Cash or Credit?
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It is easier now than ever before to get a credit card. They are great in many ways. They can make life simpler, especially when you are traveling or online, and they can really help you out in an emergency. But just because you have a credit card (or two or three) doesn't mean you need to use it all the time. Sometimes it makes more sense to pay using cash. Lets look at some reasons why:
First of all, nothing feels better than paying with cash. You know that you aren't building up debt, you don't have to think about the transaction anymore once it is over and you know that nothing is going to go wrong. There can be a good deal of pride involved in using the cash you worked hard to earn to buy something you want or need.
Second, it is much harder to overspend if you are paying by cash. With a credit card it is too easy sometimes to spend now and figure out how you are going to pay for it later. This delay, delay, delay plan is a one way ticket to poor financial health. By using cash you can only spend the money that you have in your pocket. It's like having a budget and being forced to stay within it.
Third, you might think twice about spending money if you are holding it in your hand. If we are using a credit card it is easy to spend money because it doesn't seem real. It's just a piece of plastic and nothing seems to have changed after you have spent the money. When you use cash you have to hold the money in your hand and decide if you really need whatever you are going to buy. This is a great way to cut down on the unnecessary expenditures which are really hard on your finances.
Fourth, money can often talk louder than credit cards. If you are buying a product that is somewhat expensive, the salesperson will be much more likely to give you a deal if you are paying with cash. They don't have to pay the credit card processing fees or wait for the money, so they may be inclined to pass some of those savings on to you. Using cash can actually save you money.
Finally, using cash can be an excellent way to save. If you make the pledge to yourself not to spend any change, you would be surprised how quickly that can add up. Every time you buy something and are given dimes or quarters as change, don't spend it. Instead, find a jar or a piggy bank and save it. You won't miss it and it is amazing how quickly you have saved up enough for something you want or even a trip.
Credit cards are a great tool, but sometimes plain old cash is even better.
Posted by jonathan on October 26, 2005 at 07:53 PM