The following is a guest post by Steve Repak, CFP™. Steve is the author of “6 Week Money Challenge For Your Personal Finances“, a simple, step-by-step program founded on biblical principles paired with a CFP®’s understanding of modern wealth-management strategies.
How realistic is the cash only lifestyle? If you are in debt, you have probably heard over and over again that you should quit using credit cards and stick to cash only purchases.
In a previous article, I explained that for some people it actually hurts to break a large bill like a $20 so only using cash may help you get your spending under control. I wanted to share some of the risks and benefits of a cash only lifestyle and also show that you can still get out of debt if you want to use credit cards. If getting out of debt is your goal, there are three things you must do in order to succeed regardless of whether you use cash or credit:
- Spend less money than you take home each week
- Build an emergency savings
- Develop and follow a get-out-of-debt plan
How Realistic Is The Cash Only Lifestyle?
Cons of using cash
One of the biggest disadvantages of carrying cash is that you can lose it! If you lose your credit card you can cancel it and order a new one but I am afraid you just can’t do that if you lose your cash.
If you use an ATM to withdraw cash you may be charged fees, which is like throwing money away. Worse yet, flashing cash can make you a target for thieves.