It Ain’t Easy Switching Back To Cash

thNow 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.

Go figure.

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.



13 thoughts on “It Ain’t Easy Switching Back To Cash

  1. I couldn’t agree more! We went to using cash earlier this year. I’ll occasionally use a debit card, but even that has become a rare occurrence. When you know you only have so much cash in your wallet, you simply do spend less!

    Liked by 1 person

    • Hi Chris. Me too (now) I use my debt card to buy groceries first, then get cash back for the rest of the week, to pay for gas, incidentals and DH gets his $50 a week allowance. It’s been working like a charm AND I love it.
      Good for you too! It def is a budget helper.


  2. I, too, have recently switched to cash only with debit for groceries only. Am so tired of opening credit card bills with never ending balances even after not using for many months! My husband and I retired almost a year ago and are enjoying our free time. Am looking forward to reading about your travels in the new RV! ENJOY!!

    Liked by 1 person

    • Hi Sue. Congratulations on your retirement! I’m feeling much better about going back to cash. Using that credit card, even though we paid it off at the end of a month, was a very expensive way to do things.
      Here’s a funny story: the first time I went to buy groceries using cash (my debit card) I accidentally used my credit card instead! That’s how ingrained the habit was. The grocery tally came to $52.03 and as soon as I got back home, I paid the credit card back the $52.03 I charged out of my cash account. Haven’t made that mistake ever again.
      Thanks for sharing and for your comment.


  3. My dear Cindi, In two respect you are similar to my brother. First he always finds something he wants to get and it becomes a necessity for his happiness, Even the same one as you- an RV and secondly, just like you before he had totally paid off his last major purchases- furniture and improvements also with zero interest loans. Swapping an RV loan for credit card purchases may get a tax break but any debt is still debt and now your debt does not have zero interest and has a very long time frame of being in debt.
    I personally will continue to use credit cards because of their convenience and rewards. A long time ago, I cultivated a habit of self discipline to limit spending to money already in my checking. So the true power is in not carrying balances.
    To me going totally with cash only means physically using cash not a debit card. They are the same thin rectangular shape as credit cards, so how does the brain not have the same feeling? And does this not also placate emotions of credit card withdrawal? One can play mind games to justify almost anything, but wouldn’t it just be easier to say, ” reality is we still are racking up debt just a different kind.” IMHO. No debt is good debt if you have to do so much gerrymandering to balance your budget which has to add a lot of unnecessary stress and worry. sincerely. Lara

    Liked by 1 person

    • Lara, your brother sounds like fun.
      Let’s just say at this point in our lives, both DH and myself think of debt differently.
      I totally agree, however, that debt is debt, no matter how you slice it and having it is not such a great thing.
      We do have a plan in place to alleviate it as quickly as possible.
      DH is working his last project and if all goes well he will earn enough money to pay off all debt including the RV.
      That’s our plan.
      If it fails, we have a Plan B and that is to sell DH’s car once his project management position is completed.
      The proceeds from the sale of the car should cover just about everything.
      That’s the beauty of owning assets outright. You can use them in a pinch.
      As for using a debit card, for me it’s just as painful as cash because once I swipe the debit card I have to come home and
      subtract it out of my checking account. There’s no fudge factor, so I better be correct.
      People fall into debt problems when they overextend themselves or make frivilous, meaningless purchases.
      I don’t think that debt is a very bad thing all the time.
      After all, debt builds bridges, cities, housing, apartment buildings, companies, schools and hospitals, factories and roads.
      The world wouldn’t be as wonderful as it is today if it weren’t for debt. Food is sourced, meats, poultry and fish are all cultivated by utilizing debt.
      Technological advances, medical cures, alternate energy and rebuilding are all done with debt.If used correctly, properly and with respect, debt can be a very good thing.
      Dave Ramsey made himself a multi-millionaire by placing debt fear into too many people. When used properly, debt can be the tool to advance one’s own life.
      Thanks for your comment.


  4. I am glad you have two plans to get rid of the RV debt. Owning assets that can be sold is a good thing too but I find very few of them hold their value and you always have to find a buyer willing to pay a fair price. The housing crisis of 2007 is a prime example. And those swap debt instruments.
    Yes, lenders including banks and world wide governments have convinced businesses and their people ” we don’t want to put off till tomorrow what you can finance today and pay and pay more for it and line the pockets of the financier.” And the straight interest rate was not enough profit for the lenders, so Amortization where the interest portion of the loan is front loaded was created and is used for mortgages and also student loans, too. So who cares if we are gouging our young! And passing the bill on to future generations.
    Yes, all of what you mentioned is mainly done by financing and debt and this cost is added onto the price the end consumer pays for all goods. And I wonder, do you seriously believe that using easily available debt instruments to finance everything is so good, when it drives the ever increasing cost of what you will need while your income becomes fixed? Lara


    • Hi Lara, if the loan is interest free, it doesn’t drive up the cost. And if it does, as a business person, I categorize it as the cost of doing business. Also, when I have used debt to buy something, my original purchase price has already been greatly reduced, which offsets the interest charged. For example, I am buying thus current RV almost $6,000 cheaper in Michigan than what I would have paid for the same exact model here in New York. The interest on the loan, if I let it go that long, will be about $2,000. That’s still a $4,000 savings. Granted yes, I have to drive to Michigan, but the few hundred dollars to do so still offsets the savings and I still come out ahead. Plus DH and I enjoy carousing around Lake Michigan. We had a great time in Michigan when we picked up our rPod there around 4 or 5 years ago. Michigan turned out to be a fun state.
      Who knew?
      I have started thinking about debt a whole lot differently lately. If used wisely, it can enhance your life. Not deplete it. When people go out and buy a car worth more than their yearly income, or rack up over $80K to $100K in credit card debt, something is seriously wrong. But if you’re just a regular Jane earning $50K a year and you seriously need a new computer to do your work properly, taking out a $1,600 zero-interest loan over 18 months @$88 is not going to kill ya. Also, I’m finding out that a person’s FICO score is very important. It’s used to buy life insurance, vehicle insurance, home owners/renters insurance etc. or even to land a good paying job.
      Dave Ramsey’s beliefs are seriously flawed. We seem to think that only the bank benefit but that’s incorrect. The person borrowing the money, again if used correctly, can greatly enhance their own lives when debt is used correctly. Cars and trucks help the individual earn money, student loans can help a person improve their earning capabilities (if used for a money-making career at a reasonable interest) computers are a valuable asset when used correctly.
      That should be our new mantra: debt is good when used wisely AND correctly. It should benefit the borrower NOT the lender.
      As I said, I’m changing my beliefs in my old age. I’m seeing things differently.


    • PS: The Dodge dealership is ALWAYS sending us offers to buy back our two cars at good prices! Apparently, there’s a big market for these used cars. So, I’m not worried if and when the time comes to sell DH’s car (not mine LOL, we need it to tow).
      Thanks as always for your comments.


  5. When you have the kind of savings you mentioned in older posts you have a security blanket so using zero percent or even below 3% home equity loans is just a convenience to keep your savings earning interest that further discounts the items purchased. I agree using credit in this circumstance is a win, especially if you maintain your high credit rating. For me I just had an eye opener- Charging the home renovations and Getting the two travel credit cards dinged my credit rating over thirty points even though I will have them all paid off when the bills come in. I will be interested to see how quickly my FICO goes back up and how long it takes.
    Two other recent experiences I had recently was the new mortgage process if I moved. The banks no longer look at assets when determining how much you can mortgage and it is far cheaper to use a no fee home equity loan which also has a lower interest rate on your current house. You also qualify for a much larger loan ratio and then you just pay the penalty for paying off the loan early if you sale Your original home. It would have ended up being $300. But no fees for the home equity loan! I realize though I would be paying the payment each month till my old home sold,
    The other thing I did was transfer IRA money to Merrill to qualify for the top tier of benefits as a Bank of America customer. Their 1-2-3 rewards credit card earns 75% more becoming 1.75- 3.5-5.25. If I transfer the rewards earned directly to my checking or money Market savings. I also get 75% increase on the travel credit card Miles, reduction on loans, and increase on savings. All good.
    With Aldi’s taking credit cards now I get a 3.5% discount on their already low prices. And I purchase Many retailers I use gift cards at Shop Rite and StopNShop when they offer a $10 or $20 grocery coupon for purchasing $100 in gift cards. Layering multiple savings. Cha- Ching !
    I know for you Being thrifty drives you to get purchases at discounted prices- giving you a great sense of accomplishment. Nothing wrong with getting the luxury life style at bargain prices. More power to you. Sincerely, Lara

    Liked by 1 person

    • I’ve been using my airline miles credit card to shop weekly at Aldi. I get double points. BUT as soon as I get back home I immediately transfer what I spent over from my checking account to cover the cost on my credit card. I really am committed now to get out of all debt ASAP because once DH officially retires at the end of this summer, he’s not taking on any more work. I don’t blame him but being retired AND having debt is NOT a good place I want to be. DH thinks he’ll be able to pay off the RV loan. There’s no prepayment penalty. We’ll see how it goes. Persoanlly, I want him to sell his car since we’re ALWAYS together we have no need for a 2nd car once he officially retires for good. I’d like to use that car money to pay off the RV loan. We’ll see how is goes. We have options so that’s a very good thing.
      Thanks for sharing your financial actions. Much to think about. We ladies rock in retirement, don’t we? TTYL (talk to you later)


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