Over the last several years, my family has adopted cash only living, a decision that ultimately freed us by ensuring we stayed accountable for managing real money. There was no false illusion in being able to spend by swiping a card, living above actual cash that was flowing into our lives. By adopting cash only living to how we lived and live each and every day, we are happily forced to only spend what we actually have, without debt.
Effects of Cash Only Living
Our lives have improved in many ways by taking this approach to our finances and have made us very conscious spenders. When there is only a certain amount of cash on hand, one has to think very carefully how much they truly want to spend it, if they want to spend it at all! Since our cash on hand is paltry compared to many households, purchases must be thought about and weighed heavily against all the other things it could or needs to go for.
While our income has a huge area into which it could improve, a cash only lifestyle has really cut down the immense stress of using plastic and that going into debt has brought us. Using credit cards was always fine until a major life-changing event occurred (and it always did) that would change the income with which to pay off the debt. This went for car loans as well, where too much can and did happen over the 5-year periods of the loans.
With cash only living, we no longer worry about what our credit scores are either, recently coming to the conclusion that if we are serious about a forever lifestyle of only using cash, then a credit score is pretty darn irrelevant to us. Some say we should be concerned about credit because you never know when an emergency will come up where you will need it. I don’t see it that way at all.
If you assume that you need credit for some unplanned emergency in the future, well then of course there will be some “emergency” in which you think you need credit. Of course emergencies do occur and will come up, it is part of life. The ideal picture would be to have a savings built up to cover these; however, if that has not happened, there are still always options to deal with it in a cash only fashion.
For example, if our car breaks down to the point we need a new one and we do not have money to purchase one yet, we walk, we bike, we do what we have to until we have the cash to purchase another vehicle. Our $2,500 Bronco has proved to be a VERY reliable source of transportation!
We have no desire for a 15 or 30-year mortgage that would put us in our 70s to pay off. No, we would prefer to purchase something in cash, such as an acre with a trailer on it. if that is what we could afford and not owe anything. If even that small dream is not possible, why then we stick to low cost rural rentals.
We have found the cash only policy to be the best policy for our family in being able to live within our means. While this does bring its own share of challenges, it certainly makes us get creative in problem solving. There are always options and ways to solve financial challenges, without needing to resort to the use of credit cards. After all, credit cards have not always been around and families managed just fine for a long time without them.
Final Thots
While living from a cash only perspective may not be for everyone, it is something to really consider for anyone dealing with low income since for them, credit can be a very dangerous and tempting game to play where in the end, the credit card companies win. For my family, paying for everything in cash has worked the best and keeps us accountable for being able to live well, within our actual means. There is nothing to fall back on so whatever we do, we need to make it work. It keeps it simple; it keeps it real; it keeps us out of debt. It is a beautiful thing!
Carrie Hetu is not a financial expert, but has been passionate about finances since the age of 19 years old when a neighbor introduced her to taxes. From that time, she has made a point to increase her financial literacy into areas of frugal living, investing, real estate, budgeting and passive income. She currently blogs at Poor to Rich a Day at a Time and Simply Homeschooled.
This is fascinating Carrie! Whilst I’m a long way from cash-only living I do try to take money, say £100, from the bank at a time and use that for all purchases eg food, fares, clothes etc, rather than putting these items on a card. That way, I’m far more conscious of what I’m spending, and potentially frittering away. Seeing an empty wallet is very sobering! Great to hear how it’s working for you.
Oh yes, an empty wallet is very sobering LOL! I do think paying for things in cash almost always keeps one more conscious as it brings more emotion that we tie to cash, where a plastic card is more abstract and not near as “real” I think it is great you take cash from the bank for purchases!
After I got myself into some debt after college, I went to a cash only lifestyle. Once I paid off my debt and was still using only cash, I slowly switched back to credit cards to get the rewards. I slowly went back in, and make it a point that whenever I made a purchase on my credit card, I would transfer the cash from my checking account to an account for my credit card. That way, I would always have the money to pay off the credit card.