Debt Reduction, Everyday Living

The slow transition to a cash-only existence?

I’m about to ask an obvious question: Why does it seem to be easier to save money when you finally have more of it? For most of my adult life I’ve lived paycheck to paycheck. Don’t get me wrong – this isn’t something I’m wearing like a badge of honor. It was just a fact of life. I remember a conversation I had with a coworker when I was in newspapers.

Her: “I saw an article the other day about the importance of an emergency fund.”
Me: “And?”
Her: “Well, it said something to the effect of having this fund in case of an emergency. You know, like emergency repairs to your car, etc.”
Me: “Well, what do you do?”
Her: “Figure out what I don’t have to pay that month and go on an immediate diet of Ramen noodles to make ends meet.”

I could blame a lot of my money woes on some of the former jobs that I had in my life. But to be honest, I could have been making a ton of money and I’d still be broke. Why is that? Because I was crappy with money.

My husband and I just got back from a weekend road trip. As I’ve discussed before, the extended times that we spend in a car driving gives way to many conversations about money. What we want to do in the short-term with our funds, future expenses and our end goal, which is our ultimate dream of being debt free. No college debt, no mortgage.

To that end and towards that ultimate goal, we recently came up with a new plan of action. We have been reveling with the recent influx in income that we’ve enjoyed recently. But now it’s time to buckle down and limit our spending. How are we going to keep this in check? Each of us gets $100 in cash at the beginning of the month to do with as we please. For me, this will be my slush fund for my iced coffee habit, lunches out, extras like pedicures (I never claimed to be perfect …) and other “stuff” that falls out of my normal grocery budget. There is still some negotiations that need to take place. For instance, how should we budget gas money for times when we drive to see our parents? Trips to Iowa to see our families take about a gas tank and both of us have larger and older cars that take about $50 to fill. Ryan’s going to need new shoes shortly and because he literally wears shoes for about two years until they are in rags around his feet, I don’t feel like he should be dipping into his monthly cash fund to pay for something that isn’t a luxury item for him.

And to be honest … this is an accountability measure for both of us, but as you’ve probably guessed by reading my posts – my husband isn’t the one with the spending problem. I’m the money sieve in this relationship and this is more for me. But this is something I’m excited to work towards.

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4 thoughts on “The slow transition to a cash-only existence?

  1. “Why does it seem to be easier to save money when you finally have more of it? ”

    Well, that’s a good observation. I think part of it is that once you have a cushion, every little unexpected expense that comes along is not a full-blown crisis, just a bump in the road, and having cash on hand allows you to get back on track fairly quickly.

    It’s also easier to save once you have a nestegg because you realize how hard it was to save what you’ve got and you are less willing to let it slip from your fingers as easily as before.

    And, once you have put in place various ways to auto-pilot your savings plan, it’s all clockwork. In the words of one famous rotisserie chicken maker: “Set it and forget it.!”

  2. I’d echo some of the comments from the last person – when you have more “disposable” income every month, you can set up constant savings amounts that automatically get deposited/transferred every month (just like a bill) and can still handle all the little “crisis” things without having to dip into any of that. The only time I go to savings now is for planned, major stuff like a big vacation or buying a car or something like that. Certainly I could use all and any of that buffer in an emergency, but the point is that most of the time you can deal with “little emergencies” without doing that.

    Also…I used to do the strategy of giving myself some set amount of cash for a month for “extras”…it worked to a degree. It was very visible how much money I had to use/had left. However, there were two problems – I often didn’t then see where that money went (which, if it’s really “expendible” that’s ok, but I like to see where I spend money over the long term) and, I often would “re-categorize” expenses if I was getting close to being out of my “expendable” allotment – so if it was toward the end of the month and I was already running out of my stash, an extra meal out with friends might get purchased with the “regular” allotment.

    So for me, the results were mixed…but I wish you good luck 🙂

  3. Paul’s comment made me think about how we budget for recurring expenses. It is actually pretty easy for us because my wife is a teacher and only gets paid once per month.

    We just write down the yearly/every 6 months/every quarter bills. Think car insurance, vacation, Christmas, car tags, termite inspection. We have also setup a category for medical and car repair expenses.

    We have an ING Direct account witch let’s us create sub accounts for each expense and have automatically have the money transferred each month. Like I said we are fortunate since she gets paid once per month.

    This has really helped us. It is a big relief when the bills come due or we need to start shopping for Christmas.

  4. Smart move trying to stop spending so much money using cash when paying, instead of debit cards…It’s more painful when you really touch the money when you spend them and you may decide to spend much less….

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