I am currently reading Dave Ramsey’s wildly popular book, The Total Money Makeover: A Proven Plan for Financial Fitness. This book is often mentioned by writers I respect, so I thought I would give it a whirl. (Plus he’s coming to speak in Portland, and I thought I should familiarize myself with his teachings.)
My copy is from the library and literally took months to come in. Unfortunately, it was due yesterday and I’m currently paying twenty-five cents per day to read it. (Hardly a smart financial plan on my part, although I should finish reading it tomorrow while the kids are in school.)
The main premise of the book is stop living a debt-ridden life and start only buying the things you can afford. Make it a priority to pay down all debts and start an emergency fund of cash savings.
Solid logic that I can stand behind.
One of Ramsey’s money management techniques is to only spend cash money for all life’s essentials.
Budget $100 for per week for groceries? Put that amount in an envelope and stop buying food when it’s gone.
But here’s the thing, I actually spend more money when I have cash in my wallet.
My baby wants a new pencil sharpener at the art supply store? I do have a couple dollars on me. Why not? He’s a great kid and deserves nice things!
The situation reverses itself when I’m cash poor.
I know you want that cool pencil sharpener, but I’d hate to put a $4 purchase on the debit card. How about you clean your room and find the four million pencil sharpeners you already own?
I’m really good about not impulse shopping. I’ve even gotten myself to abstain from previously frequent thrift store explorations, and when I do I’m vigilant about only buying the things we need. Not the things I want.
I’m not saying that I couldn’t train myself to be more self disciplined with cash, I just don’t feel the need to. Yes, I do have debt at the moment, (which is related to our money-pit of a fixer-upper, not fancy clothes, meals and vacations.) but we’ll pay it off in a year or so.
I was talking to my step-mother Lindy last night about cash vs. debit, and her response was this:
“But if I only have a set amount to spend on food, then I wouldn’t be able to stock up on the foods we buy when they go on sale.”
I thought this was a interesting argument. My grocery bill fluctuates greatly from week-to-week, as I can go quite awhile without buying anything. This is balanced when spend a large amount all at once to take advantage of deals.
Another argument in the cash vs. debit debate came from my son’s first grade teacher a few years back. She had been a victim of identity theft, and had moved her finances to a pretty much cash only system. I don’t remember the details, but she felt in control with money, but had lost that trust using her debit card.
I do have credit cards, and use one for buying gas. Otherwise, I leave them alone. We are currently carrying a credit card balance that’s related to the loveliness of home ownership, but are getting it paid down rapidly.
I will continue to read this book, (even at twenty-five cents per day) as I feel there’s much to be gleaned from Ramsey’s intense focus on living a debt-free life.
Do you feel your finances would be in better control if you only spent cash? Have you found tools and inspiration from Ramsey’s writings and radio program? Please share your insights in the comments section below.
“Use it up, wear it out, make it do or do without.”