Can You REALLY Live a Cash Only Lifestyle?
January 27, 2009 by Miranda Marquit
Filed under Finance
One of the effects of the current recession is that many people are turning to cash as a way to pay for purchases. More and more people are putting away the credit cards — either paying down debt or just trying to avoid getting in deeper. And there are numerous folks out there who contend that cash only is the way to go.
Is a cash only lifestyle truly possible in today’s world? Is cash only a viable option in a world where you are expected to build up credit in order to buy a house — or even get insurance? What about at the car dealership? At many dealerships, it’s actually harder to plunk down $10,000 in cash for your car than it is to finance it. Additionally, what about the security of risk of carrying that kind of money around with you?
Some people compromise by getting a debit card. With a credit card logo on the card, it is possible to use a debit card where credit is accepted, but it comes out of your checking account — mean that it is a way to use cash. This can be a good way to use money you have available now to make purchases that would ordinarily be made with a credit card. Of course, there are pitfalls to the debit card. You have to keep careful track of your expenditures so that you do not overdraw your bank account. And it doesn’t have all of the protections against liability that a credit card has. Besides, you can’t build a credit history with a debit card.
Building credit without a credit card
There are ways to build credit without a credit card — but some of these methods include borrowing money. You could get your car financed, and then pay off the whole amount much faster with the money you have saved up. You can also get a secure credit card (which is really just a debit card that is reported to the credit bureaus) to help you build a credit rating without using true credit. But watch out for the fees.
Additionally, there are some companies that can help you get a credit rating when you are functioning with a cash only lifestyle:
- FICO offers the Expansion Score, which looks at how you pay your bills — such as rent and utilities.
- Payment Reporting Builds Credit is another site that allows you to use your payment history to build a credit profile. Fees are involved in set-up.
Unfortunately, the credit card remains the fastest and most reliable way to build a credit history. And — even more unfortunately — we live in a world where a credit history is necessary if you want to buy a car, finance a home purchase or even get cable TV. Some employers even look at credit reports before they hire. Living a cash only lifestyle is admirable, but it isn’t always practical. But if you do live cash only, consider participating in some alternative ways of building a credit profile.
Do you live a cash only lifestyle?
My New Years Resolution was to pay down my debt, and I’ve taken the “cash only” approach. It’s been only a month, but I find myself shocked at the things I thought I could afford but was paying for with my credit card. It’s become pretty clear to my why I’m in debt in the first place. Last year I had a whole “but I NEED it” approach. By carrying with me the only cash I have, it’s really made me understand my spending habits.
Thanks for sharing Darcie! I think using only cash is a good way to get an idea of what your finances are truly like. And using cash for most every day things really puts your spending into perspective. It may not be practical to ALWAYS be COMPLETELY credit free, but using cash most of the time can be a real eye opener.
Not strictly speaking. I use a credit card for convenience and to get the kickbacks on gas and other purchases from Costco’s AMEX card. But I pay it off in full at the end of each month.
I used to write checks for everything, but I finally decided that was time-consuming, cumbersome, and wasteful. If I carry actual dollars around, they run like water through my fingers, and I have no idea where the money went. Using a card but restricting charges to a budgeted amount gives me a paper trail, and with a little self-discipline I have no problem living within my means.
Interesting viewpoint, Funny. More proof that personal finances are…personal! I like the idea of a paper trail to help keep you line. Of course, this only works if you check your statements regularly — and I’m sure that you do!
I agree that a credit card can be a great tool as long as you have the budget and the discipline to pay it off every month.
I’m in my late 40’s and I have zero debt. I comepletely stopped banking in 1991. I have never apllied for a credit card or loan. I have paid cash only and will continue to til death. The main reason I stopped banking and never applied for a credit card or loan is “I READ THE TERMS AND CONDITIONS AND THE FINE PRINT” and didn’t agree! I repeat, “I READ THE TERMS AND CONDITIONS AND FINE PRINT AND DIDN’T AGREE!” That was back in the late 80’s and early 90’s. I know credit card and loan agreements have only gotten worse and I wouldn’t waste my time to read them.
Here are a few items I enjoy that you don’t!
1. I get lmost zero juck mail! Well… except for Dish and DirectTV
2. I don’t waste my time on hold dealing with the mistakes Banks make!
3. I don’t waste my time on hold doing the Bank and Credit Card Companies jobs to correct my accounts!
4. I don’t get sold-out by the Banks and Credit Card Companies to Marketers!
5. I don’t get daily mail from Banks or Credit Card Companies.
6. I don’t spend hours every month reading the fine print of every flyer or ad looking for hidden changes in terms or account fee’s the Banks or Credit Card Companies send.
7. I don’t have to deal with jerk-off Bank Tellers.
8. I have almost zero stress!
9. I purchase my autos pre-owned and pay cash.
10. I don’t deal with Auto Sales People or play the Auto Dealers Games!
11. I decided to living in a modest house and now save $$$ on Taxes!
12. I have enough cash to NOT waste money on Home Insurance! That alone will save me lots of grief in filing a claim in the future! Being about to afford to kick the Insurance Money off my back feels great! Insurance thieves be damned! I call the shots and it feels great!
13. No Courtesy Calls from Anyone!
14. I have a go phone, no land line so no Telephone Company BS to deal with!
15. No Bank account and debit card means no place holders on purchases! When I leave the gas pump I’m paid in full! The past stays behind me! The gas purchase is paid, no bill for later or the possiblity of account shortages due to place holders on a debit card.
16. No payment on demand at Bank!
17. No one stands between my money and me. I have cash and live with cash!
19. I don’t sign contracts or agreements I don’t edit. I also don’t play the Arbitration Game!
20. I call the shots, I’m 100% in control of my life. I owe nothing to anyone and I feel great. If I could only get Big Brother out of my life, I would be in Heaven!
We do live cash only lifestyle.
We have found we do not need the credit score.
We created our own credit line with cash, why pay them the interest, you take it.
We learned how to buy a car with cash only and keep upgrading till I have the car we want.
Debit cards gets you rentals and hotels….yes they do, we have done it for years now.
You can buy a house without the credit score, yes you can, we have done it, use manual underwriting mortgage companies and if you have lived this lifestyle, you will actually have 20,30, even 40% to pay down on your home, and yes they will take your cash.
Live this lifestyle for a few years and you will be fascinated at what you have saved up using cash and a budget. FREEDOM!
Everyone can do it regardless of income. You must live within your means.
The justification for a credit card as an emergency? Hogwash, laughable! Simply an excuse to the attachment of the credit line! If you save up $2500, then that is your emergency line. Thats only an example, the logic is there.
Convenience of a credit card? HOGWASH, cash is just as convenient if you take out what you need in your budget every payday and I am sure all of you have heard of debit cards by now!
Save the credit card for the gas pump? Again, HOGWASH, debit card debit card!
Cut em up! You know what we are talking about, Close em out! Don’t buy into this debt infested society, be different and free! Sell what you don’t need, downgrade what you don’t need.
Credit rating????? LOL…..thats what got you into this mess!
Amen James! I admire you!
It’s true that you can make a cash lifestyle work. I don’t know that I could go straight cash, but I live a mostly debt free (with only mortgage and student loans) lifestyle. At any rate, it’s all about what you are most comfortable with, and what works for you.