A while back, Mrs. Planting Our Pennies posted an article with an entertaining short video ruminating on the eerie quality of cash to disappear without a trace as one goes about one’s daily life. The video actually plugs Dan Ariela’s Coursera course on financial irrationality, echoing Dave Ramsey’s theory that most of us spend less if we use cash than if we buy everything with credit cards.
Mrs. PoP goes on to reflect that she and Mr. PoP have the opposite experience: cash disappears without a trace, whereas the paper trail created by credit-card receipts and statements makes it easier to keep a grip on spending because it’s easy to see where the money went and when. I was delighted to learn that someone else in the world has a similar experience to mine — not only the PoPs but many of their readers who commented. I thought I was some sort of strange outlier! Cash flows through my fingers like water — a walletful in the morning can be empty in the evening, and I have no idea where the money went. Something about the extra hassle factor of pulling out a credit card and having to fool with signing for it slows me down enough that I don’t buy just any pointless thing that strikes my well-honed whim.
It may be “painful,” as Ramsey suggests, to spend cash; but evidently some of us find it more painful to do without whatever doodad we happen to crave at any given moment.
As you may recall, late last spring, as part of an overall decomplicating strategy, I decided to use cash for small purchases. The idea was that I would withdraw a couple hundred bucks at the beginning of the month and use that to cover things that cost $30 or less. The initial idea was to make it $50 or less, but at that rate four purchases would consume $200.
This scheme actually did work, on two fronts: it cut the number of transactions that I have to keep track of in reconciling accounts, and, weirdly, I did spend less in the first month of the experiment.
This month, alas, I never did make it to the credit union to pull out some cash. My credit union doesn’t scatter ATMs across the city, and although customers can use other ATMs (I think), there’s a gouge for the privilege that I refuse to pay. I live about eight miles from the nearest branch of my credit union — that’s a 16-mile round trip, or, in the Dog Chariot, almost a gallon’s worth of gas — and there’s nothing up in that direction for me except a Home Depot and, much further up the road, a Costco. Since I try to limit visits to those worthy retailers, if I have no specific reason to go to one or the other of them, a jaunt to the CU through homicidal traffic is a nuisance that costs me about $3.35. This month it was a week or ten days past the August 1st before I hit Costco, and because I also needed some things from stores that are closer to a different outlet in a different part of town, I never did make it out west to the credit union.
And interestingly, what should I discover but that this month I’m already $87 in the hole on the credit-card budget, whose cycle doesn’t end until the 21st. Last month, when I used $120 worth of cash, I came in $143 in the black!
Naturally, the red ink on the AMEX budget comes in a month when power and water bills hit astronomical levels. And I had to pay Gerardo the Wonder-Lawn-Dude an extra $50 for some outrageously hard work he did in gawdawful heat.
And strangely, no single huge purchase jumps out from this month’s AMEX charges. Instead, I spent a bunch of money on small, separate bead-crafting expenses for the pieces I’m planning to donate to the choir’s silent auction this file ($135.76); $50 on propane and a new propane tank from Costco (not unreasonable); and a staggering $388.72 on a dozen trips to grocery stores. I did manage to stay out of Costco pretty well — hence all the grocery-store runs — however, in the two Costco runs I did make, I spent an equally staggering $378.73
Some of that $378 covered a couple pair of bluejeans to adorn the now much-slenderized body. None of my pants or shorts will stay up, so I really did need those. And the cost was nominal: Costco blue jeans run about $18 or $20 a pair.
You’d think that shifting to a mostly vegetarian diet — meat shows up on my table about twice a week now — would cut grocery costs. But in fact, fresh veggies and fruits are not cheap, and you have to eat them or else watch them spoil. Salad greens don’t lend themselves to freezing. That means I’m racing off to Sprouts or Trader Joe’s every time I turn around. Also, I visited Whole Foods, where I bought some (gorgeous!) wild-caught fish and two whole organic untrammeled chickens (on sale!) and splurged on too much sushi and a bottle of pricey craft beer.
But…the diet was under way when I started this experiment, so in theory grocery bills should have been no higher this month than they were then. The Mac ate the Excel spreadsheet I use to track the monthly budget (never have the same DropBox file open on two computers at the same time! :roll:), so I can’t confirm that comparison. But it’s safe to assume grocery bills must have been about the same, with the possible exception of the Whole Foods episode — which, after all, put about a month’s worth of meat servings in the freezer.
In the “never” department, also never go into grocery stores when you’re hungry.
It looks like what happened is I lost track of how much I was spending on groceries and on beading goods and tools. At one point I got ripped off by Bead World — a saleslady sold me a pair of wire cutters that she knew would not work on the wire I had in my hand at the time, and they won’t take returns (they won’t get a return, either: a return customer). Then I bought a pair at Michael’s, but wouldn’tcha know: you get what you pay for! So I had to order up a decent pair, for twice the cost, at Fire Mountain.
So this month, in fact I did spend a lot more in using the credit card to cover everything (there’s a $3.06 charge in here, for godsake!) than I did when I used cash for small purchases. The “under $30” category amounts to a kind of Dave Ramsey-style “envelope,” and in fact when I ran out of the cash dedicated to discretionary spending that month, I consolidated shopping trips and limited purchases to real necessities, cutting back on the number and hence the amount of small expenditures.
Since it costs upwards of $3.35 to drive to the credit union, it probably would be cost-effective to get a debit card and pay the gouge to withdraw money from an ATM.
Just what I need: another card to help me spend money! 😀
Whole Foods, I stopped right there.
Wait, what? You don’t shop at Whole Paycheck in the Mohave Desert? 😀
Actually, I wouldn’t normally shop there, either, except that it’s now part of the diet plan to eat a LOT less meat but better meat. They do have first-rate, really fresh fish. And…remember when chicken had a flavor? Well…Whole Foods carries chicken that actually tastes like CHICKEN. It tastes so good…definitely worth the price. And it’s not soaked in salt water, so it doesn’t push your blood pressure up. And it hasn’t been fed dead chickens. And it hasn’t been fed antibiotics. And it hasn’t been fed hormones.
Same is true of their beef. I can’t afford WF beef, so I’ve pretty well stopped eating beef, sticking instead with chicken and fish. Probably just as well — fatty meats push up your blood pressure, too.
I wish we had Sprouts here–I’d save soooo much money on food!
Might I suggest a visit to Home Depot for your tools…wire cutters included…I have never had a problem with returning a single thing and their tool are pretty good quality. Of course, I am a “frequent flyer”…know the staff and try to be fair when problems arise. In addition, instead of purchasing a whole new wardrobe…how about purchasing some suspenders…Home Depot has them too….you could be starting a new fashion trend…LOL…
Actually, I did try a hardware store — I find our nearby Ace has as good a selection and they have human beings to help. Jewelry wire cutters are flush; wire cutters for electric and other purposes have a tiny, almost imperceptible groove along the cutting edge, so you can’t push the edge under a bead and nip the loose end flush against the main wire and a bead hole.
LOL! Suspenders! There’s a great idea. And why not a fashion trend? They’d go nicely with the tatts young women favor these days.
By the way, if you use propane and you have a Costco nearby that carries the stuff, the other day their propane was A FULL DOLLAR A GALLON LESS than U-Haul’s, which charges the same as the gas stations where I used to buy it.
I miss Sprouts terribly… loved that store when I lived in Dallas.
As far as cash goes, have you thought of using it at the grocery store and getting cash back via debit pin? There are limits on how much you can take out, but at least it kills two birds with one stone. Plus you could always do one debit transaction with your groceries to get cash back and then run through the line again with pack of gum to double the cash you take out.
I don’t have a debit card, for two reasons:
1) When I did, I would go to the ATM and pull out $40 or $60, and by mid-afternoon it would all be GONE, and I couldn’t even remember what I’d spent it on. I was diddling away phenomenal amounts of money because of the difficulty I have with keeping track of cash.
2) They’re far riskier than a credit card. If someone steals or hacks your credit card, your liability is limited if you report the loss promptly. But if someone gets his hands on your debit card, he can empty your checking account and you have no recourse. Thanks, but no thanks.
Also, the point of taking out a hundred & eighty bucks to cover small purchases is to cut down the number of card transactions that I have to enter in Quickbooks. When you’re charging $3.00 purchases, you end up with umpty-umpteen entries to enter, check, and reconcile, which has become quite a nuisance. Using a debit card for those ditzy little items would defeat the purpose.
I don’t use a lot of cash, either. I like my cash back reward credit cards and I always pay them off in full each month. If I used cash, I wouldn’t get the cash back!
Tara’s comment reminded me that Discover has the option of getting cash back at many grocery stores, too. And it is *not* treated as a cash advance with astronomical interest fees, either. Back when I was banking with entities that had few local ATMs I would occasionally use that Discover option when purchasing groceries if I knew I needed some cash.
Now that I’m banking with Ally I can happily get cash at any ATM and not worry about fees (they reimburse the fees that other banks charge!).
And, yes, fresh veggies and fruit are not cheap! This is one of the issues many people have with the Farm Bill, which subsidizes commodity crops like corn and soybeans and big dairy operations, yet provides little to no value to farmers growing produce. So, processed foods made with lots of corn and soy or certain dairy products are cheaper for consumers (although they kind of aren’t since they are already paid for through our taxes since they are subsidized), yet fresh produce is more expensive.
That’s interesting about the Discover card. I’ll look into it.
Does Ally give you free checking? The reason I bank at a credit union is that they do not gouge their customers every which way from Sunday. In addition to my nutty attitude about debit cards, another of my eccentricities is that I highly resent having to pay a bank to use my own money, which the bank is generating interest and dividends from by investing it elsewhere.
The other advantage to a credit union is that most of them employ live human beings and the customer service is generally excellent.
Yes, Ally gives me free checking with interest (less than 1%, but better than nothing), and very good customer service. I’ve used their customer service via phone and online chat and it’s always been excellent. I like their online tools a lot, too.
I do have checking and savings account at a credit union, but I use them very little. As much as I like the idea of banking with a credit union, it is a real PITA here in Chicago. There is literally only one ATM I can use that is reasonably convenient for me to get to (yes, ONE ATM in the entire city of Chicago!!!) and to make a trip to a branch during business hours means I would have to take a day off of work and drive 30 miles. Reciprocal arrangements with other credit unions seemed like a great convenience factor, until I realized that most of these other credit unions where inside access-controlled buildings in the Loop. Yep, if I had no employee ID for the building I could not visit the branch or ATM! Also, the credit union accounts don’t sync with Mint so I can never track my transactions through them.
I keep the credit union accounts for two reasons: nostalgia (my first account was set up there when I was 10), and for the few times I travel overseas they don’t gouge me on ATM fees. I’ll have to see if Ally has similar service with overseas ATMs before I go to Scotland this year. I’ll probably still keep the credit union account for a bit longer either way. I direct deposit about $25 a pay period into the checking account and use it for my hobby money, so it helps a bit with budgeting.
OMG, that’s an even WORSE pain in the tuchus than our CU’s pose. I love it…you can’t get to the ATM unless you have an employee card to get into the building! Heeeeeeeee! The board of directors must have had a lot of fun dreaming that one up!
Hm. I forgot about the reciprocity. There’s a different credit union that actually IS on my beaten track. Occasionally I’ve thought about moving my accounts over there, but the hassle factor has deflected that scheme. But…maybe, just maybe they have a way I could withdraw money through the nearer CU. I’ll call and ask today. Thanks for the reminder!
All credit card for me.
Easy to track, hefty cash rewards, and I don’t like the debit card risk of cash being wiped from my account.
Whole Food is a great store, and they know it.
That’s been exactly my philosophy, too. In the “waste” department, though, I found that altogether too much of my time was being consumed in reconciling credit card statements full of small-change charges. Realized I could cut the number of transactions to only those actually worth tracking and save time and hassle simply by using cash for purchases under about $20 or $30. I think this strategy has merit…the trick is to get your hands on the cash and not allow it to sift through your fingers like the sands of the Sahara.
So are you thinking the cash budget is working to save you money? Or are you thinking that the one-time expenses that you racked up make this month an inadequate comparison?
On the subject of CU’s – ours lets us pull cash out of any ATM and reimburses us the ATM fees of every withdrawal (up to $20 per month). Very convenient, considering the nearest branches of our CU are in Pennsylvania.
Well, I suspect we don’t have enough data yet. I think having a small cash budget (it was only $180) probably worked to save a little. During the experimental month, when I began to run low on cash, I found myself either putting off or aggregating purchases, so that I was making fewer trips to stores (always a money-saver!!). A number of the smaller purchases I’ve made this month may have been things that really weren’t necessary or that could have been deferred a week or two, putting them into a fresh budget cycle. But since I felt no pressure to think twice about them, I just charged them up.
This morning I made an awesome discovery! With a debit card, my little credit union lets members withdraw money from any ATM, and — mirabilis! — we get two withdrawals/month absolutely free of charge! They’re sending me a new debit card and secret code, since I disposed of the one I don’t use years ago. 🙂
Credit cards are only used when we buy online, normal trips to a store are done with a debit card or cash, that green stuff.
The closest Whole Foods is in Las Vegas, 70 miles away.
Not worth the trip and we have our own chickens for eggs. The Mrs. names them so they are not going to end up a pot for Sunday dinner.
As a tip for Vegas tourists. They have a murder shooting, car jacking weekly. The place is full of gangs and the Police are never every where. They hide until shots are fired and the dust clears.
Let’s open up the gates at let all these illegals be legal that will sure fix the problem of crime and gangs.
I would not go there unless dragged bound and gagged.
Hah hah! It sounds like lovely uptown Phoenix!
Actually, that’s not fair. Our crime rate has been dropping, and except for the occasional garage invasion, the rate of mayhem is down significantly. The other surprising positive development during the past five years or so: the police have begun SHOWING UP when called — can you imagine? Not only do they show up, they usually show up quite promptly.
Ohhh real chickens with real eggs: far superior to Whole Foods. Any chance you could lodge a few hens in a coop called “Hotel Nameless” and keep those ones anonymous? 😉
Yep real chickens.
I think it is acceptable to purchase via credit card as long as we have the cash for it. Besides, it is convenient and worry-free of bringing huge amount of cash for big spending. Just pay the card on time to avoid penalties.
Exactly! My strategy is to set a specific budget for credit-card charges, based on the known history of grocery, household, clothing, and similar purchases. Between that and a backup emergency fund, I never charge more than I can pay.
I actually keep a small notebook (where I could write my expenses during the day) and I audit myself every night before I go to bed. I prefer to use cash than credit card, because first, I can provide my own financial statement everyday (using my notebook). Second, I can save money without the interest charged by the credit card company. Right?
🙂 There’s a lot to be said for paper and pencil records! For one thing, they’re mighty hard to hack.
Because of my problems with numbers (I’m essentially innumerate — can add up figures three times ON A CALCULATOR and still get three different answers!), I find Excel much more accurate and less grief-inducing. But if I could add and subtract accurately, you can be sure I’d have a handy-dandy paper notebook.