave the debit card, checkbook and CC at home. That way I never am tempted to spend more then I have on me cause I can't spend more then I have on me.
Title: Re: Is cash-only the answer?
Post by: netskyblue on June 23, 2014, 02:18:31 PM
I would not cancel your account, particularly if it is the oldest account you have.

This will negatively impact your credit score.

I love the credit card Popsicle idea though.

Even better, freeze the card and keep it at someone ELSE'S house.  (Someone you trust, naturally).  It's even harder to go to your parents and ask THEM to thaw out your credit card without a legitimate reason!
Title: Re: Is cash-only the answer?
Post by: frugalnacho on June 23, 2014, 02:29:05 PM
Why don't you just track your money and spending, and create a budget for specific items and store that money in an account?  Then you just use the cc the same way as cash, just make sure you check your budget before you make a purchase.  You never actually buy anything on credit because you always have the money in your account to cover it, and if you don't have the money in your account earmarked for whatever you are about to purchase then you can't make that purchase, the same way you couldn't make the cash transaction without the cash in your hand.

This alf alarm clock is cool, but do I REALLY need it, and do I have the cash in my account earmarked specifically for this (whatever category you place alf paraphernalia in)?
Title: Re: Is cash-only the answer?
Post by: superone! on June 23, 2014, 02:31:44 PM
Just to chime in with more agreement, don't cancel the card.

I cancelled all of my credit cards in 2007 (after one was stolen and I was moving abroad and trying to "get out of the system"). Now that it would be nice to have a card again, I'm finding it nearly impossible to get one without an annual fee.

I absolutely love the frozen card idea though!
Title: Re: Is cash-only the answer?
Post by: lifejoy on June 23, 2014, 07:09:41 PM

Online shopping is one of my biggest weaknesses right now.
Do you have an online problem?  If you only have problems with credit cards when you are online, then the root is possibly being online and not a credit card problem per se.  Are you going online to pass the time and then all of a sudden you black out and wake up with multiple items in your amazon cart?  Hard to shop online when you aren't online (as much).

Walk, bike, do extra chores, read a paper book, schedule limited online time, etc.

This is a really excellent point. I do have an online problem. This gives me a new way of addressing things :)


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Title: Re: Is cash-only the answer?
Post by: swick on June 23, 2014, 09:09:50 PM
Is it ok to have a visa and not use it? Is that ok for credit scores?

Yes.

Very cool. Thanks for weighing in! This is the plan, then: keep the visa "active" but live life as though I do not have one. I can still go cold turkey :)

Hey Libraryjoy, I have a friend who works in the credit reporting industry (Canada) and she says to put at least one transaction a year on your CC or every few months or so, They weight a couple of different factors when looking at you credit card, there is your limits and your history but also your payment history (otherwise your account will show up as inactive and will count for less)
Title: Re: Is cash-only the answer?
Post by: arebelspy on June 23, 2014, 09:56:30 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.
Title: Re: Is cash-only the answer?
Post by: swick on June 23, 2014, 10:54:39 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.
Title: Re: Is cash-only the answer?
Post by: nereo on June 24, 2014, 05:33:28 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 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.
Title: Re: Is cash-only the answer?
Post by: lifejoy 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 :)
Title: Re: Is cash-only the answer?
Post by: mpg350 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.

Title: Re: Is cash-only the answer?
Post by: Cassie 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.
Title: Re: Is cash-only the answer?
Post by: lifejoy 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.
Title: Re: Is cash-only the answer?
Post by: NonprofitER 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. 

Title: Re: Is cash-only the answer?
Post by: rmendpara 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.
Title: Re: Is cash-only the answer?
Post by: neo von retorch 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:

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.
Title: Re: Is cash-only the answer?
Post by: RyanHesson 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.

Title: Re: Is cash-only the answer?
Post by: nordlead 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.
Title: Re: Is cash-only the answer?
Post by: frugaliknowit 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.