October 5, 2011
As cash money and what you can tangibly hold in your hands disappears and is replaced with digital numbers on statements or computer screens, so too is the fading understanding of the value of money. Too many people are overwhelmed by numbers and don’t see something as being gone unless it was physically there beforehand. Case in point, the elected leaders that still cannot grasp the concept of an enormous debt that is just too much for them to handle.
To those who are responsible, and understand debt and the frugal concept of spending too much, using credit is not much of a problem. To those that spend excessively and don’t see or understand responsible debt management, this can be a very big problem. Credit limit or debt ceiling is a notion that lots of people still don’t understand.
Credit has its place in society, as it enables people to own a home, businesses can borrow to expand, and other responsible uses. Frivolous abuse of credit however destroys lives and makes paupers out of potentially successful individuals. One of the main problems with credit for the abusers, is that the quantity of money is not seen or felt, or understood.
There are some people who have managed to get out of debt and balance their finances without credit counseling in very remarkable fashion by getting back to the basics of money related transactions by using cash money for almost or all of what they purchase and pay for. This seeing and touching currency helps them retrain their minds to what they were hopefully taught as children, that you buy only what you can afford.
Here’s a plan to start the road to recovery and someday be debt free for those people who cannot to seem to stop the credit monster from consuming their lives.
First when you get your paycheck, withdraw it to cash (or as much as you can). A checking account and or debit cards will work for some, but many still do not see what they actually have unless it is right in front of them. Many people also still bounce checks because of improper accounting practices. Instead, use cash money for your living expenses. It is there to work with and to be fully visible and understood.
When paying bills use money orders. Money orders only cost around a dollar or so. Not only do you see and feel just how much the bills actually cost, which can help and motivate you to cut back, but you are using what you actually have to work with and not building up debt. The cost of the money orders and inconvenience of mailing them will be vastly made up in the long run.
Get rid of the services that automatically take out money from your bank accounts that are subject to change. The SET monthly bills that are the same each month are not a bad idea, as they leave you with a set amount to work with. However things like utility bills that do change, or phone bills that can change vastly, pay them using money orders. Helps to curb over usage of something that can be cut back, like over electric use for example.
Pay for everything when you go grocery shopping and other shopping with cash. People will often get something that they feel they need at the time to later find out they should not have. Take only the cash that you will need, no more. Having a set limit of cash in your pocket is an excellent way to purchase only the necessities. This teaches people to look for the best prices to (and to add).
Avoid going back to the bank for withdrawals of more cash unless you absolutely must for items or bills that are strictly pending and important. It will be difficult at first to go lean with spending, but after awhile it should kick in and become more of a habit. This is the most difficult part of it as it takes willpower to go without some of the items that people have taken for granted and accustomed to, that they don’t really need.
Do not use the credit cards that you have for any reason other than emergencies. Pay the balances on these credit cards with money orders each month. If you can pay more than the minimum, that is good, if you can’t, at least you will not be adding to it each month.
If anything catastrophic happens in the world, cash money may be the ONLY way to purchase anything as the credit cards might be useless, methods of electronic communications may be down, and banks may be closed. There is an advantage to having cash on hand.
One little advantage to paying with cash is all the coins that you get back. Putting these coins in a jar until it’s full is a great way of saving some fun money to splurge with, or maybe applying it to pay off some of your debt. Coins add up surprising quickly.
This overall method WORKS, I have seen people go back to the days of using only cash money and they get a grip on their finances because they see and feel real currency. While currency is fiat and does not really have much to back it up, it is still physical and can be held. Even the old time Monopoly game works with fake currency but teaches the concept of careful buying and selling. People understand something better when they can see it. Cash money is certainly not the only solution for those plagued by overspending and credit, but it sure helps as an excellent foundation for people getting a much better visual hold on what they actually have to work with.