4 reasons I use cash instead of a credit card (& a giveaway!)

People are often quite surprised to find out I’ve never had a credit card. In fact, sometimes, they have to ask three times just to be sure they heard me correctly:

“So you’ve never had a credit card?” they ask incredulously.

“Nope,” I respond.

“Like ever?”

“Right, never,” I reiterate.

“Not even when you were younger—ten years ago or something?” They continue to quiz.

“No, really and truly, I’ve never had a credit card,” I reply, again.

Usually people just end up looking at me aghast like I’m from some other planet or something. That’s okay, I’ve gotten used to the fact that I’m weird.

But you know what I’ve also never had? Credit card debt.

Yes, it’s true. There’s a brilliant and guaranteed way to avoid credit card debt: just don’t get a credit card in the first place. It works—every single time!

I’ve never had to worry about how I’m going to pay off the credit card bill that’s coming due. I’ve never had to hassle with being harassed by credit card companies because my payment was late. And I’ve never had to dread opening up a credit card bill to see how large it was.

We have a policy at our house: if we can’t pay cash for it, we don’t buy it. It’s a plain and simple policy, but it’s saved us a boatload of debt, fights over money, and stress about our finances.

Sure, it has meant we’ve gone without a lot of different things we wanted over the years because we didn’t have money to pay for it. But truthfully, I’ll take the peace and freedom that comes from living without credit card debt over all the bling and stuff. It’s worth more than money can buy, anyway.

Do I think credit cards are evil? Well, I wouldn’t go so far to say they are wrong or immoral, but I would say that I’d strongly encourage anyone who is currently swiping plastic on a regular basis to step back and consider a few things:

1. Using cash keeps you from over-spending.

Yes, cash can burn a hole in your pocket and you can blow it. But here’s the thing: if you only use cash, when the money’s gone, it’s gone.

You either learn to pace yourself and your spending so that you have enough money to buy groceries at the end of the month, or you go without buying groceries. I promise that if you don’t have any grocery money to spend the last week of the month, you’ll probably think a lot more carefully the next month when you’re tempted to spend all your grocery cash during the first few weeks of the month.

2. Using cash forces you to evaluate your purchases.

When you use cash, you can’t mindlessly swipe a card—you have to pull green bills out and hand them over. It doesn’t take a month for the purchase to show up on your credit card bill; the pain of purchase is immediate.

This direct correlation can give you a much better grasp on your finances and on where your money is going. And it will probably also cause you to step back and carefully evaluate each purchase.

Photo by seanfx

3. Using cash prevents you from betting on the future.

So many people say, “I treat my credit card like cash and always pay off my credit card bill in full at the end of each month.” That sounds great—in theory. But very few people are truly treating their credit card like cash.

Unless, before you make a purchase, you set aside the full amount of money to cover the purchase in a separate account and never touch that money until you pay your credit card bill, you are not truly treating your credit cards like cash. If you don’t have the money set aside for the full credit card bill, what happens if you lose your job tomorrow or you have a major financial crisis that puts you in a big bind?

By using the bank’s money or store credit to pay for your purchases, you are presuming that you are going to have enough money to pay the bill when it comes. And if you don’t, you could end up getting hit with high interest payments on top of the money you owe.

4. Using cash guarantees you never have to pay anyone back.

When you pay with cash, you can’t buy something unless you have enough money to pay for it. This often means you have to work hard, scrimp, and save up to make a purchase. This process of scrimping and saving can be grueling, but the satisfaction of exercising self-discipline and waiting to buy something with your own hard-earned money is every bit worth it in the long run.

And you know the best part about paying with cash? You never have to worry about paying anyone back. When you buy something, it’s yours—free and clear!

Want to learn more about living a plastic-free life? Check out chapter 4 of my book, The Money Saving Mom®’s Budget, where I tackle the common arguments as to why credit cards trump cash, and challenge you to at least try the three-month cash-only challenge. If it doesn’t work for you, you can always go back to the cards. But it just might completely revolutionize your life and finances in radical ways.

Giveaway time

This giveaway is now closed.
Crystal is giving away ten copies of her book to Simple Mom readers! Here’s how to win a copy:

1. Leave a comment on this post, telling me what you’d do with a $100 bill that mysteriously appears in your pocket. (If you’re reading this via email, you must click over to the post to comment.)

2. For an additional entry, tweet about this giveaway, mentioning both @simplemom and @moneysavingmom, and including a link to this post. Your tweet could look something like this:

Head over to @simplemom to win a copy of @moneysavingmom’s new book! #giveaway http://lvsm.pl/wP3gsj

Then come back here and leave an additional comment telling me you tweeted.

3. For another additional entry, “like” both Simple Mom and Money Saving Mom on Facebook, then come back here and leave a comment telling me you did so. (You don’t have to mention the giveaway on Facbeook, but you’re certainly welcome to!)

This giveaway will end Saturday night (tomorrow), and I’ll announce the winner soon after. I hope you win!

top photo source

Crystal Paine is a wife, homeschool mom to three, self-proclaimed minimalist, lover of dark chocolate and good coffee, and a wannabe runner. For practical help and inspiration to get your life and finances in order, check out her blog, Money Saving Mom, or purchase a copy of her brand-new book, The Money Saving Mom®‘s Budget.

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  1. Given that it’s hubby’s slow time of year (he’s self employed), it would very possibly go for gas or groceries. Otherwise, I’d probably use it to pay on my camera (that I charged!). I sure need this book.

    • 1) with $100, i would get a hot stone massage and visit the nearby korean bathhouse/spa.

      2) i already liked simplemom. and today i liked money saving mom.

    • At the moment, it would likely go to dog food, cat food, and possibly a pair of slippers if I’m good. I’m conveniently living on a ranch where we do not have to pay rent or utilities, because one of us works for our home. But I am unemployed and a starving artist.

      We do our best to make ends meet, but mostly that means going without more and more. I actually started going with the no shampoo, no conditioner routine to both, save money and to save my hair since it’s become this awful combination of greasy and dry at the same time.

      I found your site on a whim, looking for ways to fix my hair and not spend a fortune on some extremely gnarly shampoo and conditioner. I’ve been reading a lot here and on the sites you link to in an attempt to hopefully, make my life simpler and easier.

      • Sierra, You have a great spot for inspiration, information and encouragement towards a simpler, more fulfilling life. I would also highly recommend a couple of great books that are life changing: Julia Cameron’s The Artist’s Way or The Creative Call by Janice Elsheimer (more biblically based). They are tremendous for changing the way you look at what you do, your purpose, and especially that you don’t need to be a starving artist. Good luck in your journey to a better life!

  2. Sounds like the kind of challenge I need. I would love to read Crystal’s book.

  3. If I had $100 mysteriously appear I would put it towards paying off our car. It should be all paid for in 2 months. Yay! 🙂

  4. I already like you both on FB. 🙂

  5. I like both of you on facebook. 🙂

  6. I would buy books with an extra $100! 🙂

  7. If I had $100 i would buy my son some books I’ve been eyeing for him! He is 3 and loves to read- just like his mama 😉

  8. This is such great advice! I would use the $100 toward a mission trip I’m taking in June.

  9. amy gallant says:

    $100 would go to our massive student debt….

  10. I’m sure I would use it to buy something for my crafting or a book!

  11. Tweeted about the contest (@ellesbee) for the extra entry. 🙂

  12. How are you supposed to build up your credit in order to do something like buy a house if you’ve never owned a credit card? Don’t get me wrong; I definitely don’t advocate paying interest on your purchases. I have several credit cards, and I always pay the entire bill when it’s due. It’s just a matter of planning ahead and being aware of what you can and cannot spend over time.

    • Crystal has actually done this. Check out her series about it here: http://moneysavingmom.com/saving-100-down-for-our-first-home

      Although my husband and I had already taken out a mortgage by the time I was reading these articles, they’ve inspired us to work with gazelle intensity to pay it off. It’s been amazing watching years and thousands of dollars worth of interest fall away and humbling to see what we’ve already paid in interest in just 3 years.

      • I don’t mean to be argumentative, but financially, it may make more sense to invest your money wisely depending on your mortgage interest rate. We just bought our first home, and the mortgage rate is only 3.5%. If we spend the next 30 years investing our savings at an average return of anything greater than 3.5% (which is not that difficult), then we will make money in interest that we can do whatever we choose with by patiently paying our mortgage. I appreciate the simplicity of paying off a mortgage so you don’t have to worry about it. However, you are also losing out on other opportunities by doing so.

        • But you’re not factoring in risk. Dave Ramsey always asks, “Would you take out equity in your house to invest?” Of course, everyone always answers no with a laugh. He then says, “Well, it’s the same thing in reverse.” That hits home the point.

        • Anytime you are paying interest, you are throwing money away. Are you really earning more interest than you are paying? My husband and I closely reviewed all of our investments and found overall that it was better for us to reduce the intererst we are paying on our mortgage by refinancing than to continue to “save” in our other investments. We discovered that by reducing our monthly mortgage payment, it saved us hundreds of dollars each month. Way more than we were “saving” on our other investments. I’d encourage you to take a look and see how much you truly are earning in interest on your savings and investment accounts.

    • Karyan Stratton says:

      My husband and I have never used a credit card, yet we have established credit. We’ve used a car loan and cell phones to build our credit. While applying for a home loan which we qualified for, a banker told me the only way we could raise our credit score was with credit cards. But he also warned that most people don’t use their credit cards properly to raise their credit. He said that even one credit card application lowers one’s credit score. Also, using more than a third of one’s available credit lowered the score. He alsopointed out that since our score was already fairly high, a credit card wouldn’t help once we took out a home loan.

  13. Shoes, please–just for fun!

  14. I would use it to stock up on meat sales at the grocery store to fill my freezer.

  15. This looks like a great book! I’d probably use a found $100 toward homeschool supplies or a gift for someone.

  16. Jennifer B says:

    An extra $100 would be fun money to be spent on something personal and luxurious – some lovely yarn to knit up, a massage, a fancy meal with my husband.

    I would love to hear how you handle things like renting a car, reserving a hotel room or buying airplane tickets without a credit card. I suppose you can use a debit card, but this post implies that there is “no plastic” involved.

    I don’t use my credit card much and at this point in my life I have enough money in the bank or in various investments to cover all of our debts (an occasional credit card bill and the balance on our mortgage), so we truly do use our credit cards like cash.

    But there is a convenience in purchasing for travel, especially international travel, with a card so the hotel room we are expecting is kept for our late arrival or our tickets are paid for when we have found the flights we want to take.

    • I agree. I travel internationally a lot and credit cards have extra protections when purchasing plane tickets and hotel rooms. I used to work at a PR firm that handled Chapter 11 cases … remember a few years back when airline companies went out of business? If you purchased your ticket with a credit card you were fine, but if you used cash (aka debit card), you were out of luck. Lost your money and your plane ticket.

  17. Oh my. That $100 would likely go directly to our son’s medical expenses. If not, I’d probably stick it in his bank account.

  18. Already Liked Money Saving Mom on Facebook and just added Simple Mom. 🙂

  19. If I found a mysterious $100 in my pocket, I think I’d leave it there for a while and enjoy the feeling of having $100 in my pocket – that doesn’t happen very often.

  20. I tweeted the giveaway

  21. I like you both on fb

  22. Theresa Milton says:

    I’d love to say I’d feed hungry people but this year I’m being very purposeful in cutting out debt. So $100 would be applied to my lowest cc balance

  23. Theresa Milton says:

    I tweeted

  24. I would invest part of it in learning materials or things to feed my mind. The other part would be saved and added to the 6 months of expenses step.

  25. Oddly enough, I’ve discovered that using cash is more of a problem for me. Generally, I use my debit card for everything. So I’m not racking up any debt with my purchases but, at the end of the month, the bank has a record of exactly how much I spent and where I spent it. My husband uses this record to track our finances. So, yes dear, I did spend $$ when we went to the zoo and $$$ on groceries that day. But cash . . . Well, we live in Japan so every other week or so I have to go to the ATM to get some yen for purchases out in town. And once it’s out of the ATM, there’s no record of where I spent it. So, at the end of the month, DH looks at me and says, “You pulled $$$ in yen out of the account, where’d it go?” “Ummm, the farmer’s market and some clothes for the kids, and . . . maybe some ice cream?” I find that I don’t feel I’m really accountable for where I’ve spent the cash.

    As for the $100, I’d just stick it in savings. Eventually it would probably end up being spent on books for myself or the kids.

    • I know what you mean, hitting up the ATM anytime I needed extra cash killed me in college. However, having a couple hundred dollars in an envelop labeled “groceries” that I can’t refill until next month…wow that has kept me seriously accountable and made me much less wasteful. You might try doing something similar with your “around town” money. Decide on an amount at the beginning of the month and don’t refill it until next month : )

  26. These days credit cards are giving more and more facilities and rewards point, because of this we all are living our life with a plastic money. we do carry a lots of card in our wallets but not cash, cash give us a lot of security and to evaluate .
    A great post keep posting

  27. Groceries. Definitely groceries. Even little people are are voracious eaters! But, maybe, just maybe, I’d throw in something extra special – like ice cream… Wait – scratch that! A new cloth diaper pail. I think I’d splurge on that. Wild, I know.

  28. Tweeted!

  29. Ooh $100 could go pretty far for me…maybe some new fabric and notions for some sewing projects I am dying to do?…maybe a used freezer for our garage? (Our inside freezer is FILLED with breast milk-what to do with it all???)…maybe for ONCE I could buy myself something nice like some awesome shoes? Ooh this list could be endless. BTW, would LOVE to read this book! We are working hard to pay off our debt and get away from all the plastic!

    • That’s awesome about your freezer filled with breastmilk, you could donate it. There are organizations online, not to mention there could be omeone local to you that could use it. 🙂

  30. I certainly agree strongly with the cash idea. I grew up (in Japan) just using cash and it makes total sense to me.
    I’d put $100 into our savings account for now and will use it for something that will come up after our first child is born end of this month!

  31. Oh that’s easy: I would finally buy that Kindle that I already wanted for Christmas but didn’t find underneath the Christmas tree!

  32. Well since I just made a promise to myself that I would no longer over spend and only use cash or my debit card. I would save the extra money for a family fun day. Bowling on a cold sounds great!

  33. I’d put it toward student loan payments! Which sounds terribly weird, I know.

  34. FB liked both!

  35. Tempted to go have fun with it but since being laid off and finally just getting a good, but temporary, job – that $100 is going in the bank until it’s needed for gas, food or a bill!

  36. I would probably spend $100 on new running shoes. Tis the season to train again!

  37. I would put that $100 towards a new car seat for my baby since he’s nearly outgrown the one we have.

  38. I “like” Simple Mom and newly “liked” Money Saving Mom on facebook.

  39. $10 would go for a tithe first. The rest would be split between paying bills and savings. I’d like to use that for some special something for myself but right now, with times the way they are, that’s not practical or smart.

  40. I would use it to pay off my credit card bill 😀 Few weeks ago I canceled my credit card and now paying off the debt. It will be paid off by June at the latest, so any extra would go to having it paid earlier.

  41. It’d probably go for gas or groceries, but I’d probably treat the kids (i.e., myself) to some fast food for lunch one day!

  42. Elizabeth says:

    I was going to say that I’d spend it on books – but then I saw someone mentioned a Kindle and yes, THAT is what I would spend it on now. This is because we are planning a move overseas sometime this year and I figure that a Kindle is now the best way to go – as well as keeping our home simple! Yay for simple!! :o) BTW, thanks Tsh – reading your books has done us a world of good! PTL! Would love to read your book, Crystal – I’m ALWAYS up for learning more on this subject! And we love being credit card free.

  43. A magic 100? The Waldorf toy shop for fun kid stuff!

  44. Elizabeth says:

    Have just liked you on FB. Had already liked Tsh. :o)

  45. Like Kim, I’d love to do something fun with $100. But we are also hurting financially, so it would probably go to something that is needed.

  46. Wiilma Fields says:

    There are so many families I know that are out of work. I’d take the $100 and give it to one of them.

  47. With an extra $100 I would hire someone to clean my house 2x. Once before my son’s 2nd birthday party coming up and once after. 🙂

  48. I tweeted.

  49. Wiilma Fields says:


  50. Willma Fields says:

    Liked you both on FB!

  51. Here is my entry for the book really would love to win!!

  52. I’d treat my family to dinner at the Space Needle.

  53. I like both of u on FB.

  54. I would love the book and save the 100 as my bookmark..read the advice and use it wisely!!

  55. If I found $100 cash, I would use it for mad money. I rarely use cash and $100 would last a long time as I would only use it when I can’t use my credit card… vending machines, money for the kids, chip in for gifts, etc.
    I am one of those rare people who treats credit cards like cash and I always make sure my checking account has enough money to cover the credit card bills. All my extra money goes into various savings account earmarked for specific things…vacation fund, emergency fund, kids accounts, etc.

    I prefer credit cards over cash so I can keep track of my spending and even save by using rewards points.

  56. Great book I would love to win. Definitely need to take that credit card out of my wallet! It’s something my husband and I have spoken about so starting next month we will be drawing cash for expenses! What I would do with $100? Well in SA that could go quite far… I would probably use it to treat my husband and I to a weekend away sans kids in April to celebrate our 10 year wedding anniversary!

  57. I have shared on facebook and tweeted

  58. I have “liked” you both

  59. Christine says:

    An extra $100.00 would go towards paying off debt. We are on baby step #2 of Dave Ramsey’s program. 🙂

  60. Christine says:

    I like both of you on Facebook.

  61. I’ve never had credit card debt, I pay mine off every month. I use it a lot though because I get points for doing so and then vouchers to shops – so every few months I ‘order’ my £20-50 worth of vouchers to a grocery store and I’m happy 🙂

    And if I found a $100 note, I’d have to take to the bank and I’d get back only about 65£ so I’d just stick it in my wallet to use for lunches and coffees 🙂

  62. Michelle Ravenscroft says:

    I already like you both on FB.
    And $100 find, well….bills, bills and even more bills is what I’d spend that money on!!!

  63. Sharon Frame says:

    $100 that mysteriously appeared? Right now in my life, since I’m just a few years from retirement and beginning to get a little panicky? I’d put it into my IRA or my savings.

  64. Sharon Frame says:

    I already liked Simple Mom on Facebook; just liked Money Saving Mom. I already see several things on your list of 51 Ways … that I should be doing, or have done before and better be doing again.

  65. I live in Africa, and using cash is our only option 95% of the time! It feels different that spending US dollars though (kind of like spending monopoly money). I would save the $100 and spend it on a massage/manicure/pedicure as soon as we get back to the US in the fall!

  66. Linda Turske says:

    I have been saving for a dishwasher and new kitchen counters so it would go in the bank to boost my kitchen fund!

  67. I “liked” Money Saving Mom on facebook. I already liked Simple Mom. Does that still count?

  68. I would have to say getting some specialty items at the grocery store that we don’t typically buy 🙂 What a treat that would be!

  69. Laura Anne says:

    A hundred dollar bill – hmmmm – right now it would go towards a new sink for the new kitchen we are building – with CASH!

  70. I would take the cash and use it to pay my daughter’s way to CIY Believe.

  71. Develop pictures! In the day of digital I’m sure I’m not alone. I’m not much of a scrapbooker, but I still love to look at pictures in chronilogical order in a nice album. I have no idea why I wait until I have over 400 pictures before developing. It’s overwhelming-costly and time-consuming. This year I’ve resolved to do so every few months at least.

  72. $100 extra would go into savings (for a vacation later this year).

  73. Jennifer B says:

    I would buy organic produce at the market and stock up on the various materials that I need for the DIY health and beauty care projects that I have been wanting to do for ages now.

  74. Any extra money I found right now would go towards a mini-vacation we are taking before my hubby deploys to Afghanistan. While he is away I’m
    Using his extra pay and savings from fuel and feeding him to getting rid of our credit balances. They get a tax free lump sum at the end of tour and we are going to buy a newer car with that as we’ve only just finished paying credit on one that died last year (my parents loaned us a car this last year or so). I never want to be in that situation again. It’s time to stop paying the banks all our money and start saving for our future as we will need to buy a house in 5-10years when hubby leaves the army and it’s a scary prospect right now.

  75. Hmm…$100 would go into the checking account and put into the pool of everything else. Just folded into the budget. I love reading both your blogs!

  76. I like you both on facebook!

  77. the right answer would be probably to put it to use practically,
    but I think I would hid it in my wallet and use it for my mocha habit –
    that would last me a while –

  78. Right now … I would add it to my the money I’m saving for a new computer … I almost have enough too – I’m waiting to add the last $100 from my next pay this coming week to put towards it too, lol!! My current computer is circa 2002 and is consistently not being helpful, lol! I am using ‘old’ software and am constantly having troubles when sending through my assignments for uni .. often I have to copy it to a USB .. take said USB to a friends’ more ‘current’ computer and ‘save as’ a more up-to-date version of it per software … then send it through via their computer as mine doesn’t ‘read’ the updated document, lol! … I’m looking forward to my new apple arriving at the beginning of next week — I’ve been saving for it since mid-last year (small budget, single mum)!!

  79. mystery $100?? Refill the dwindling art supplies…. somehow that always gets put off for more “important” purchases!!

  80. If I had $100 mysteriously appear, i would put it in the bank to help jump start my emergency fund.

    Also, i liked both of you on FB.

    I would love to receive a copy of this book as my husband and i are trying to move to a cash only system and need all of the help and information we can get.

  81. We’d put it straight in our savings account to work towards a 2012 goal!

  82. What would I do with $100? I’d like to put it in our vacation kitty.
    With the exception of our mortgage we are debt free. I’d love to share this book with my daughter and her husband. They have been married a few years and would glean great information from it, I’m sure. Thanks!

  83. I would probably buy a new crock pot and use the rest toward groceries or something.

  84. I would probably get something for my husband he’s worked very this past year starting his own business.

  85. Stephanie W says:

    Liked both on Facebook!

  86. Finally buy the prescription sunglasses I’ve been saving (in cash) for!

  87. Susie Nam says:

    The $100 bill would go towards a payment of some sort from our debt. I’m trying to pay off higher interest debt rather than sending it to savings for much lower interest.

  88. I would jump at the chance to put half in my kids’ college savings and the rest on an activity for the family to enjoy together!

  89. Stephanie W says:

    Usually when I find money in a coat or purse I haven’t used in awhile I usually hide it in my wallet until I really need it for something. My son is turning 10 soon so maybe I would spend it on gifts or a party for him.

  90. since we are trying to pay off ALOTof debt right now I would put it toward a bill. so tempting, though, those mysterious $100 bills! 🙂

  91. Oooh and extra $100 in my pocket would definitely mean stocking up on grass fed beef and pastured chickens. Since those extra $100’s don’t often appear though, I’ve really learned how to make a pound of meat stretch : )

  92. If I had $100 appear, I would probably put it toward my credit card debit. And this is the reason why I need to read Crystal’s book 🙂

  93. I tweeted 🙂

  94. I’d put it in my rainy day fund.

  95. I’ve liked both MSM and SM on FB. Oh the acronyms!

  96. I liked both on FB too! 🙂

  97. I would pay a bill and go out on a date with my hubby. We haven’t been out on a date lately.

  98. This might sound like I’m sucking up to the “teacher” 😉 , but I would put it savings. We are expecting our 2nd baby in 6 weeks, and any extra money we have is being saved right now.

    • With the $100 – I would use that to repaint my 1970’s appliances – we are doing a kitchen renovation on the cheap. Dark brown/orange isn’t really my fav color.

      • I’d probably put the $100 in our emergency fund. We just refinanced and closing costs were higher than we expected, so we had to borrow from it!