Dollar bills are my enemy

Have you heard Dave Ramsey ever say people tend to spend more when they use a credit card as opposed to cash? Well I think Dave is a cotton headed ninny muggins (whatever that means). Declaring that people suddenly become irresponsible when using plastic as a medium for payment is no more ridiculous than Al Gore claiming he invented the internet. Sure some people probably spend more with plastic, but I ain’t one of those ‘people’.

I’m a total cash nazi. I just don’t like the stuff. I consider myself a pretty disciplined dude, but when it comes to dollar bills, I am anything but. It’s as if they are sitting in my wallet, taunting me, whispering from my right butt-cheek “spend me.” When I get my hands on some $1’s and $5’s, I almost always spend it on unnecessarily stupid things like Pregnant Barbies…

When I put expenses on my credit card, I’m forced to watch my spending accumulate over the 30 day billing cycle. As the balance grows, I become more and more frugal. Paying between $1,000 to $1,500 each due date, totally motivates me to minimize my spending. Seeing the damage in it’s entirety, as opposed to incrementally, influences wise spending choices. When I spend cash, it’s as if it never existed. There’s no pain involved.

If you’ve sworn off credit cards for life, more power to ya. We each have to do what works best for us according to our strengths and weaknesses. For this Ninja, cash is my kryptonite.

Is it yours? Do you prefer using cash or a card? How much cash is in your wallet right now? (I have $7…time to go buy another Barbie!!!!)

36 thoughts on “Dollar bills are my enemy”

  1. Dollar bills are my best friend, as I’m a Georger. When I go to the bank, I take out $100 at a time, and get it in ones and twos.

    I go by the cash rule, because when I use my debit card for everything, not only is it hard as hell to balance my checking account at the end of the month, I also don’t see any money leaving. Even with my daily balance alert email, the amount of money I’m spending doesn’t really sink in.

  2. Credit cards for us. We put everything that we can on it and pay it off when it’s due. We do carry some cash with us for places that don’t accept credit cards though – about $200/month. I think because we check our credit card balances online a few times a week, we’re still about to keep tabs on how much we’re actually spending.

  3. I’m with ya, Ninja – I always make sure to have a $20 in my wallet in case I go somewhere that doesn’t take cards, but if I have $1’s, the over-priced, over-caloried vending machine eats them very quickly.

  4. I’m all about the debit card, sometimes the credit card (to get rewards on large purchases or business expenses). I like seeing the transactions pop up quickly online. I don’t prefer cash because I can’t really categorize what I’m spending it on in Mint very well, then I end up with a jar of change, etc. I like tracking transactions to the cent – I’m a little OCD about it, actually. It seems there are very few occasions anymore where I actually need cash – tipping, drive-thru coffee stand, laundromat, ice cream joint, Chippendales show (haha just kidding)…

    So yep, like you, every time I see the financial advice gurus slam plastic I get angry, too.

  5. So long as you pay your balances in full each month, cards are fine. Otherwise I don’t think it matters whether you use cash or cards so long as you monitor your outlay. I prefer not carrying a lot of cash as cards are safer in case of loss.

  6. I used to be a solely credit person, but I’m starting to see the value in cash too.

    The only problem is that I don’t spend cash _that_ much slower, I just have very little record of where it goes. That’s comforting for the little spender inside me. 😀

  7. “Cash is King” for sure – it helps me stay in my budget. I take out $100 at the start of each week and just try to carry it through for food, gas, shopping, etc.

    I’ll use credit for big purchases though – gotta get those miles!

  8. All debit for me, while I’m paying off the last little bit on my credit card. Then, debit for small things and credit for any major purchases (points, baby!)

    Except for the times when I know I’ll be taking public transportation (which isn’t the case where I live…we don’t have it) or when I am in a foreign country, I don’t carry more than $10.

  9. I am all about the plastic. Cash just go threw my hands like a sieve. I almost always use my debit card but it helps me a ton. Plus, it is much easier to follow my spending using and plastic than with cash money.

  10. I spent the most of the last year and a half going cash only, and change a few months ago. Abandoning the credit cards can be a great way to break bad habits with them.

    Now, I try to keep $100 on me. 4 20s, 1 10, 1 5, 5 1s. That way, I can pay any bill under $100, to the nearest dollar, and not have to wait for a waitress to split a check on 50 cards.

  11. I’m all about the plastic. Especially plastic that offers me crazy rewards. Every other week, when we both get paid, I log on and pay off the balance.
    I always keep $20 in my wallet for little things, like Subway or the pop machine, but I couldn’t tell you where it goes each week, so I think I’m better off without too much cash.
    And because I track my expenses, I love to challenge myself to see how much money I can have leftover at the end of the month, so putting it on a credit card does not increase my spending habits.

  12. Same here, I almost NEVER have cash, because if I did it would be gone in …..3 days MAX!!! I charge everything and pay it off weekly. Cash just doesnt curb my spending!

  13. One time I said this very same thing to a friend, and Dave Ramsey appeared out of nowhere and roundhouse kicked me in the face. That dude REALLY believes in his shtuff.

    Anyway, I agree with you, but for slightly different reasons. My wife and I have a “cash allowance” budget that gives us $100 cash each a month to use for Starbucks, work lunches, etc. BUT everything else from $2 floss to $75 grocery trips, we use a Citi AAdvantage card. Why? Because we want to be rewarded for the money that we spend. In my opinion, if you can be disciplined with credit cards and pay them off IN FULL each month, it is wiser to hold on to cash as long as possible meanwhile getting rewarded for your purchases. Our bill is around 1500 – $2000 each month, but each one of those purchases are budgeted and tracked, so it’s no big deal to have a big statement to pay off.

    I think you’ve inspired a new post for me!

  14. Cash all the way! We take out $300 every Friday; that takes care of filling up the tank, a week’s worth of groceries, and we usually have about $40-$60 left over that we’ll use for bits ‘n pieces during the week (ie: pizza night). It’s a system that works for us; I have a friend that uses debit for EVERYTHING, and that system works for him.

    Besides, our CDN dollars are coloured differently depending on the denomination (they look really pretty in my wallet… kinda like Monopoly money).

  15. I have zero dollars in my wallet and $2.76 in change in my desk drawer. That’s for emergency runs to a place called Discount Den where you can get a soda as big as your head for 75 cents.

    I use mint and check it a million times a week. So long as I only use swiper cards it all tracks beautifully! I see green bars turn to yellow when I’m almost maxed out on my budget and it turns to red when I’m over. Red is such a sad color to see, so I do everything I can to keep it green and yellow.

  16. I like plastic ’cause it keeps me in line–no small purchases for me! However, since I have children, I do like to keep a couple of dollars on hand for incidentals (no more than $10/month).

  17. I kept balances on my credit card for years (I’m newish to the get-out-of-debt-gazelle-intensity-hatred-punch-debt-in-the-face crowd), and I WILL have them paid off by June of this year. I use my debit card for nearly all purchases, because I know it’s a finite amount in my account. Plus, my credit union rules for getting interest on my account say I need to use the card 12 times a month – I usually do about 25. I’ve taken out cash – and it’s gone with the whooshing sound before I can blink. I’ve been caught needing cash and not having any, so I’m trying to keep at least $5 on hand.

    I’d like to get rewards for my credit card (my intent in 10 years is to travel my heart out), but I’m incredibly gun-shy about using it again. I haven’t for two years and I don’t miss it.

  18. Both. To get me to “enjoy” life more i.e. spend money, I use cash. Much less regret spending cash than watching the balance grow on your credit card. I have a certain amount budgeted for each weekend, and whatever I don’t spend goes to the savings account. For the bulk of my spending I use a credit card that gives me cash back each February. In fact, I just cashed it in yesterday 🙂 Nice check but it also freaks me out to think that we spent so much last year to “earn” that rebate check. Then again many necessities of life are on there like gas and food. I also pay off my balance each month.

    I always keep a hundred bucks in my wallet to make change for those who try to get out of tipping me when they say, “all I got is a hundred dollar bill.”

  19. I used to agree with you and think that I would spend the same no matter what method. But think that the danger with credit cards is that there is always more, and I no longer think in terms of a fixed amount. I think using cash is a great tool to get back to budgeting and the habit of not spending what you don’t have. Some months I get lazy and use credit cards, but when I need to kick-start my savings again, I always return to cash.

  20. Cash sometimes burns a hole in my pocket, but not often. But I WOULD spend more money with a card, simply because if I have $80 budgeted for groceries and the total comes to $82.36, with a card I’d say, “oh, no big deal” but with cash, I need to put back those Lucky Charms.

    As a result, I pay only with cash, but I almost never carry cash with me.

  21. It isn’t Dave Ramsey who says people pay more when they use cash, it is research. There are many studies that have been done that show that people who use plastic outspend those who use cash. Studies using human brain imaging show that paying with cash produces a pain response that isn’t seen as strongly when using plastic on the debit card and isn’t seen at all with the credit card. The average order price for many restaurants went UP when they added debit card machines to their franchises. Most people (most, not all) have a detached sense of feeling about money when they use plastic over cash.

    So while using a credit card WORKS for you, the majority of Americans (including many of your readers I imagine) would do much better to use a cash-only system.

    Also, if seeing your credit card balance creep up to $1,000 scares you. Imagine how much starting with $1,000 at the end of the month in cash and seeing it dwindle down to nothing would scare you. My guess is that you’ve never ACTUALLY gone fully cash for an entire month, but instead have used cash sporadically in combination with card use. When cash is used in combination with a card it gets spent frivolously, when all you have is cash and what you have is all that you get, you’ll spend it A LOT differently.

    Give it a try Ninja, try a plastic-less month and see how different your spending actually is. I double ninja dare you!

    Also, that is an urban myth that Al Gore said he invented the internet.

    • “Studies”? Please provide a link to just 2. And they cannot use college students who are handed a $10 and a Gift card loaded with $10 who are then observed spending 50 cents more on lunch. Too contrived.
      Ooops, scrolled down and saw the Bargaineering debunking.
      My main card gives us 2% cash into a 529 savings account, this month, the balance passed $10,000. 11 years till Jane 2.0 is a senior, that account will likely pass $30,000, more if the market resumes normal growth.

  22. Correction:

    There are many studies that have been done that show that people who use PLASTIC outspend those who use CASH.

    If you could edit that for me I’d appreciate Ninja 😉

      • Studies/Summaries of Studies done by MIT:

        Done by the Federal Reserve Bank of Chicago:

        I’m still trying to find the actual primary reports of these studies:

        “Dunn & Bradstreet study found that people spend 12-18% more when using credit cards than when using cash. And McDonald’s found that the average transaction rose from $4.50 to $7 when customers used plastic instead of cash.”

        As reported here:

        None the less, Ninja, my primary point is to say that you’ve NEVER lived a cash only life so you don’t actually KNOW that you would spend more when using cash. Having $20 in your wallet AND a credit card makes that $20 go fast because it has no purpose to it. Money that has no purpose will fly out of anyone’s wallet (especially mine and especially when you know that if it goes away I can still buy more with the card).

        But if you have $1,000 in cash in your wallet and you know that is ALL you have (no plastic, no debit cards as back up), it makes you more conscious of exactly how they spend it because there is no safety net at the end of the last $20 like there is on a credit card.

        (I use “you” in the general “one” sense, not the specifically YOU sense, as everyone is different and for you there is no data on what YOU would actually do in cash only lifestyle.)

        Seriously Ninja, if you’re going to say something DOESN’T work for you and go out of your way to proclaim how “evil” it is – don’t you think you should at least TRY it to confirm that this is the case? Otherwise…. your opinion is kinda just hot air with nothing to back it up. =)

        (Also, I apologize, the scientist in me is scoffing at the idea that you want to see the research that disproves your theory, but you won’t do the personal research to prove your own. Kinda humorous, and a little hypocritical… 😉 )

        • SS4BC – Ok, you get points for tracking down these studies. As I mentioned above, I give no credence to the student ones which are contrived at best.
          But the Federal Reserve one got me. Now, I am a numbers guy and I respect data. There’s more here than I can absorb in a sitting, but let me make a few observations.
          On p10 – “some cardholders are part of the APR reduction program.”
          On p25 table 3 – the spending does go up $159 to $203, but the standard deviation jumps from $652 to $915.
          I find this curious, it implies a select subset of the studied group taking a much larger jump to bring up the average.
          Know what? When my 2% card came in, I talked to my wife and encouraged her to charge where she use to write checks. I can think of a few hundred per month that Jane wrote checks for that have now hit the card, dry cleaning, hair place, grocery store among them. Our monthly budget didn’t change, but if studied this way, the report would show a substantial jump in card use based on the reward.
          Let me offer one concession. It’s not black and white. The report that I would love to see would have to be far more comprehensive, looking at total expenditures each month. I am guessing that (get ready for this) such a report would prove you correct. (got that?) It would also show that the studied group could be separated after the fact into two subgroups, one of which proves your point but more so, the other showing no change. The “no change” might be 20% or 40% how can I know? The only point is that personal finance is not the absolute Dave suggests. Ninja and I may be to the good when you do the math, but 8 others may be losers.
          One more card point – my card comes with a “warranty doubler”. For groceries this is meaningless, but when I buy any tech, how do you value this? The cell phone, not covered by Verizon for a drop in a puddle is covered by the card.

      • Just read that GRS article, he posts in there quite a few of the studies that also show that people spend more with plastic. (Obviously in addition to Dave’s claim which as my other comment shows I couldn’t find either when I searched.) Thanks for the link. =D

  23. I’m going to ride the fence here and tell you that my best spending friend is the debit card. Seriously. I have gotten in a huge mess with credit cards, so it leads me to hate them (because you know…it’s their fault). But if I have cash, like you I fly through it and spend it without having any idea where it went. I intentionally do NOT carry cash for that reason. I use my debit card because I can track my spending easier and therefore hold myself accountable more easily. But due to stupid things I have done with credit cards in my past, I do NOT use them. So I’m most responsible with a debit card (real money, but can’t use it at a vending machine for crap I don’t need to eat anyway).

  24. I currently just use my debit card but once that credit card debt is gone I will move to credit card. When I have cash, it is gone and I am standing there with a dumb founded look on my face and no idea what happened.

  25. I have $0 cash in my wallet right now. I have a credit card and I pay it off every month. The rewards are pretty nice for those who have control…

  26. I use credit card as much as possible because it’s convenient, I don’t have to stop at the ATM before every grocery trip, it’s much easier to track my spending via mint and other online sites, and I like getting the rewards.

    The only time I spend cash is when I’m out with friends, because I hate being the person that needs to use their credit card when splitting up a restaurant bill. I just want to throw some cash in and call it a day.

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