Monday, September 10, 2007

Money, it's a hit.

Using cash for things changes the entire spending-money dynamic.

I used to be a bona-fide debit card guy - everything from groceries to online shopping to visits to the bar, they all got paid with my checking plastic. It was easy; all I had to do was sign for my purchases.

But then things got forgotten. Sure, I'd check my account every day at work (one of the many benefits of working for a credit union). Every once in a while, thought, I'd forget about some debit transaction that was "pending," where my available cash was different than my actual account balance.

Some folks take care of this by balancing their checkbook on the fly. As soon as a purchase is made, it gets noted in the check ledger.

Well, that didn't work for me. I'd try it, but it wasn't very convenient. And I was all about convenience.

Now for the past year, since switching to the Dave Ramsey plan, I've been using strictly cash for my everyday spending, and it's opened up quite a different world for me.

Ramsey's plan has me putting cash in actual envelopes that are labelled "FOOD," "GAS," Or "BLOW" (spending money, not prostitute money - sicko), etc. I'd budget myself so much each week in the "FOOD" envelope, and then use that cash to buy groceries. "BLOW" would be my fun money, "GAS" my gas money, and so on, and when the money ran out of the envelope I didn't spend any more in that category.

Ramsey's basis for doing this involves people like me who didn't think about their overall spending patterns. I spent until the money was gone, and didn't keep track of where it goes.

Now I do track where it goes by the simple act of keeping my receipts: everytime I make a purchase I take the receipt, stick it in the envelope, and then - later, on an Excel file - note every dollar spent.

Anal? Maybe. But the five minutes it takes to do this per week has kept me from overspending. Any time spent on finances is worth something.

I'm finding there are all these fun dynamics at work when using cash, like paying tips in the new presidential gold dollars. With Mr. Washington and Mr. Jefferson, I can leave the waitstaff a fun souvinir to spend or save. It makes more of an impact than a plain ol' dollar.

For some reason, it feels better to leave someone a gold coin rather than signing off on some slip of paper they may not look at. Actually leaving some cash for someone makes me feel better, and lets them know I appreciate the work they do.

Have you seen that new Visa commercial, where the economic process is running like clockwork until some goof pulls out actual paper money to pay for something?

I say that's bunk. A visual record and the actual physical exchange of money feels better than using plastic now. When I need it, my debit card is there. But not everyone accepts plastic, and everyone accepts cash.

My attitude about cash has definitely changed. Maybe someday cash will be like the snail mail to plastics slick e-mail interface, but the old way of doing things still has its uses.

After the stamp collectors are long dead and gone, maybe I'll be the old guy still pulling out his two dollar bill, hoping to get a smile from the waitress.

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