Now that DH and I are on a gazelle-like effort to pay off all our zero-interest credit card debt within the next two months, we’ve switched back to cash. After buying whatever we needed with a credit card with nary a thought about the ramification, I found it a bit disconcerting switching back to cash. It’s true what the financial analysts say: it hurts a bit more when you are using cash vs a credit card. The human brain simply doesn’t record credit card usage like it does good old, common cash.
Here’s the problem with credit cards: the insula doesn’t seem to understand how they work. When we pay with plastic, the transaction is abstracted. Instead of forking over cash, we just swipe a thin card. As a result, the usual hurt of spending is diminished – we barely notice that we’ve given something up. (As the scientists note, “The nature of credit cards ensures that your brain is anesthetized against the pain of payment.”). Because spending money doesn’t feel bad, we spend more money, even when we can’t afford it.
DH now gets $50 spending money for his work week and because of this he has been more cautious of how he spends his weekly cash allowance. I’ve switched back to using my debit card to buy groceries and other expenses and I’m stunned at how mindful I’ve also become when it’s time to make a purchase. This is NOT to say we were totally out of control when we made needed purchases with our credit cards. No. What I’m stating is that you certainly give spending any amount of money a second thought when you know it’s cash.
We used to tell ourselves that we were building up airline miles by using our main credit cards but realistically, I think DH and I have accumulated enough frequent flyer miles, we can buy an airplane by now. I think we’re done. By this time next month, all credit cards will show a zero balance and I think we are going to stick to our new cash-only status. In retirement, there really isn’t any room for credit card debt. Zero-interest or not.
Live well and prosper, my friend. Live well and prosper.