Living Cash-Only in a Credit World

This country seems to live entirely on credit. Credit cards and their symbols are everywhere, from retail stores to gas stations to burger joints. Any business that wants to be successful must first accomodate patrons by accepting credit cards.

My family was no exeption to this credit lifestyle. We built up a decent credit history and our finances were good. We lived in solidly middle-class territory for most of our married lives with the living my husband earned from manufacturing. Then, soon after 2002, the collapse of manufacturing in N.C. meant big changes in the local economy and big changes in the way we handled our finances. With significantly less money annually to work with, we made the decision to completely revise our budget, lose the credit cards, and use cash only. This may seem like a drastic reaction to some, but we quickly realized that any other solution, especially one that involved more debt, was unreasonable. Suprisingly, it wasn't that painful. Here's how we did it.

First and foremost, we stopped using our credit cards and began putting large chunks of money on the balances. Slowly the principles began to shrink until most were paid off entirely. A few we are still paying on, but most have been paid off. It is vitally important to send more than the minimum payment, as much as you can afford, if you want the debt gone before you hit the retirement home.

We also had to check our egos at the door. There is no room in the land of financial responsibility for shallow spending, whether it's the latest Nike sneaker or a new car. Not having the hottest this or the latest that may seem an insurmountable obstacle to some, but it's a matter of perspective. I get satisfaction from a great buy on eBay (tm) not only because I pay a low cash price, but because it will not cost future interest. All it takes is buying something after it's been around awhile. I can wait six months to get an item for less money because it is no longer the latest craze, or a great jacket that's NWT (new with tags) from last season.

We then set priorities. Yes, we were as guilty as anyone for spending when there was noneed. That extra dinner out, that great pair of shoes I couldn't say no to, all piled up on the Visa (tm) or Mastercard (tm), and like a ball of string, the balances got bigger and bigger with each small purchase. Now we have a list of priorities that are met each week. In my desk there are 5 envelopes that we divide my husband's his weekly pay into. Each envelope has its bill written on the front and after a month of steady additions, that bill is paid, the envelope is emptied, and the process is started again for the next month's bills. We also include a small cash allowence for ourselves, which is the most difficult restriction of them all. Once that allowence is gone, no more spending for the week. If I want to buy something pricey, I have to save to make the purchase in cash. That's tough.

Discipline is something we had to develop to make this budget work. I keep in mind the old saying, "make a plan and stick to it" as the key to success. When the temptation to cheat breaks in, I look at our savings, the interest it's earning, and that usually does the trick. I do know one thing. No matter how badly I want to buy something, I don't want to see that balance shrink.

The last part of our method to living cash only in a credit world is keeping our old pickup truck. This falls into every priciple we have. It takes discipline, remembering priorities, and strips the ego right out from under me. We decided to keep it so that we would not be burdened with a car payment and higher insurance. Sometimes I struggle with that decision. Mostly when I'm scootching over the seat to get in or out on the passenger side because the driver's door hinges need welding. The lack of a heater is pretty rough in the winter time, too. I should be thankful, though. Oddly enough, it is the most reliable vehicle we've ever had.

Changing our budget and our lifestyle was one of the best dicisions we ever made despite the inconveniences. We have money to meet our needs and savings to take us into an uncertain future while I continue my education and save for our daughter's as well. We also have a sense of control and empowerment. Most people think it is impossible to live without credit cards these days. I'm here to tell you, it isn't.