Chapter 4 – “Go Totally Plastic-Free – Temporarily”
So Crystal’s suggestion is to do this for 3 months. She’s talking no credit cards, no debit cards. No plastic at all.
Rule #4 – Take The Cash-Only Challenge
Yes, this may seem very drastic to some. To me, honestly, it would feel next to impossible. Or at least very difficult- even just thinking about it is sort of scary for me!! Maybe just the change it would involve is the cause of my trepidation. I would venture to say that many of us have taken advantage of the ease of using a credit or debit card, even if we pay the credit card in full when the bill comes due.
Sometimes I do like to do scary things. I know that usually in the end, the result will make the fear it caused well worth it. So, I will soon be taking the plunge on this one. <GULP> Planning to begin in April and taking the month of March to prepare.
Our Money Saving Mom says one of the main reasons to give up the plastic is that plastic gives you something to fall back on. “Just this one time.” or “Just until payday.” It gives a false sense of security and the opportunity to cheat on your budget when temptation arises.
Commit to buy only what you can AFFORD. If you don’t already have the money set aside for it, you can’t afford it. (This is an eye opener!!!! So true!!!!)
Here are her steps toward taking the “Cash-Only Challenge”:
1) Cut up, freeze or otherwise completely remove the ability to use all credit or debit cards for the next 3 months.
2) Make sure you have created the Full-Fledged Budget. This must be done first.
3) Determine which categories from Full-Fledged Budget will be paid from cash envelopes and which will be paid by direct withdrawal or check. Use cash for as many as possible.
4) Divide up paycheck immediately. Deposit enough money in checking account to cover all monthly payments paid by check or auto withdrawal. Withdrawal in cash the total amount needed for cash envelopes and divide accordingly.
5) Bring only the cash envelopes and calculator with you when you shop. Do a quick estimate on how much the items on your shopping list should cost. Bring this amount and a little extra (she recommends $5-$10 extra).
6) Calculate purchases as you add them to your cart. This motivates you to evaluate each item carefully, being aware of the cost, looking for the best deals, and prevents you from having to put items back at check-out.
7) For online purchases – use PayPal, prepaid cards or giftcards. Take cash from cash envelope and deposit into bank account ASAP.
8) Any extra budgeted money in category or cash envelope should be saved and rolled into next month. This gives some wiggle room.
She addresses a FAQ:
~ Q: What if I find a good deal but I don’t have the cash on hand?
A: Use “extra” cash or skip another item in order to buy it. Otherwise, do not buy it.
She also gives several reasons why credit cards can be our worst enemy
– spending money we don’t have
– buying things we don’t need
– encouraging you to bank on the future (planning to pay it off and what if something happens that you can’t?)
– discouraging self-discipline and stealing the fulfillment of working hard and saving to pay cash for purchases
She is not “anti-credit card,” although she has never had one. She does, however, warn of the dangers and feels strongly that credit cards can only be appropriately used by someone with extreme self-discipline and a strict budget already in place.
There are several other credit-related issues addressed in the book, but I’d rather not go into too much detail here. I’m trying to just give an overview and bring you along on my journey. I’ve been hard at work re-vamping and adjusting our budget. I think I’ve actually been able to simplify the Excel spreadsheet that I have been currently using, thanks to some of the information and tips I read in the book. I’m really excited to get our budget a little more “full-fledged” and functional. This will be a work-in-progress, since budgets can vary from month to month and normal tweaking typically needs to be done.
I have to say that this chapter has been the hardest for me to swallow so far. It’s caused me to be convicted to make an uncomfortable, but necessary change. I know it will be worth it, but it will not be easy! I’m excited to see where this journey takes my family!!!
Baby steps and bite-sized pieces! 🙂