Start Paying Cash and Watch Your Expenses Decrease

by Justin Weinger on April 17, 2007

This afternoon while I was on Yahoo! Finance checking out the stock market results, I came across an interesting/scary daily poll.  The question was, “What type of debt causes you the most stress?” to which the answers were: 1) mortgage, 2) student loans, 3) credit cards, 4) auto loans and 5) other.

I went ahead and selected “mortgage” and hit submit, assuming that I would be in the same boat as a lot of other people.  Turns out, I’m actually in the minority, and that more than half of people (54%) were more concerned with credit card debt than with their mortgage.

I suppose there are a couple of ways to look at this:

  1. People aren’t worried about their mortgages because everything’s under control and they have no problems making payments
  2. People are worried about their mortgages but are more concerned with their deep credit card debts.

Considering the rising mortgage default rates and the high average credit card balance that the average American consumer carries, I’m going to go out on a limb and say that it’s probably the second of the two scenarios I described above.

Anyway, this got me thinking about ways we might be able to reduce our monthly expenses/credit card debt – and the one answer I kept coming back to was a pretty simple one: PAY CASH.

Before you drag me through the streets and stone me to death with thick-as-a-brick credit card statements, hear me out.

There are two distinct reasons why I’m in favor of ditching the credit cards and having more people pay with cash:

  1. It hurts when you have to open your wallet and physically hand over your money.
  2. When you spend cash, you’re only spending what you have.  Once you run out, you can’t put yourself into debt.

Think about it, when you make a big purchase and hand over your credit card, you don’t really feel any sting.  As a matter of fact, you probably hand over your credit card without even thinking about it because you know that you’ll only have to “deal with it” when the statement comes at the end of the month.

But, when you have to hand over a wad of your hard earned cash – now that stings quite a bit.  You probably put a bit more thought into what you’re purchasing and think a little bit harder about whether or not you’re making a wise decision if you go through with the purchase.

Finally, when you finally do run out of cash, you don’t run the risk of ending up in massive amounts of debt; you can’t spend cash if you don’t have it.  However, when using credit cards, you can continue to spend what you don’t have, continue to make minimum payments and continue to make your financial grave deeper and deeper.

For those of you who are diligent about paying off your bill each month, I think it’s safe to say that this article isn’t aimed at you.  But if you can sense yourself starting to have some bad credit card spending habits – try switching to cash for a month. 

I’d be willing to bet that your perspective on money will be completely changed once you have to physically part with your green.



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