In my last post, you read about the book that changed our life. One of the first things we learned, that we had never thought of before, was that cash is king! We had used cards our whole life and never thought about using cash at all. So we hopped onto this cash bandwagon….drank the juice so to speak…. and threw our doubts of success to the wind.
The very first thing we did was call up our credit card company and cancel our cards. ALL OF THEM. Cut them up and DONE! No emergency card or anything. It was kind of scary but felt so good! We had been using them to build our credit back up after a business bankruptcy, so we had been using them A LOT. Problem was – every month we had a large credit card bill to pay and that was always painful! We never accounted for what we were spending or set money aside to pay the bill when it came due. So, we spent and borrowed and paid the large bill and had always nothing left. Another big kicker…studies show that when you’re using a card, ANY card, you spend approximately 25% more. Crazy!!! But it makes sense! You don’t really pay attention to what you’re spending when you’re swiping a card. But do this – go to Target WITHOUT your wallet, only your cash and see how closely you pay attention to what you’re spending then…you’re calculating every penny! I’ve done it and totally makes sense! I’ve been careful to avoid Target by the way, because I always spend money on what I don’t need there. However, I have gone there with only cash and ended up spending a good amount time standing at my cart sorting through what was necessary and what was not! That was a life changing experience in how important it is to use cash when spending. The only thing we use a card for is gas and that’s because I don’t like to leave my kids unattended in the car.
Now that we knew we needed to stick with cash, we had to figure out how to use it. How much cash? Where to put it? Luckily we had been using Quicken for a while so we were able to see what we had been spending on groceries etc. BUT, we wanted to lower that amount a lot. We just went with a number lower than we had previously spent and took the cash out of the bank. I got some cool envelopes on etsy.com to keep it all separate. Those aren’t mine exact envelopes, but you get the gist. We split our spending money into 4 categories….GROCERIES (basically anything you can buy at a big grocery store), MISCELLANEOUS, DATE NIGHT and BLOW MONEY. The blow money is money that my husband and I each get to spend on whatever we want, no questions asked. If you can’t have a little bit of fun money, it’s hard to stick with the process. The rest of our spending is bills only usually paid online. Whatever is left after bills are paid is what we take our cash out of. Now here’s the good part, whatever is left after the cash goes toward debt! To be continuted…..