Monday, September 10, 2012

Cash VS Credit, Which Do You Use?

My husband and I are reworking our budget yet again right now, because he really wants a Sleep Number bed, but I'm not sure I want the extra payment.  Paying cash isn't even really an option right now, since we just bought a truck for my husband (and paid cash!!), and we're in the middle of the basement remodel.  We are going to have to buy a new bed soon, though.  Ours has two springs sticking out the side now, and no matter how many times my husband tries to fix it, they poke back through and end up ripping sheets.   Sheets are too expensive to replace every few weeks!

Anyway, when looking around for creative ideas of ways to cut our budget, I keep seeing people say that switching to cash is the easiest way to do it.  That doesn't work for my family.  We've tried it two or three times, and we usually end up spending MORE when we have cash, than when we don't.

What my family does is put everything on a credit card.  We still keep close track, and treat it more like a debit card.  We know exactly how much we've spent, and how much more we can still spend, and be able to pay it off on our next payday.  This way we earn cash back that we can use to get giftcards for Christmas or vacations.  Because we buy pretty much everything with our credit card, our cash back adds up fast.

When we used cash in the past, we were more likely to spend it all, just because we had it in hand and knew we could.  If there was $20 left toward the end of the pay period and we didn't need it for something else, we would go out to eat, just because the money was available anyway.  Now we still pull out a small amount of cash after payday, but only use it places we can't use our credit card (the base movie theater, some vendors at the farmers' market, etc).  I'm much less likely to decide to do something just because there is still money left on my credit card.

Another problem we had with cash is that I HATED having to go in and pay at the gas station.  I couldn't just fill up my van at one station, because I had to prepay if I used cash.  If it's raining or snowing or just really cold (I live in ND, so really cold to me is 20 or more below zero), I don't like having to go in.  Especially if Elliott is with me.  So even when we were on a cash budget, I switched to using my credit card for gas.

So we have just decided that overall, using our credit card for everything makes more sense to us.  I do like hearing what works for other people, though, and why.  Even if it doesn't work for me, it sometimes gives me ideas on ways to tweak things and make my system a little better as well.


JRFrugalMom and Family said...

I hate credit cards, and I hate the thought of buying something and still not having paid for yet. Still, my husband keeps on telling me that I need to use the credit card to build up the credit, so I am trying to use it more.

What works for us is saving up for those big purchases through cash and gift cards, even if we end up buying it on credit, we can still put the cash back into the credit card immediately. It is amazing how fast you can save up for something, if you just put $50 a side every week.

Carla said...

We usually try to save up for bigger purchases, too. And we probably would have been saving up for a bed sooner if I had realized how much my husband wanted one. We've had a lot of extra things we've been saving for lately, though, like the basement remodel, and now we're saving in our car repair fund again since we bought the truck. That means we are behind where we want to be financially right now, but we are moving in the right direction, so I have to keep reminding myself of that! :)

The basement is almost done, and everything has been on the credit card for less than a month before it gets paid off, so that's exciting! It's all about baby steps right now. :)

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