Going Green: How to Live a (Nearly) Cash-Only Life

According to Time.com, the current average APR on credit card debt is 15.22%. For folks who aren’t disciplined about managing credit card debt or paying off their balances aggressively, the rate is a real eye-opener. All the cash-back rewards, airline miles, and perks in the world can’t justify the financial hit consumers take in long-term credit use and interest repayment.

With interest rates on the rise and credit card companies devising ever-craftier and creative ways to score a few bucks here and there, isn’t time to consider going cash-only? In 2010, I wrote an article on 6 Reasons Why Cash Is Still King. Now it’s time for a more pragmatic discussion on how to make a cash-only life work for you. Here’s how to give a big thumbs-down to the credit card companies and go (almost) cash-only. (See also: 5 Ways to Give Cash as a Gift)

1. Carry Cash

Surprise! The first step in going cash-only is to actually get your hands on some of the stuff. It’s still green(ish), and it still works like a charm. Take a look at your credit card statements for an average week and see where/how you’re spending your money. Take a similar amount out in cash at the beginning of each week, and dispense it to yourself on a daily basis. Consider experimenting with the amounts a little and see if you end up spending less when you’re spending paper vs. plastic.

2. Save Receipts

One of the convenient things about using credit is the electronic trail it leaves behind. You can easily track transactions and refresh your memory about expenditures you’ve forgotten. But cash is a different animal. Get used to saving your paper receipts. I dump all my cash receipts in file folders divided by month/year. A shoebox and a binder clip for each month works just as well. It’s not the sexiest way to stay on top of what you’re spending, but it works like a charm.

3. Hold With Credit, Pay With Cash

Going cash-only doesn’t have to mean you spurn all of life’s conveniences or that you can’t leverage the power of credit from time-to-time. Using your card to reserve a hotel room, rental car, or other service is quick and convenient. Just remember, when you arrive at the hotel or car rental agency, pay in cash — and get that receipt.

4. When You Do Use Credit, Make It Work Like Cash

We live in the modern world and there are times (unfortunately) when cash just won’t work. For online shopping or other cash-adverse transactions, think of your credit card as a friend who’s spotting you a few bucks for the very short-term. Pay him back quickly. Who says you need to wait until you get your monthly bill to make a credit card payment? There’s nothing credit card companies hate more than getting paid back in full each month. I say, embrace the hatred and wear it like a crown.

5. Don’t Trade Credit Card Interest for ATM Fees

Whether you’re paying interest on a credit card or getting pinged by debit card withdrawal fees, using plastic usually means more money out of your pocket. Don’t trade longer-term interest for shorter-term ATM fees. Withdraw cash at the beginning of each week from your bank or an affiliated ATM and let that amount of cash guide your purchasing decisions — without the need for frequent, spur-of-the-moment trips to the ATM.

6. Remember: Safety First

Cash gets attention. Sometimes that attention is good (ask for a modest discount when you pay for your next car repair using cash instead of credit — it works). But at other times, pulling out a wad of $20s isn’t the best idea. Use your cash wisely, be smart about how much you carry at any given time, and be discreet about who sees it. Organize the cash in your wallet from lowest to highest bill, and keep anything higher than a $50 tucked away in a separate compartment.

There’s no question that credit cards can be a great convenience. Anyone who tells you to give up credit completely and permanently is trying to sell an idea that has a very limited real-world application. The key is to use credit responsibly and reserve its use for those occasions when cash simply won’t work — or will work only through complex and onerous measures (with online purchases, for example). For 95% of the day-to-day stuff, try skipping the fees, late charges, and interest. Rediscover cash.

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Guest's picture

"When you use credit, make it work like cash." If I do use my credit card, I usually record the amount in my checkbook and show it as "payable". I hate getting a credit card statement and then have to come up with the money. It's not as bad when the money is already set aside.

That being said, I always spend more when I use a credit card or debit card. I've been trying to talk myself into switching to cash. For some reason, the same things I don't hesitate to buy with my debit card, I can't buy with cash. I just have a harder time spending cash. I'm much more careful! But debit cards are SO convenient! I guess the question is: do I want to save money and stick to my budget or have convenience.

Guest's picture

Use a smartphone app to record transactions and skip the receipts (except for anything which may need to be returned or for warranty purposes). If you really want to move to a mostly cash based lifestyle then you should switch to an online bank. Some, like Ally, offer free debit cards with no charge to withdraw money - they even refund the charges that other bank ATMs charge.

Guest's picture

One thing that has helped me is using my miles credit card. When I make a purchase, I immediately transfer that amount into a savings account. At the end of the month, I pay the credit card bill out of that savings account. I keep my money until the bill is due and my money earns interest during the month. The balance in my checking account is "realistic" because it does not need to cover a huge credit card bill every month. This works out really well for me.

Guest's picture

A credit card is a not necessarily the evil sometimes portrayed. I've not carried a balance in twenty years.

However, we seldom use one. We use cash for daily transactions: gas, groceries, etc. And when making largish purchases, we use cash since we've pre-determined what item we're buying. Using cash helps keep us within budget.

Guest's picture
Elyse Stein Zois

Cash? I went shopping this past December because t he department store nearby was having a big sale. When I got to the counter I ws asked for my store credit card. I replied that I didn't have one. I was asked if I wanted to apply. I replied that I did not. She then looked at me ans said "If you aren't using your [name of store] card, how are you planning to pay?" I told her, "I am going to hand you some money and you will give me change and my purchase." It's a sad situation when cashiers don't know what to do with cash.

Guest's picture

Are you really all that surprised by this?? Times are changing and the younger generations simply aren't aware of things that are no longer commonplace. I don't necessarily find it "sad"...things are constantly changing, but that's life.

Guest's picture

Cash is MUCH harder to keep track of, IMO.

When I spend on my Credit cards, I simply enter that amount (rounded up to the nearest dollar) in my Checking register. Means I'll always have money to pay the card bill...

People just need to stop being lazy.

We live off of $600/mo and have credit scores of 730+.

Guest's picture

If you've ever been through having your card compromised (pay at the pump is particularly susceptible) using cash is far less hassle. I just find it as a simple method of paying. I ask for discounts (and get them) for large purchases when using cash. Every card transaction costs the merchant money.

Guest's picture
Thrifty Writer

I spend less with cash. It's just more painful and makes you more mindful than a credit OR debit card. I keep the receipts until I enter them into my budgeting software (The Birdy) or if they're business-related receipts, I keep them for taxes.

Guest's picture

Anyone who tells you to give up credit completely and permanently is trying to sell an idea that has a very limited real-world application??? Really? Just get a prepaid debit card for online purchases & car/hotel rentals/reservations and go cash only. Don't put your money in banks!!! 20 Years ago you were paid to deposit money in banks now they charge you, and go beg congress for your tax dollars on top of everything else. I just closed all my banks accounts (credit union too) and I've still got money at the end of the month!!! P.S. Its surprising how little online purchases I make now. I realized that they were impulse buys!!