Sunday, November 23, 2008

10 Reasons to Have a Cash-Only Spending Plan

I am a big fan of having a cash-only spending plan. Here's some reasons why:

  1. You can't spend more than you have like you can do with credit cards.
  2. Credit card air miles are a joke--nearly impossible to use due to all of the rules you need to follow to use them (plus you have to book almost a year in advance to get a seat!).
  3. Cash can't be declined like an over-extended credit card.
  4. You will spend less by using cash than with a credit card--it's a proven fact.
  5. You can be confident that you can handle any financial emergency if you are carrying a wallet full of cash instead of nearly maxed out credit cards.
  6. You will often get a better deal at stores and gas stations if you pay with cash.
  7. Using cash means you don't have to pay interest on your purchases.
  8. Cash can't be refused (yet) unlike certain types of credit cards (some places don't take Discover or AmEx cards due to the type of precessing company they use).
  9. There are no "surprise" fees when you use cash such as over limit or an NSF fees.
  10. Using cash means your purchases can't be traced like they could be with a credit card trail.


  1. Yes, cash is king. NEVER go into debt, and always pay bills on time.

    I use a debit card for all purchases where cash cannot be easily used, especially for business. If there is no cash in the account, no purchase is made until there is.

    Once you get ahead like this, it's smooth sailing - no interest fees means the money you earn is worth alot more.

    Budget for big expenses, putting a little away each week. For example, a car - rather than make monthly payments for the rest of your life, pay yourself every month so that when it comes time to purchase a new vehicle you can pay cash. Many people think they cannot do this. They are wrong. Maybe they cannot do it for the first vehicle, but over time you can save enough so that at some point you can start always paying cash.

    You are gonna have to pay for it anyway, might as well be free and clear with no interest and no big bills hanging over your head all the time. Now THAT's freedom.

  2. Great idea. I have a friend who was practically homeless. He scratched together $500 for a car and it ran for about eight months with a bit of tinkering. Considering that most people pay about $500 A MONTH for their car payment, my friend came out about $3500 ahead. If he had continued to put aside $500 a month for the following eight months, he would have had $4000 to buy his next car which probably would have ran for the next few year and if he would have put aside $500 for three years, he would have been able to purchase a brand new car with $18,000 cash (obviously I would have suggested that he buy a slightly used car so someone else could take the hit on the depreciation!).
    Thanks for the suggestions.

  3. That's spot on. The mistake most people make is that if they have $18,000 and need a car, they buy a $30,000 car and use part of the 18k as down payment. Wrong.

    If all you have is 18, only purchase at or below 18. In that way you remain a free man, un-enslaved by debt. Eventually, if you really feel you need a $30,000 vehicle, you can pay cash for it - but I do not recommend such a waste of money, there are many better ways to use it.

  4. Nice post. Cash is always better for everything. I thought this was interesting: "Cash can't be refused (yet)," because I've been wondering if at some point people will be penalized for using cash. I don't get any special deals for using cash, though. I pay the same whether I use cash or a debit card, or even a credit card. Even at gas stations, it's the same price, no matter what mode of payment you use.