December212012.info
FREEBIE LIBRARY!
Join my email list and get FREE ACCESS to the MSM Freebie Library, including my top printables & eBooks.

Reader Testimonial: By switching to cash, we’re saving $500 per month

A testimony by Kathryn from

I didn’t think we needed to put our family on the cash system to save money each month. After all, I tracked every dollar we spent, paid off our cards each month, and knew exactly why we were over budget every month.

We had six overnight guests for a weekend, so of course groceries would be over budget!

My husband turned thirty, so of course he needed a really fun party to celebrate!

There was such a great sale on kids clothes, so of course I needed to stock up!

When I started adding up just how much over budget we were every month, though, I knew something needed to change.

I have been a faithful reader of December212012® for about two years, so I have heard plenty of praise about the cash system. I just never really understood why the cash system can save you money beyond the principle of “when you run out of cash, you stop spending.”

Here’s what I’ve learned during my short time on the cash system:

1. You shop less.

I used to take my small children to the store just to have something to do. If I “needed” a new basket to corral the kids’ toys, we went. But when I had to grab my cash before leaving, re-purposing a basket I already owned became much more attractive.

2. You buy less.

For me, that means “extras” at the grocery store don’t even make it into my cart, like snacks we don’t need or fruit we can’t eat before it spoils. I simply do not want to be stuck at checkout without enough money to pay for the things we really do need!

Or at a restaurant, my husband and I are much more deliberate in ordering the appropriate amount of food — we no longer need an appetizer, salads, our own entrees, and beverages!

3. You buy differently.

For example, we were organizing our very small garage and decided to hang many of the items that were cluttering precious floor space. At the home improvement store, my husband saved $12 simply by choosing individual hooks instead of the pre-packaged kit that the store offered.

Before we went to the cash system, we were around $400 over budget every month, which is our exact cushion. Now, we are easily $100 under budget, which, I am both pleased and embarrassed to admit, means we have saved $500 a month by switching to cash.

Please don’t make the mistake we did for so long — stop using your cards and start using cash! I know you’ll save more than you even hope to!

Kathryn keeps her hands busy during the day as a stay-at-home mother to two precious girls. She attempts to occupy her mind as well by reading and by blogging at

Subscribe for free email updates from December212012® and get my Guide to Freezer Cooking for free!

143 Comments

  • B says:

    Thanks for this post.
    I keep contemplating whether or not to go to cash. My husband always used cash, and I always used a card. I dont want to give up the perks in cashback or miles. Although, I am sure saving $500 a month is much more than I get in perks, I still cannot bring myself to do it. That and I wont be able to track as easily.
    Any suggestions? (Besides-“You’ll Save MONEY!)

    • Diane says:

      I heard of a research study years ago that discovered people spend 29% more when they just see a sign that says Visa. People spend more when they use a credit card, it’s not just the interest that costs money. I use all cash and really really like it. It also helps me keep organized and carrying money from month to month means that I can save up for some clothes and not feel badly for spending money on something if I do have the envelope money for it.l

    • says:

      We were in the same boat, not wanting to give up CC perks. We still use cards for online purchases or big purchases so we can get *some* points at least, but I always immediately pull the cash out of the appropriate envelope and put it in my “CC Bills” envelope so I can still hold myself accountable. It works well for us!

      Also, my husband was super skeptical about switching to cash (and it was a bit awkward at first– I recounted some funny moments on my blog in August), but he committed to one month. We were both hooked by the end of that month!

      Good luck!

    • Pamela says:

      If you have children you may find them to be enough motivation for you.
      I wanted to make sure my kids know what money is and that it is finite. It is not just a piece of plastic you can use anytime you want. We switched to cash mainly for that reason, and we are so happy we did. It definitely allows us to stay on budget.

    • says:

      B.

      You can always get a receipt for cash just like you can for a card. You can take the receipts and put them in a book to keep the records straight or in the computer in a money program.

    • Julie says:

      You could always switch to using cash for a short period, say 3 months, and track how it influences your habits. If you find yourself saving more, stick with it. If not, go back to your old system!

    • Sara says:

      Try it…try it for a month or two…if you don’t like it you can always go back to “the way you have always done it.” …but I bet you won’t 🙂

    • B says:

      Thank you for the feedback everyone! I am going to try it for a month and see how I like it. Wish me Luck!

      • Miss Jay says:

        One easy way of tracking is to just have a few different envelopes for different categories of spending. If you have $400 for groceries, $50 for eating out, $100 for gas, $100 for misc. etc, you know exactly how much you spent in each catagory based on how much $ is left at the end of the month in the envelope. If you are really interested in the breakdown, you can keep the receipt for each catagory in the envelope and at the end of the month look at specifically where it went.

        We started with cash for grocery only 2 years ago when I started couponing. I realized I was doing a lot more smaller transactions and it was more difficult to keep track of how much I had left when using my card. A year later we switched to cash for eating out, which was the other category where we were consistantly going over budget. Since switching we have never been over budget in those categories, and sometimes we are even under!

        I hope it makes as big of a difference for your family as it has for ours. Good luck!

    • Debbie says:

      Mint.com does a nice job of tracking your expenses with debit and credit cards. You can set up monthly budgets you can monitor and get weekly updates on where you are on your budget and alerts if you go over. If you can’t switch over to cash, it might make you feel more accountable with credit/debit. I use it and really like it.

    • says:

      You should definitely go the cash route! At the very least you could try it for a couple of spending categories, like groceries and “fun money”. We use a simple Excel spreadsheet to keep track of our cash purchases, listing the amount of cash we have budgeted for each envelope… and always grab the receipts and enter them just to make sure everything is adding up right 🙂 We actually do use one credit card for larger purchases (as long as we already have the money in our budget–and it gets used rarely). Good luck!

    • says:

      Get Crystal’s new book!

      She has a whole section explaining what a scam those cc rewards really are.

      • Liz says:

        A “scam”?!? Wow, that’s harsh.
        After trying the cash-only system for a while I’m happily back to using my credit card. And those free Target gift cards I get fairly regularly certainly aren’t a scam!

        • says:

          Well, scam was my word, not Crystal’s.

          Sorry if it offended. If you’ve got a plan that’s working for you, carry on! We actually use a combination of methods, but I think Crystal’s section on this topic has a lot of insight.
          Many folks have found they save much more by using cash even after accounting for the value of any rewards they received from their credit cards.
          The author of this post is saving hundreds of dollars a month-I’m guessing you’d have to charge many thousands in purchases before you’d make up for that amount in Target cards.
          Again, though, I wasn’t intending to offend you or what works for your family. I just think it’s important to note that reward programs are a marketing tool that cc companies use to encourage you to charge more, and for many the danger of overspending outweighs the potential of reward. It probably depends on your personality. My sister uses a credit card to get airline miles, but she is incredibly disciplined. Even as kids, she was the last one with any Halloween candy. 🙂
          Take care…I hope you scored some great after Christmas deals this week!

          • Lynn says:

            “Again, though, I wasn’t intending to offend you or what works for your family. I just think it’s important to note that reward programs are a marketing tool that cc companies use to encourage you to charge more, and for many the danger of overspending outweighs the potential of reward. It probably depends on your personality. My sister uses a credit card to get airline miles, but she is incredibly disciplined. Even as kids, she was the last one with any Halloween candy. ”

            ****I think you nailed it in this paragraph….it depends on our personalities rather than being a one-size-fits all”. Some of us are already very disciplined in our spending and switching to cash would NOT save us $500 a month because we’re already disciplined to not spend on things we don’t really need. If we’re already disciplined financially, than the cc rewards are just frosting, not a temptation to spend more. I am not lured into spending more at restaurants just because they take my credit card or my credit card will give me bonus points for using it at a restaurant. Dh and I are too disciplined for that as we know we will save much more by eating at home. Eating out is budgeted for and saved as a special treat…and when we do eat out and use the cc we have the money set aside to pay it off in full. For folks who have a hard time with self-control when it comes to sh0pping and eating out, the cash only method may be the discipline method that may help them….but not everyone needs that method.

    • Stacy says:

      We are in the process of switching over to cash for some of our expenses. Mostly groceries, household misc, and our grownup allowances and date fund. We still use credit for gas and online purchases. I don’t budget gas because I drive for work so I consider it a necessary expense, and I HATE the thought of going in to pay for gas. I figure this will keep us accountable to not overspending while still giving us some CC rewards.

      • Mandy W says:

        This was my biggest hang up with switching to cash because Sams Club doesnt even accept cash. It is literally right around the corner from us so we always fill up there. We solved this problem by getting an ING account with a debit card that is specifically for this. That way if the card is ever stolen it wont mess up our primary account. I also put our miscellaneous money on that card so that if something comes up we can just take care of it without having to remember to grab cash. This has been a great way for us to handle the misc. fund because when the money is gone it is gone just like cash. It doesnt get mixed up with the grocery money which is cash either.

  • Marci says:

    Thanks for sharing! This is very inspiring. We recently looked at our budget and realized if we stick to our budget we can be saving around $500 a month too! Cash is the only way to go, since it’s just way to easy to swipe a card and forget about it.

  • says:

    I don’t use just cash but have been contemplating it for when we are eating out! It’s really easy to spend too much on the extras.

  • says:

    B – I would TOTALLY suggest it! If they idea of going cash only is too intense I would say do it with a 3 month commitment – that gives you enough time to really see it work – then decide after 3 months if it is for you – that was our deal – two years later we have to remind ourselves it is very rude to roll your eyes at someone when they say ‘Oh, I pay off my credit card each month and so I get so many points, it would be a waste of money to go cash only.’ – we have to remember that was us a couple years ago too! We are currently totally debt free other than our mortgage and have a small emergency fund – we are currently saving to add to the emergency fund and to buy my husband a new(er) car cash only! It was a challenge in the beginning, now it is second nature and so worth it!

  • Jen Knox says:

    I’d love to use a cash system, but I coupon pretty diligently and do very well at Target where I do most of my shopping and that 5% discount I get for using the Target Debit card has only increased my savings. Do any “cash only” users here have exceptions to the rule in cases like that?

    I can see us totally doing this one spending category at a time: for example, eating at a restaurant (which we don’t do often) or for gift buying for birthdays/Christmas/weddings and establishing a bottom-dollar budget per gift for each person. It’s so hard with so many great deals online though too! Amazon may send a package once a week here, but it’s almost always something I would normally buy elsewhere for more (a need item) and I get that 7.5% discount when there is no tax added. Aghh…I so want to do this, but see so many exceptions. How do you get around them?

    • Diane says:

      I take cash out of that envelope if we buy something online (so I take out of my clothing envelope if I buy clothes for myself online) and put it in our Bank envelope. That money is deducted from the amount we would take out the next month, or we make a deposit to the bank for online purchases. I think the same principle applies to using a Target debit card, you will generally spend more using a debit card than you will if you physically hand the cashier cash from your envelope.

      • says:

        I do the same thing. Pretty much most of my shopping is done online (all gifts and some groceries through Amazon), and I just take out that amount of cash and put it in a bank envelope. Next time I’m driving by the bank, I just swing in and deposit.

        The only exception we make with our budget is for gas. We use a Chase Freedom card that gives us cash back and we only use it for gas. We budget a certain amount each month (generally more than we need) and anything left over just goes to savings. The credit card payment is just part of our scheduled payments, along with utilities, mortgage, etc. The main reason we do this is because we don’t want to get stuck somewhere with no cash in need of gas and also because I was getting tired of lugging my kids in the gas station to pay cash for gas. 🙂

        • Kristen says:

          I agree totally with Melody. I use mainly cash, but have credit cards to use online and with gas. I put the cash back in the bank. Have done this for 3 years and it has worked great!

          • BethB says:

            I can’t imagine giving up the credit card for gas. The way I look at it is I’m not going to overspend at the pump, you know? It’s not like I’ll be driving around and make an impulse purchase of gas we don’t need! Ha ha.

      • Katie L says:

        We do exactly this for online purchases. We have an envelope called “savings” where we deposit money from the appropriate envelope when we make an online purchase. Before I go to the grocery store each week, I check the “savings” envelope and use that cash before I go the ATM.

        We also use our debit card to buy gas, and then keep track of our gas purchases after the fact to see if we need to make any budgeting changes as gas prices/our driving fluctuates.

    • StacyH says:

      I’m right there with ya Jen. I’m going to start off one category at a time. I’m a couponer too and I know I’ve bought stuff simply because it was too good of a deal to pass up. I’m forcing myself to create budgets and if I run out of money that means no more deals (no matter how good the deals are). YIKES. I figure when I miss some killer deals because I’m out of cash it will force me to be a little more selective on what I spend my cash on. As Diane suggested, for anything bought online, you have take it out of the cash envelope and put it back in your bank envelope or deposit it. Otherwise, it’s kind of cheating, right?!

      One baby step at a time.

      • Marie says:

        We use an all cash system except for gas too.
        I also coupon alot and love to find killer deals. However, I know what my envelopes have in them and how much we can spend at any given time. What helps me is that if I know I am low on grocery money or household money towards the end of the month I don’t even look at the adds/blogs for deals. This way I don’t have to worry or stress or feel I’m missing out on something. There’s always next month or the next month.
        And one exception to the cash system I have is Kohls. I have their CC. However, I bring my envelope with me and any purchase with their CC gets immediately payed with the envelope cash. So I still get the benefit of saving more with extra discounts but stay within our budget. It takes discipline but for me saving my family money is more important then over spending.

        • BethB says:

          That’s what I want to do for Kohl’s. They’re deals really are worth it – IF you’re careful. Which I’m not always.

        • says:

          That’s definitely a great idea to not even look at the deals if you don’t have the money for them! It’s too easy to feel like I “need” to buy that because it’s such a great deal and I would love to have it!

    • Chantelle says:

      I take out $200 per week to cover groceries/eating out/anything else needed. (Not bills or gas.) I also have the Target Debit and love saving that 5%. WHen I use the Target Debit card, I simply put that cash in a separate place in my wallet and withdraw less the next week for expenses and put that cash with what I withdraw so I have my $200. I don’t want to constantly be running back to the bank and depositing money so this is how I handle it!

  • Cindy Kluger says:

    I like using a credit card for the cash back bonuses & I think it’s better to have cash in the bank earning interest. I decided to use a program called YNAB (Why You Need A Budget). There is a one-time fee for it ($50? can’t remember) & that gives you a ton of free tutorials, webnars & podcasts. It is, essentially, using the envelope system to budget so everything is allotted & accounted for but you’re money is in the bank earning interest & not in 15 envelopes at home. It has a mobile app you can sync to so if you’re out & love that sweater you can check your phone to see if you’ve spent your clothing budget for the month or there’s money available.

    • julie says:

      Generally, checking accounts dont earn interest and my savings account earns .18%. I dont think I’m losing out on much especially since the money I add to my envelopes for the week would not have stayed in the bank long anyways 🙂 The only money that stays in the bank is our emergency fund and general savings.

      • Jen says:

        Both my checking and savings account earn interest.

      • says:

        Our checking account way more interest than our savings account. It a money earning checking account that our bank offered and we get over 4% interest! It was so much higher that we transferred our savings account to our checking account and were earning approx. $100/month in interest! It’s awesome!

        It has dropped down a percent (it changes), but it was worth it us to find a bank that offered this. 🙂

        BUT I’m all for the cash system. The most I take out to fund the accounts is $1000. I also have heard of people taking out their budget weeking or bi-weekly so they don’t have so much cash in their purse.

  • Hannah says:

    I would love to use cash but my husband is just not into the idea. I did switch to cash for groceries though as that was the only category I was really struggling to stick with.

    • says:

      Yeah – I was using the cash system for groceries and dining out only. And it really did work. I found myself more diligent while grocery shopping. For example, I was actually weighing produce and I never bothered before.

      Why didn’t I stick with it?

      When I was on the cash system, I worked for a company so small that direct deposit wasn’t available. I HAD to go to the bank to deposit my check. When I deposited my paycheck, I simply got cash back.

      Now that all of our money is direct deposited (welcome to the 21st century – LOL), I find it harder to make a trip to the bank to take out money.

      I may try it again though – for dining out and groceries (I include entertainment under dining out since dining out is the only entertainment we get other than Netflix – yes, it’s sad).

      Once I get used to it, I plan to add gifts and clothing (we don’t buy these things regularly and I find myself struggling to come up with a realistic budget).

      But I think I will always stick to credit cards for gas and all other bills because those expenses are as low as they will get for us, and we can still get some cash back that way.

      • Cathy says:

        I would like to do this system but like you my husband’s check is direct deposited which makes it harder to do this system I think. I have thought about having a set amount that would cover all of our bills deposited into our bill account and then the leftover go to our other account. I could then pull that amount out in cash I guess. Gonna have to give this some serious thought!

      • Hannah says:

        I have also found that I am much more diligent when using cash for groceries. I just go in a get what I need and don’t wander around the store looking for “extras.” I am hoping that after seeing how cash helped us with our grocery budget my husband might be interested in using it for some other categories too (such as clothing and eating out). I don’t think we will ever use it for gas though. We don’t overspend on gas (just get what we need to drive to work and back) and I hate the idea of having to go into the gas station in the rain just to pay with cash.

    • BethB says:

      My husband is the same way. However, since I do most of the shopping for everything I think we can save tons if only I do cash. His spending is pretty predictable with the exception of home repair stuff which we really can’t not buy, you know?

  • a says:

    B,
    I’m not sure what kind of tracking you want to do, but if you go to the cash system that Dave Ramsey (and I think December212012, too) uses, your budget requires you put the cash into separate envelopes/folders/pouches/whatever for each category at the beginning of the month or when you get paid. In essence you’re “tracking” all your money before the month ever begins, because you only spend money on food that comes from the budgeted “food” cash. The beauty of this is that you decide ahead of time how much your going to spend, instead of looking back at the month and being surprised about what you spent. If you need certain categories separated for taxes, etc., then you can make a separate category and put only that cash in that envelope every month.

    • Jill says:

      I like you comment. The problem we have it taking money out and placing it in the appropriate envelopes and actually bringing the envelope with you so take money out of the appropriate envelope. The other thing is my husband does not want to keep a lot of cash at home. How do people handle this? Depending on how many envelopes you have that could mean taking out a lot of cash each month.

      • amber says:

        I only have a few envelopes, one for groceries ($300), one for gas ($100) one for dining out ($40) and our fun money ($20 each). We keep our fun money in our purse/wallet and the rest of the cash in a ‘secret’ place so we don’t worry too much about keeping too much cash on hand. We were continually going over our grocery budget and switching to cash has helped tremendously. Our bank also allows sub-saving accounts so I have 10: cat care, internet, electricity, health care, gifts, travel, phone, saving for a new treadmill, car insurance/registration fees and a large doctor bill we are paying off. At the first of each month I simply transfer the appropriate amount of money from the checking account into each category. It’s like using cash but we don’t have to keep the cash on hand. Most of the categories are paid using online bill pay so I keep track of when each payment is due then simply transfer the money from the category back to the checking account. It works really well and we ALWAYS have the money to pay the bill when it is pulled from our checking account because we put our money where it needed to go long before it was even due! The nice thing is that if we are going shopping to stock up on cat litter/food or to buy a gift I know approximately how much I will spend on that and can easily transfer it from it’s category to the checking account and then pay with the debit card. I also keep a very simple spreadsheet of our budget. We pay our car insurance every 6 months and I like having a category that I can transfer money to each month so that we are not ‘surprised’ with a large bill every 6 months, the money is already there. I also like that I can save up for other big purchases like a treadmill, instead of keeping that cash on hand and saving it up in an envelope at home. However, this system only works if your bank allows you to have multiple sub-savings accounts!

      • BethB says:

        My SIL started doing their budget on a weekly rather than a monthly basis. She said it was better in terms of how they thought about it because if you run out of cash you only have to wait until the end of the week. If you’re worried about keeping large amounts of cash around, which is completely reasonable, why not fill the envelopes every week or two rather than monthly?

  • StacyH says:

    I needed this motivation. We have talked about using cash but can never seem to pull the trigger. I’m going to give it a try, but in baby steps. I just emailed my hubby to recommended we try cash only for 3 months for ALL household type items. This includes everything from toothpaste, cleaning supplies, feminine care, soap, makeup, paper towels, TP, over-the-counter medicine, first aid, etc.). I think I’m going to recommend we do this for eating out too for the initial 3 month trial period since this is the hardest thing for us to overcome. No more cash = no eating out.

    Then if this seems to work out for us we can add groceries to the mix. I think I just created my New Year’s resolution.

    • Kaeli says:

      Your list included everything you can get for cheap or FREE via couponing. Read up on a couponing blog and go to the Dollar Store and spend $3 and buy 3 Sunday papers.. You’ll save a TON and you can use that money for savings or groceries. I couponed for a month or two, stocked up enough on all of that stuff to fill an entire dresser and haven’t needed to really coupon in months.. =)

    • Mo says:

      Stacy-eating out was out biggest achilles heal as well. When we sat down and looked at our expenses we were spending over $500 a month eating out and I have a meal plan and cook at home every night! We were ditching my dinner plans to go out (mainly on week-ends) and my husband wasn’t tracking what he was spending for lunches. We started the Dave ramsey plan in Nov. and now spend $85 a month for all eating out/fun/kid outings and misc. expenses. It’s tough but very eye opening when you switch to cash. My husband was VERY against going to cash but we need to dig ourselves out of some serious debt and so far it’s working. I was also falling into the “good deal” trap when grocery shopping and now when I find some great deals I know the next week’s menu will have to come from the panty 🙂 Good Luck, it really can work! (and don’t let the weird looks ppl give you when you pull out your envelopes discourage you. remember, you won’t have any surprises at the end of the month!)

  • April Reed says:

    Man, I hate the “B” word! That is why I have to go to work every day and you get to stay home with your precious children. Good job discovering what works for your family!

  • says:

    Thanks for the inspiration! I’ve been thinking about trying this for awhile, but I was waiting until after most of the dust had settled from our recent move, and until our paychecks were regular. At this point, I don’t have much reason not to go ahead and try it! 🙂

  • says:

    Wow, thank you for sharing your wisdom and experience. I know there is a psychological reason why it is difficult to part with your hard earned dollars. Swiping a debit card is just simple and carefree. No wonder why they market debit cards for us all!

  • Liz says:

    OK, I’m going to be the dissenting voice here….but, the cash system isn’t for everyone! If those of you who are contemplating it try and it doesn’t work for you, don’t let others make you feel guilty for not sticking with it.

    Several years ago my sister and brother-in-law went through Financial Peace University (I think that’s where they first got the idea for going to the cash-envelope system) and strongly recommended it to my husband and I. We were fairly newly married, and despite the fact that we were both very financial savvy and not prone to impulse buys, we decided to give it a try. And, contrary to what most people experience, I found it HARDER to account for my spending. I’d gotten into the habit of twice weekly going through our credit card info online and entering it all into a budget spreadsheet. With the cash system, I didn’t do that, and found I’d get 3/4 of the way through a month and my grocery envelope would be nearly empty and I’d wonder where I’d spent the money. Maybe it was just me, but I found I was much worse at tracking/recording my spending with the cash-envelope system.

    We found that since impulse spending wasn’t a problem for us, the cash system didn’t benefit us at all – so we went back to using our credit cards and we were still able to be wise with the money we made. For the first 4 years of our marriage I was a high school teacher in a parochial school (take a public teacher’s salary and divide it in half and that’s what I got paid!) and my husband was in grad school full time. When he finished his degree and we moved for his job we were able to pay for over 70% of our house in cash and the remaining mortgage will be paid off in 5 years at our current rate. And, when our son was born just over a year ago we paid cash for a new, safer car for me to drive.

    So, for those of you who use the cash system – great! But, I’m sticking with my credit cards and am going to thoroughly enjoy that free flight that takes me back to see my family every summer!

    • Lydia says:

      We have friend’s who had the exact experience. I agree…cash only isn’t for everyone.

    • Stacey says:

      I totally agree! I’m so glad that the cash only system works for many people, but it is NOT for everyone. My husband and I both have a much harder time staying under budget when we use cash than when we do when we use the credit card. In over 20 years of marriage we have always lived below our means, and now have very healthy bank and retirement accounts, etc. Again, I’m glad it works for some, but please don’t feel you’re doing something wrong if you’ve already got your spending/budget under control and don’t do cash only…..it’s not a one-size-fits-all.

    • Emily says:

      Yes! I totally agree. We’ve never had an issue with impulse spending and every dollar than comes in has a designated place to go out to. We are an a very tight budget and I find it much easier to keep track of where my money goes when I do it electronically. We spend most of our money on bills, which I either pay online or send a check in the mail. I don’t have any extra for eating out or buying clothes. Any extra goes into a savings account and we take from that if we need a pair of shoes or something. If we don’t have the money there, we do without. I find I actually spend more when I have cash. The envelope system is definitely not for everyone.

    • says:

      I agree that the cash thing did not help our family’s finances. I think it really does work better for many people, but not for everyone. Just like anything else, what works for a majority of people, doesn’t necessarily work for everyone. If someone hasn’t tried it before, there’s certainly no harm in trying it. We had always been doing great with our finances using credit cards that we paid off in full each month, but after listening to Dave Ramsey we gave the cash thing a solid try for 4 months. First, I found it to be an additional hassle to set up the envelopes, make sure the spouse that’s stopping by the grocery sure actually has that envelope, tracking transactions was a bit harder, and it was a huge pain at a store where I bought things from several categories. Also, it didn’t save us any money. We had no problems staying on budget using credit cards. It was slightly the opposite for me. For example, I would give myself $30 for my personal eating out (covers things like lunch at work if I don’t take mine, any kind of snacks or vending machine drinks at work, any fast food, Starbucks, etc.). When I used cash there was no record of what I was doing, so no one would know if I spent $30 each month at Starbucks! However, with the credit card thing, my husband and I would see the 7 transactions for $4 at Starbucks, and it actually helped to keep me in check. There’s no denial with such a black-and-white record. I tended to stay under my budgeted $30 when using credit, versus with cash I would spend most of it because I already had it. For anyone who doesn’t prefer the cash method and prefers to use credit cards paid off in full each month, I highly recommend the mvelopes on-line budgeting software. It works on the concept of using credit cards and paying them off in full each month. So it takes money out of your virtual envelope as soon as you make a purchase with your credit card (instead of waiting until the credit card payment is made). And, again, if someone reading this hasn’t tried the cash envelope system, I would still recommend trying it. You might find that it really helps you.

    • BethB says:

      That’s exactly how my husband feels. He thinks he’s much more conscious of money he spends on credit cards rather than cash in his pocket. Honestly, I haven’t seen much in his behavior that contradicts this. In fact, at times I’ve been frustrated with him in terms of how he blows through cash.

    • Roxanne M Jones says:

      We tried the cash system for 11 months. Why so long? Um…maybe we were stubborn.

      It was not helpful for us at all. I still spent the same amount of money, and my husband absolutely spent way more on eating out because he had cash in his pocket.

      We tried to believe the hype that we would spend less and be able to save more but it simply wasn’t true in our case. It was cumbersome keeping track of cash, and more work (trips to ATMs, going inside gash stations to pay).

      A few months ago we switched back to credit cards and couldn’t be happier. We are completely debt free, big givers, and big savers. We are not impulsive spenders, and both hubby & I are in the finance industry. We understand money. And for us all the cash system resulted in was headaches and tons of lost credit card points. We put everything on our cards (including hubby’s work travel) and get over $1,000 in rewards a year.

      While the cash system is quite vocally promoted by those it works for, it doesn’t work for everyone.

  • Andrea says:

    For those of you with direct deposit, do you withdraw a certain amount of cash each pay period for your envelopes?

    • says:

      Yes, I go to the bank at the beginning of every month to withdraw what I need. Some people go every week or twice a month, though. Whatever works for you!

      • Jill says:

        I am curious how people do this. I would think going to the bank every month would mean taking out a large amount of money. I also wonder how many different envelopes/categories most people have. My husband does not want a lot of cash around the house. I have good intentions of going cash only but can’t seam to figure out how to get it going. I love to play the drugstore game. Let’s say I go to Rite Aid and buy a box of ceral do you take money out of the grocery store envelope or do you create a envelope for the drugstores. Then it get’s complicated by do you do sepearte purchases if you are buying somethings from a store that would come out of several envelopes? I feel lost when it comes to switching to cash only but get tired of seeing a large credit card bill and wonder why it became so large. I like the idea of when the money is gone it is gone.

        • says:

          I understand your husband’s reluctance to have cash around, but I agree with the other commenter that credit cards can be stolen too! Do you have a safe you could use? If not, I know a lot of people who go to the bank once a week so they are not withdrawing a larger sum of money at once. Since I have two little kids with me when I go, I find it is easier on me to go to the bank once a month.

          Here are my envelope categories:
          -Food/household (groceries, toiletries, etc)
          -Entertainment/dining out/babysitting
          -Kids (clothes, cups, toys, pacis, diapers, wipes, etc)
          -Fun Money (anything we spend on ourselves, be it eating out at lunch or buying clothes, books, or makeup)
          -Misc (random projects that come up, like caulking, painting, repairs, etc)

          Also, if I go to Walmart and buy groceries and diapers, I pay for everything out of my Food/household envelope and then simply pull the cost of the diapers out of the Kids fund and put it in the Food/household fund.

          I do not use envelopes for saving, giving, gas, utilities, insurances, or gifts. I track those in a spreadsheet and re-evaluate it every quarter to make sure we are within our budget. However, I know people who use the envelope system for gifts and find it really helpful. I am thinking about switching soon in that category too.

          I hope this helps! Switching to cash was SO MUCH EASIER than I anticipated, and I really encourage you to figure out what works for your family and give it a try!

          • K* says:

            The difference is that a stolen credit card can be reimbursed; stolen cash is gone forever.

            I’m reluctant to switch to cash because I travel through a city daily when classes are in session. I know that a lot of Dave Ramsey fans will say that credit card companies are mugging me every month with interest, but I use a Visa debit. When it was stolen from my wallet, it was immediately reimbursed. Losing that much cash would have seriously hurt me.

          • Ellen says:

            We’ve tried the cash thing and switched back to cards. Our discipline seems to be about the same on either. I’m a list maker either way and am also good at stocking up on what’s on sale and compensating with other purchases. i find this easier to do with cards. With either method, we write down every expenditure in an account book the day we make it – with columns for date, item, category, and amount. I tally these up every so often when I’m wondering where we are for a category.

            As for what you said about stolen cash vs. cards – I have had my wallet stolen twice. Both times I was reimbursed the money for what the thieves bought with my card, but I lost the cash I had in the wallet.

    • says:

      My husband is paid once a month via direct deposit. He goes to the bank once he knows his check is there and pulls out the cash needed to fill the various envelopes for the month. For us, it is worth it – we have been living this life style for 3 years now without any regrets.

    • Meredith says:

      Yes! We have direct deposit, but use cash for everything but gas. I don’t want to drag kids inside every time I need to get gas, so we use debit for that. We do a budget twice a month, then I add up all the cash I need, withdraw it from the bank, and separate it into the different envelopes. We love it and it’s been a major factor in getting out of debt. Definitely worth trying!

      • Beverly says:

        Actually, the gas/debit card with kids in tow is saving lots of $$. You don’t have to go inside the station where you and each of your children can find so many wonderous things to spend more $$ on:) Our small town station has a Kwik card that saves you even more with cents off of gas and groceries. I didn’t sign up out of my fear of mis-spending by my husband and children. Thanks for posting this so I feel better about my decision:)

        • Jessica says:

          Lol. Hauling kids in and out of the car, especially in the winter, to go stand behind some guy buying a dozen scratch tickets is just TOO painful. I must pay at the pump! It saves at least 15 minutes and I don’t have to disappoint the kids by never buying candy!

  • Ac says:

    I could have written this post! We went to cash last January. We had a goal of paying off my car and paying off 50% of our student loans in 2011. I also found that using cash had a huge impact on our buying behavior. I was much more aware of whether or not we really needed to buy something. It also helped communication with my husband as we had agreed to the amounts so neither of us could really “complain” – make it work! It worked so well that we paid off my car earlier than we had planned AND we paid off all of our student loans on December 31. Woo-hoo!!!

    If you’re at all open to it, try it for a set period of time (3 months even). I loved getting my airline miles but I honestly don’t miss them compared to the accountability of using cash.

  • Valerie says:

    What a fabulous article! We use credit cards for everything and I love how easy it is to track our expenses that way. However, this would make for a great experiment for us and I’m sure we would end up saving money too. Thanks!

  • RobunLee says:

    We have just started this cash only journey and I still have caught myself using my debit card, so I think I still have a long way to go but we are working on it. Part of our issue has been we live in the middle of nowhere the closest store is 17 miles from us but the stores we like to go shopping at are 65 miles from us so when i see something I have been wanting that is on sale and I dont have that money envelope I seem to put it on the debit card with the intention of putting the cash back in the bank, but I always seem to get too busy to get to the bank. Hopefully with a few more months of practice I will get this down. Plus getting more organized would help too. 🙂

  • Koree says:

    I just worry to switch over b/c I work in a lot of “ghetto” areas of town and God forbid someone try to take my purse with all my cash.

    • Miss Jay says:

      I don’t usually keep all the cash I have withdrawn with me at all times. I rarely have more than $100 on me at a time. And since I have saved that amount 20 times over by switching to cash, if I did get it stolen or lost, I figure I’m still quite a bit ahead.

  • Mary Beth Patnaude says:

    I was in exactly the same boat! I use Quicken to track everything, so I thought I was doing well. I had a budget, but was over every month! When we switched to cash, we were able to start saving $700 per month! We are almost halfway to our 3 month fully funded emergency fund!

  • says:

    Thanks for your story. I really need this. I just got back from superwalmart and spent more than I had planned. It’s so easy to swipe that card, even if it’s a debit card. I think I’ll add this (paying with cash) to my new years goals.

  • says:

    My parents use the cash envelope system and have done so for 33 years but with some bad occurrences a couple of times. A few times, they sent in cash payments or cash as gifts that were lost / never received / stolen / whatever– but not credited to them. They hired a babysitter who stole cash from their envelopes one time. Another time they lost an envelope.

    In this day and age of so much theft, cash just does not seem the safe way to go. My parents also have a tough time paying bills because no one accepts cash (the electric co, the car payment co).

    Also, some of us are mandated by state law that pay is direct deposited. Using all cash, making deposits into the bank, taking it out, etc, can take a lot of time, some banks charge transaction fees for activities such as that.

    • julie says:

      To me, it seems no different than when I lost my wallet with all my credit cards and had to cancel them and argue over $200 of fraudulent charges. My husband has direct deposit and I just tell him the amount of cash we need, he swings by the bank on his way home from work. It’s one transaction….if youre using a bank card you would have way more! It works for our family, but its not the only way that works 🙂

    • Lea Stormhammer says:

      I think this is for the other person who commented on working in a not so good area of town too, as well as this comment. We just don’t carry all our cash with us and send in checks or use auto-payment for the bills.

      We use cash for groceries, gas, parking, entertainment, misc (clothes, shoes, gifts, etc.) and the teenage babysitters we use sometimes. We have envelopes for each cateogry. We keep them in a locked desk in our house and only carry our grocery money when we’re buying groceries, parking when we need to pay for parking, etc. That way, we’re not carrying around hundreds of dollars. Our payments are paid either online or with a check (we haven’t had much luck with online in a couple of places). We go to the bank 2x per month, take out the money we need for our envelopes and it takes us maybe 15 minutes – we use either the bank’s ATM or go through the drive-up. We roll it in with our other errands, which are in the same neighborhood, so we’re not running all over town.

      Usually we carry an extra $5 or so on us, just in case we need something or if we get caught un-awares with parking or coffee with co-workers or something. It does require pre-planning – we grocery shop once per week, and have to pay close attention to things like parking and the gas gauge, but we’ve found it to be worth it. Especially since we’re both prone to impulse purchases and not having money with us means we can’t make them! 🙂

      Hope that’s helpful!
      Lea

      • kelly says:

        Crime is why I will never switch to a cash system. My house was burglarized last year, and I hate to think how much worse it would have been if I had a series of envelopes with cash in them. If you think a locked desk will stop a burglar, I am guessing you have never been burglarized.

        • Lea Stormhammer says:

          You’re right Kelly, I’ve never been burglarized. Though I do know a locked desk will not stop a burglar, I also know that they can do a lot more damage with my credit cards, ss# and bank statements then taking a couple hundred in cash. We don’t keep much on hand, relatively speaking, so our electronics would be worth more than the cash, and our electronics are pretty cheap! 🙂

          We live on a very busy street, with a county sheriff living across the street and a city police officer next door. We also have a 6ft fence, no alley, a large street light in the front yard and a security system on the house. While I know this doesn’t guarantee no burglaries, it does lower our chances.

          I guess, I’m comfortable with keeping a couple hundred in cash in my house. If you’re not, by all means, use something else! No one way works for everyone.

          Thanks for your thoughts!
          Lea

  • Kayla Herrera says:

    Wondering if you all have any suggestions for me. I would love to go to a cash envelope system, but my husband is not on board with this idea for his own reason, mainly the security risk of carrying around cash. It is just too easy to swipe the debit card, and I would love to have a more definite way of budgeting. I have thought about using gift cards instead of cash, but then the stores that I shop at vary so I’m not sure that would be the greatest idea either. Any suggestions?

    • Mo says:

      Kayla-if your Husband isn’t on board I wouldn’t do it until your both ready (I waited a year to bring my husband around) When I finally showed him some studies on how much less you spend using cash, he got it. I actually keep my cash envelopes in a zipper pocket in my coupon binder, nobody even considers the money could be there. (I don’t carry a purse so that wasn’t an option for me) You can try keeping your envelopes at home or in the glove box and just taking out what you plan to spend. Yes that requires budgeting and fore-thought, but that;s kind of the point 🙂 You need to sit down together with your husband every month and do a detailed budget and then you can check in half-way through the month to see where you stand. I take out money every 2 weeks so it’s really not that much, you could even do a week at a time to keep the cash on hand even lower. My husband actually likes being on an allowance for his work lunches so that’s a non-issue. You could also start with just 1 catagory and see if it feels too scary for you. I really have NEVER carried cash, like use my debit card for less than a dollar on a regular basis, before switching to the envelope system and I’ve never felt threatened or worried about having the cash on me. People don’t have any way of knowing I have cash and not a debit/credit card. As long as your not flashing your cash all around I really don’t think people even pay much attention 🙂 Good luck, start small and convince your husband that the 28% less (on average) you spend using cash is worth the small risk.

    • Diane says:

      Well, you could take a certain amount with your when you go to the store. For example, I don’t take all of my envelopes with me, they stay home, I take the food envelope if I’m getting groceries. I also have my name and phone number written on the envelope just in case I would drop it and an honest person would find it. We haven’t lost an envelope yet but there have been times when it got left in a pocket or something and gave me a scare, for sure. If you wanted to just take a certain amount out of your envelope with you physically to the store you could do that, too.

  • sarah says:

    Thanks so much for this post I have had the same notions- many times. I have read MANY articles on using cash and the only thing I took from it was- when you run out of cash, you cant spend more. Or this crazy idea that I would spend more and if I had cash and maybe even lose the cash envelope, while chasing 3 kids around a store. Then it really wouldnt be a good idea to carry cash. Or my final thought- that I wouldnt have enough cash on hand to buy what I might need in that moment. This fear has really kept me from using cash, but I am all for NOT letting fear rule my decisions!

    After reading this Im going to give it a shot though. I also absolutely LOVE the line, “Now, we are easily $100 under budget, which, I am both pleased and embarrassed to admit.”I totally feel this way- pleased with myself, but embarressed. The authors honesty is so refreshing and relatable 🙂

    Thank You for sharing.

  • says:

    $500 is awesome! Congratulations! We’ve switched to cash for some things, but this year my husband really wants to go further with cash only. We’ve found that it really does help us spend less.

  • says:

    How wonderful! Thanks for sharing your tips! 🙂

  • says:

    I have talked to my husband several times about switching to cash, but have never been able to get him on board with it. Does anyone have any suggestions of how to make it work even though he still uses a card? He’s the more frugal one between us, so I’m definitely the one who needs the cash system more than he does!

  • says:

    We use cash for nearly everything — not gas savings, or utilities. With the grocery money I have two envelopes. One stays at home with all the money for the month. The other says “Food to Go” and that’s my grocery money for the week. It helps me budget the money throughout the month since we just do cash envelopes once a month. We both have a debit card for our “blow money” since we like to shop online. If I need to buy something online that should be paid for with cash, I just take the cash from the correct envelope, put in in my wallet (blow money) and pay for the item with my “blow money” debit card.

  • says:

    I could sure use an extra $500 a month. I used to use the envelope system years ago – but then came debit cards, credit cards etc. I’ve been clean and sober (off credit cards) for 5 years now, but I am addicted to my debit card. I’m thinking would I have to get rid of my checking account too?

  • says:

    Does anyone have suggestions on how to get the hubby to go “cash only”? He is stuck on the premise that he has to have his debit card. (we don’t have credit cards at all).

    • Miss Jay says:

      Is there a budget catagory in which you are primarily responsible for doing the spending? For example clothes or food? Would he agree to you switching to cash for just that 1 or 2 catagories? Perhaps when he sees how well it works he may be more willing to participate in other catagories.

    • says:

      My husband was super reluctant, too. The only cash he is “in charge of”, though, is his fun money, so he just sticks that in his wallet at the beginning of every month. He hasn’t been affected by the changeover much except in the fact that our account balances are growing! (He has expressed an interest in getting a re-loadable debit card instead of the cash though, since he feels like someone is always saying something like, “I don’t have any cash on me. Can you spot me $XX?” 🙂 )

  • Painter's Wife says:

    I’d love to try a cash system, but we don’t have a clear budget amount for many categories other than “as little as possible,” and we’re both self-employed in an industry badly affected by the recession the last couple years. Paydays are random, and our income has huge fluctuations from month to month, season to season. I have been strategically couponing for the last 8 months and find my spending is slightly less than it used to be, though I’ve greatly increased our supply of non-perishables so those months when little money is coming in, we don’t have to spend it on food and hygiene items, etc. We used cash for Christmas shopping, other than using rewards points on-line — gas is tax-deductible so we use a credit card for that, and only cards that earn rewards.
    Any suggestions on how to go cash-only when you don’t know when you’ll get money?

    • Erika says:

      You make an excellent point! We are in the exact same situation with irregular and seasonal income. Thanks for sharing your experience.

      • Meranda says:

        We’re in the same situation here. The past 2 months have been harder, especially with the no snow in New England and that’s my hubby’s other seasonal job. Last month was scary trying to pay bills, much less have cash on hand! I’m just trying to find a budget plan that would work for us!

  • sheri says:

    I have used cash for 6 years. With my target card I have made sure that I hae an extra enevolope with target card and use the money out of the envolope that I should have taken it out of. I mail it out the next day. I do not do credit cards I do pre paid. I put money on them every week and at the end of the month I have the electric and gas money. I love the cash system.

  • Lisa says:

    After going through Dave Ramsey’s Financial Peace class last year, my husband was finally on board with trying out the cash envelope system. We weren’t in debt by using credit & debit card, but our problem was that we weren’t saving much at the end of each month. We decided to try the cash system for 3 months and that was almost 10 months ago! We’re hooked on using cash and have saved so much each month as a result! It was a bit of a hassle at first to pull out the cash on pay day etc, but the benefits outweigh the inconveniences! I love seeing how much we’re saving and it’s been good to have limits on our spending. (when the cash is gone, we’re done buying things!)

  • Kristy DeGraaf says:

    OK, so no one has mentioned the problem I have: I would probably LOOSE IT! Ha ha! It’s kind of funny, but true. I run a daycare and I HATE it when people pay me in cash because it’s so much harder for me to keep track of…especially now that I can mobile deposit when people give me checks. Don’t get me wrong….I do think it’s probably a good idea for a lot of people. And might be a good idea for me if I could get my life a little more organized and in order. But for now there’s no way I would switch….

  • Marie says:

    One thing that I have found that helps with keeping the envelopes straight is by seperating my purchases. For example yesterday at the store I needed Oxiclean and then had some groceries. I put the Oxiclean up and then the divider and explained I wanted to just pay for the Oxiclean first. I pulled out the household money. Then the cashier rang up the groceries and I payed for those. I will do the same at Target or Walmart. I try to not do it at busy times or if there’s a line.
    If I can ‘t seperate it out at the time of purchase I try to make change at the bank so I have smaller amounts like one’s in the envelopes to easily make change.
    Right now my goal is to see how far into 2012 I can go without really needing to buy anything except milk, eggs, bread and fresh fruit/veggies. I will be eating out of my pantry/freezer and using only the toiletry/household items I have stockpiled. I’m also making a list of what I have for the children’s clothes that I’ve bought ahead so I know what we NEED. I want to see how little I can spend in the next few months.

    • Suzy says:

      We are doing the exact same thing! Day 8 we haven’t purchased anything. Meals will be very creative! Clothing has been sorted out to know what we need.

      Can’t wait to see what we are able to live on. So ready to live on less!

      • Marie says:

        That’s great!! I wish you well. I am even more encouraged after my pastor’s message this morning on contentment. There are so many things we take for granted that we have or that we get to do, like shopping. I want to be content and I want to steward well what God has given me.
        I’m glad I’m not alone. I’m excited for this new venture for 2012!!

  • Gina says:

    Unlike other people, I am always spending money when I have cash on me rather than credit cards. For me, I spend impulsively when there is cash around. I live in the city and I am constantly walking everywhere. There are tons of little stores around. Since there are stores on every block for two miles (on two different avenues, no less) it is incredibly easy for me to just waltz into a store and throw a few dollars here or there at anything. If I don’t have cash on me, I will not do this, especially because many of the little stores around here do not take credit cards or make you have a minimum purchase amount in order to swipe.

    Instead, we have taken to downloading the pear budget excel sheet, as recommended by many readers, and just make the budget at the beginning of the month. I am filling in the amount we are spending every day so that we do not go over our budget. Since we have a high yield interest savings account, I like to keep the money in there.

    • ahmum says:

      My DH is just like you. If he has cash, he blows it…on things like coffee, etc. If he has to take the time to get out the debit card, he thinks twice. I think everyone is different and everyone just needs to find the plan that works best for them! 🙂

  • BethB says:

    Thanks for a great post! This is very timely to me as we are looking at an income drop due to career and life re-prioritizing.

    (Tangent: I attribute the clarity I have the past few months to the fact our house is finally in a very organized and decluttered staight and my cleaning routines are rock solid. With that major thing under control I have mental energy to focus elsewhere.)

    It’s not a huge income drop. Just grocery money. But that’s enough we’ll have to be much more strict. My husband is really opposed to the cash only system (a few reasons, some stubborness so I’m letting it go) but I’ve realized I need it to control my spending. I’m not spending beyond our means but many of the behaviors the original post listed sound so much like me. Even if my husband doesn’t do the cash thing we will still save a lot if I do. I’m rather excited about it, actually. The income drop won’t affect us until July or August but I’m anxious to get started with the cash thing NOW. 🙂

  • Julie says:

    I have trouble with this concept because we earn so much free money by using our credit cards wisely! I was able to pay for almost our entire Christmas with points earned by using our credit card. Doesn’t it make more sense to track your spending and stay on budget, but still use a credit card that earns you free money?

    • Sarah says:

      I’m with you on this one. I think the cash system is only beneficial for those who don’t do well with budgeting on paper/online. For instance, the OP saved $500 not because she used a cash system, but because she used a system that kept her, personally, from overspending. For those who stick to a budget while using a credit card, there would be no savings, and you’d lose out on valuable rewards. I guess the real lesson is that you need to stick to a budget, and if you can’t do that with a credit card, you need a new system.

      I love having a written budget, and being able to cash in on credit card rewards when we need them most – we have a new baby on the way, and I just cashed in a couple months worth of points for a huge case of free Huggies.

  • Emily says:

    We tried that cash envelope systems and we failed miserably. It really didn’t work for us at all. We both work full time and have two kids and lead a very, very busy life. I found that I could never remember to take the cash with me at the beginning of the day so that I could grocery shop on my lunch hour or gas prices would go up 30 cents overnight and I would need to pull an extra $30 from one envelope to cover an extra tank of gas (I drive 70 miles a day and my husband drives 50) and then I would be short somewhere else. It put way too much stress and confusion on me and was something I didn’t have time to manage properly. I love being able to pull up my bank account online every day and see where the money went and how much is left. We have a very tight budget and I know where every cent goes. We don’t spend frivolously and don’t have money for any “extras”, so that’s not a problem for us. The cash system isn’t for everyone because not everyone has the same circumstances in their lives. But I’m glad that it can help some people save money, which is the ultimate goal. I think, however, that you need to find what works best for you and saves you the most money, no matter what system you choose.

  • says:

    As a real life friend of Kathryn, I can tell you she is really inspiring me to get on the cash system. You couldn’t have chosen a better person for your testimonial 🙂

  • Susan says:

    I’m a dissenter too. I’m glad it works for some people, and I agree with other commenters that everyone should do what works best for them. But it does not work for me, for the same reasons others have mentioned.

    I’ve tried the cash system, and I found it way too time-consuming to keep track of receipts, transfer physical money from one envelope to another, etc. At the end of a month, I had no idea where the cash all went.

    Nowadays I carry very little cash and use my debit or credit cards for everything. I’m much more diligent at controlling my spending when I use a card than when I was using cash. I check my accounts every single day, and it’s very easy to see exactly where the money went. I use an electronic application to budget and track my spending that works very well for me.

    Also, I worry about loss or theft when keeping that much cash on hand. If it’s lost or stolen, it is gone for good. If a card is lost or stolen, you won’t necessarily lose your money; you do have some recourse.

    • Susan says:

      Oh, and I agree with Julie about credit card benefits. If you pay off your cards faithfully, the benefits are well worth it.

  • Sakura says:

    I started a budget last year, and I’ve tried the cash system. For me it didn’t work well. I use a combination of a “virtual” envelope system and one credit card. I keep a spreadsheet with the monthly income and expenses ino my budget categories, then I move the money online from my main account to a secondary that I’ve set up. I only spend what I’ve moved on my credit cards. When the 7th rolls around I use my cash to pay it off in full. I use the receipts and keep them in an accordion coupon size file under each of my budget amounts. At the end of each month I close out the spreadsheet, print it, staple my receipts to the back and file it. Then the month starts all over again. This has kept us on track. We will be out of consumer debt by November or earlier. Just like anything else in life you have to ind the right way that works for you and your family.

  • Stephanie says:

    We earn 2.75% on our checking account at our local credit union, so keeping cash out of this account does not make sense for us. We also have a rewards VISA, which we use for groceries/gas/online purchases. I track our expenses vs budget in an excel spreadsheet I created, and we are extremely careful not to go over, and we tweak categories as necessary. We also have ‘Misc’ category in case we do, but mainly to catch those unexpected expenses.

  • Jen says:

    My biggest savings has come from not stocking up or doing deals. I am learning that just because restaurant.com has $2 certificates, I don’t need to get one. We are eating at home except for on very special occasions because I found that even with a deal, we’d spend $40. I don’t go to Kohl’s every time I get a 20% off coupon in the mail, unless we are truly out of something we need, like underwear. I don’t really stock up on kids’ clothes anymore, because I found that a lot of the clearance things I bought never got worn or didn’t fit. I save money but only shopping when we really need something, not because it’s cheap. I think before every single purchase if I can borrow or repurpose something we have already, or if we can get by without it. By doing this, I can use my credit card and not go overboard. We get free flights on our credit card through Southwest and that is how we are financing our biannual trip to see my parents. Credit card rewards can actually be a good thing if you are super disciplined.

    • says:

      I totally agree! I was cleaning out my stockpile last weekend and found FOUR bottles of Metamucil (don’t ask) that I bought at Wags because I got RR for them.

    • Susan says:

      Jen, yes! I wish there was a “like” button for your comment.

      For me, the best way to “save” money is to stay out of the stores. I do maintain a small stockpile of household, personal care, and no-perishable food items that I pick up when they are very cheap, but other than that I shop once a week for what we need, and don’t run to the store throughout the week.

      Sure, I can save money buy buying product when it is really cheap with coupons, but I can save even more by not buying it at all.

    • says:

      Jen,
      I always say that the only money we really save is the money we don’t spend. I too don’t have much of a stockpile and nor do I do most of the deals. Instead I buy what we need as we need it. I am not drawn to buying things just because they are on sale or because I have a coupon.

  • Lori says:

    I am beyond thankful that you posted this read TODAY!!! My husband and I decided and agreed last night that we are paying off all of our credit cards TODAY and will be going to only CASH and debit card. It has taken me a VERY long time to want to give up the credit cards, but I am excited to see what will happen! I already feel a sense of “peace” inside!!! I just have to be strong……and I will because we never want this to happen to us again! Thank you for all the positive encouragement!

  • Lori says:

    Oh and did I mention I am terrified??? AHHHHH….LOL!!! 🙂

  • Laurie says:

    I too have tried the cash system and it did not work for me. I to am a Dave Ramsey fan and have taken his FPU. I choose to have very little in my checking acct. I know what we spend on groceries,gas. We do not have a entertainment budget or clothes budget b/c we do not buy

  • says:

    We had a similar experience switching to cash. I used to track all our expenses but would habitually go over budget and always say, “we’ll do better next month” instead of actually adjusting the budget. Going cash forced me to construct an ACCURATE budget and now we are able to control our spending, rather than just monitoring it.

  • Maureen says:

    It’s great to read everyone’s experiences here. Whether you agree or not with using the cash system, I think the main point is to purchase purposefully and deliberately. To realize where your money is going and decide if that’s truly what you want to do with it. Some people can do it easier with cash, some with debit cards, and some (who aren’t tempted by their limits) credit cards.

    For me, using cash helps me decide where my money is going to go (foresight) instead of getting a statement a few weeks later and see where it went (hindsight). I like I paying with money I have already earned, instead of getting a statement and knowing that I have to work X amount of hours more to pay it off. I know that it took me an entire day working with preschoolers to earn that twenty dollar bill, which helps me evaluate which purchase is truly worth letting it go.

  • Kristine says:

    I think that the key is when you have cash, you only spend what you have. Alot of people say that they “blow” their money away with cash, but this can be due to the fact that there is always a credit card to save the day. It is important to remember that when you have a certain amount of cash, that is IT, you are not allowed to spend any more money, and must disciple yourself.

  • NJ says:

    Saving $500 a month sounds awesome but I don’t think I have to switch to cash to do that. Personally I think that it boils down to being disciplined enough not to go over your budget. If I were to deal in cash only I know that I have extra cash in the Bank so if I use cash and I really wanted something that would put me over budget I could go get the cash and still buy it. Also if I carry cash and I lose it or my wallet it is gone for good! I see many more benefits to using cards than cash. Some benefits to cards are the tracking of expenses, perks such as cash back, pocket change roll-over into high interest bearing savings accounts, and if my card is lost the cash is still in the bank which is insured. Cash is like a black-hole. I deal a little in cash and it almost never reconciles when it comes down to tracking it. Again, it really comes down to if you can discipline yourself to stay within your budget which will give you the same results as the proposed cash system. I don’t need to use cash to save money I just need to use discipline.

    • says:

      NJ,
      You hit the nail on the head. It is all about discipline. Not whether a person uses cash or not. I think it is time to stop pushing the cash issue and let everyone do what works for them. Whether that be cash or cc. We as a society tend to get stuck on something and think everyone has to do the same thing. Didn’t God make us all to be diffent? Then lets talk more about discipline not the method we use.
      Elizabeth

      • Lynn says:

        AMEN!!!!!

      • says:

        I totally agree with you! For me, debit and credit cards were not enough accountability. I NEED the discipline that cash brings to ME. I think we all need to do whatever works for us individually; I just wanted to encourage those who needed to do something different to give cash a try. 😉

        For the record, I also love my CCs. I just got $300 worth of gift cards from the points I had earned. BUT, for monthly spending, I need the accountability of cash.

  • says:

    I too am not a fan of the cash system. We use our cc and we aren’t in debt. We pay them in full each month and we watch our spending very closely. It is a hassle to track our spending with cash. It really bugs me that people try to make the ones who uses cc feel guilty. If you want to use cash I support that. All I ask is that you respect others right to use cc.
    Elizabeth

  • Wendy says:

    Kathryn, believe it or not, your post couldn’t have come at a better time. I am a full time student (not working) and will be starting clinicals next week. Since our household only has one income right now, “extras” aren’t in the budget, but somehow we still manage to buy them. Just today, I overspent at the grocery store…a big no-no this week since my husband took some time off at Christmas, so we won’t be getting a paycheck. I had to do the unthinkable (and very embarrassing) and take back “extras” I had bought at the grocery store! I simply explained to them I did not have it in my budget and had overspent. They were quite nice about it, didn’t give me a hard time, and took back about $50 worth of groceries. I couldn’t really be any more embarrassed today so this is why I don’t mind admitting my mistake on here.

    Again, since I will be starting clinicals soon, we will have to start paying for a babysitter through the week whereas previously my children (ages 3 and 2) were staying at home with me (my classes are online…but clinicals are not). This also means we will be having to pay for more gas than usual because I will be driving to and from clinicals.
    My husband actually mentioned today that maybe we should switch to cash. I’ll have a set amount to use at the grocery store and whatever is over that amount will have to go back. We may not be able to have all those little “extras” right now, but I won’t be in clinicals forever, and once I graduate, our sacrifice will definitely pay off. Then, maybe I’ll get a “raise” on my grocery budget!

    Thank you Kathryn, for reaffirming that this is indeed a great idea and that I’m not the only person in the world with a budget 😉

  • Wendy says:

    Sorry bout that, I actually typed my email address in wrong and wasn’t quite sure how to fix it but I just posted something. Mine is the one about starting clinicals, being on one income right now, having 2 young children, and having to take part of my groceries back today (how embarrassing).

    Cash is definitely the way to go!

  • Lynn says:

    Some of us are already very disciplined in our spending and switching to cash would NOT save us $500 a month because we’re already disciplined to not spend on things we don’t really need. If we’re already disciplined financially, than the cc rewards are just frosting, not a temptation to spend more. I am not lured into spending more at restaurants just because they take my credit card or my credit card will give me bonus points for using it at a restaurant. Dh and I are too disciplined for that as we know we will save much more by eating at home. Eating out is budgeted for and saved as a special treat…and when we do eat out and use the cc we have the money set aside to pay it off in full. For folks who have a hard time with self-control when it comes to shopping and eating out, the cash only method may be the discipline method that may help them….but not everyone needs that method.

    • says:

      I so agree Lynn. When I read this post. My first thought was there isn’t a problem with the cc it is a lack of discipline. So if cash help with the lack of discipline then by all means this the way to go. But let’s call it what it is. Not make the cc out to be the bad guy. I use my cc and pay in full every month. I keep tabs on my spending and set aside the money to pay in full each month. When I shop I know just because I am using my cc that doesn’t mean I can buy anything I want. I make a list and stick to it. I don’t even take my coupons in. I take only the ones for the items on my list.

      • says:

        You’re right; I WAS lacking discipline. I do not think CCs are “the bad guy” at all, and I hope I never implied that. It is not my intent to make anyone else feel guilty– I was simply sharing a success story and hoping to encourage others.

        • says:

          Kathryn,
          I am sorry if it sound like I was being mean that isn’t what I intended.. When I read this: stop using your cards and start using cash! I know you’ll save more than you even hope to!It made me very concern that the wrong message was being sent because it wasn’t getting to the root cause. A person can switch to cash and still have the same problems, It is only when they address the real issue do they save money. I know because I was there at one time. I brought into the hype about getting rid of cc and using cash but I never addressed what my real issues were. I still had the same problems with cash. When I got my heart right and addressed my real issues then and only then did I start saving money. Now by the grace and mercy of God can I save money and it doesn’t matter what I use. Whether it be cash or CC. This was my whole point. Again I am sorry if I came across mean. I would like to see someone write a post about this.
          Blessings,
          Elizabeth

    • Rnae says:

      If you are so disciplined, why the need for a credit card?

  • Liz says:

    Way to go! This is very inspiring and practical.

  • Jen Knox says:

    I have to say that what has worked best for me, and maybe it’s impractical for some, is to go to the store less often. It sounds simplistic, but when I go to the store for five things, I walk out with ten, so I’ve reduced the number of trips I make to two per week maximum so that I’m somewhat forced to be more creative with what we already have.

  • Kris B says:

    This is me.

    I’ve tried the cash system before and found it “uncomfortable” because I couldn’t buy what I “needed” so I quickly went back to using the card.

    How ridiculous that statement sounds to me now. I’m putting away the cards for good this time and will just have to re-purpose what I have rather than running to Walmart every time I “need” something.

  • Selena says:

    Thank you for sharing this! I have a very similar background in how we handle money in our home and your post gave me the kick in the rear I needed to go old-school and use cash! I’m excited to see how much we can save. We will probably be needing a new vehicle in the next year or two so that is what we are going to save for! Thanks again!

December212012® Comment Policy

We love comments from readers, so chime in with your thoughts below! We do our best to keep this blog upbeat and encouraging, so please keep your comments cordial and kind. Read more information on our comment policy.

Do not be silent