Using Cash and Cutting Up Those Cards!

by GettingFreedom on March 9, 2012

 

 

Our first drill in Finding Freedom Boot Camp was laying out your Monthly Cash Flow.  It may take a couple of months for you to get a better picture on the amounts for your categories if you’ve never had a budget or cash flow plan before.  That’s perfectly normal, and actually better for you in the long run so you have an accurate number.  After all, accuracy and honesty are essential!  Without them, you will fail.  End of Story.  You can find additional tips to managing your expenses and your categories here.

Setting up your Cash Flow Plan is one of the biggest steps in obtaining freedom. The next?  Your follow through.  If you do nothing with the information that you have in your hand, you will get nowhere.

With your cash flow plan in hand, you are ready to start looking at your numbers and attacking them head on. This is seriously my favorite part of budgeting!  If you’re looking to shave your expenses, there are numerous tips at the bottom of this post.

Why Use Cash?

The main reason?  It’s hard to overspend when cash is all you have.  Checks, debit cards, and credit cards aren’t money.  They are a promise of money and a swipe.  Meaning you do not feel the pain in handing them over, like you will with cash.  When you go to hand the cashier your $100 bill, you will feel pain at how fast it goes.  Do that a couple times and you will start to rethink a lot of your purchases, which will help you to save your hard earned money!

If you have $100 allotted a week to spend on groceries and you spend $125, you’ve broken your budget and your overall goal.  Creating your cash flow plan was a waste of time.  You don’t want that!

So, to further avoid going further in debt or continually knocking your eye off the prize–Use Cash!  Not to mention you’ll also avoid any transaction or accidental overdraft fees.

Tips to Using Cash

Switching to cash only can be a hard transition, but if you’re consistent it will reap great rewards!

Cut Up Your Cards

Take a deep breath and cut up all of your credit cards.  It’s a scary thing to do if you consistently rely on them month to month.  But you will continue to be in the same place you’ve always been if you don’t.  Very few people actually use a credit card for emergencies like they say they will.  Plus, your final goal is to have enough in your Emergency Fund that you won’t ever think of having a credit card again!

Leave Your Checkbook at Home

I still use my checks on a regular basis to pay some of our monthly bills that cannot be paid online.  But having my checkbook in my purse when I’m out shopping is very dangerous!  I know how much money I have in my account, and oftentimes I’m easily tempted to make a purchase that could break my budget within the category with the excuse that I can move money around and “fix it”.  Not a good idea!  Continued fixing is what gets you into debt and farther from your goals.

Get rid of your temptations, and just leave it at home!

Designate Cash Only Categories

I do not use cash for every single category in our Cash Flow Plan.  We’ve designated our top spending categories, and those are the ones we use cash for.  For instance:: Groceries, Fuel, Eating Out, Entertainment, and our Individual Fun Categories {other wise known as Blow}.  If you are new to the cash-only concept, start with just a couple categories at first so you don’t overwhelm yourself.

Once you’ve designated your categories, get your cash for each one and separate them into envelopes, ziploc bags, or whatever works for you.  Keep in mind that this is how much money you have until you are paid again and are able to refill your categories.

Keep Track of Money Spent

Write down where every penny goes out of your cash supply.  This will help you to realize later on where you need to cut your spending.  Before I started writing down where I was spending my money, I had no idea I was spending upwards of $20/month on Fountain Drinks!  That’s $240/year!

You can track where you spend your cash by writing it on the outside of your envelope every time, or by saving all of your receipts and tallying them all up later.  Just make sure that you are doing it, especially for the first 3-4 months.

 

 

Have you found success with using cash?  And go ahead and spill the beans, who still has a credit card in their wallet?

 

 

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