Archive for the ‘Finances’ Category

Straight Cash – The Conclusion

April 7, 2010 2 comments

The cash challenge has reached its conclusion. I learned a lot during that month but my main takeaways from it are:

  1. If you don’t have money, you can’t spend it – that sounds horribly simple, but carrying multiple credit cards means I have thousands of “dollars” the credit card companies are willing to loan me hoping to get 20% interest on it at my disposal at any time. What usually kills my budget aren’t $5, $10 incidentals – it’s the big ticket items ($50 or more), and during the month, since I didn’t carry more than $30/$40 at a time unless I had a  plan to purchase something specific, not having credit cards available forced me to stay within my budget. Additionally, I’m a far more compulsive shopper than my wife: she almost never says, “Oh, btw, I bought this today.” Me, that’s a frequent statement, which I usually justify with “b/c it was on sale!” Finances can be a contentious issue in a marriage, and the cash challenge encouraged me to consult my wife prior to making a significant purchase, rather than after.
  2. Credit cards are a necessary evil – when we booked our stay in Ocean City, I needed to provide a credit card number to hold our reservation. Though I paid for the reservation in cash upon arrival, we probably wouldn’t have been able to lock-in the deal we got without the credit card. We get our gas at Sam’s Club and they only take credit cards at the pumps.
  3. Cash is KING for group dining – does this situation sound familiar? : you’re having a great time out with friends, then the check comes and everyone has to whip out their credit cards, write the last 4 numbers of their cards on the check along w/ the amount they want on it. Some people include the tip on that amount; others don’t. Some people pay cash. Of course all of this is given to a sucker one person who whips out their calculator on their cell phone and begins to crunch numbers. Inevitably, that person will shout out, “Hey! We’re $xx short!” and everyone has to pitch in another dollar or two. The $xx short is a function of the number of people in the group – I’m still working out the proof and specifics for the Distributive Tightwad Property, but it’s safe to say it’s an exponential function. For example, if you have a group of 10 and a $100 bill, you’ll be short $10, but if you have a group of 20 with a $200 bill, you’ll be short $40. Age is also a factor, so if you have a group of 10 under the age of 20 w/ a $100 bill, you’ll be short $50. That being said, having cash for once made things awfully convenient. But it also made it annoying when everyone was asked to chip in more $ and of course, none of the credit card people want to adjust their amounts.
  4. Bricks and Mortar = suck! Traffic, traffic in the parking lot, insane lines, inept customer service, store employees who know probably less than I do about where certain merchandise is located, store uniforms so undifferentiated that I walk up to anyone in a polo shirt for help, grumpy people, kids who are on leashes who are still managing to run amok, customer service people who think you’re a criminal when you bring something in for a return even with a receipt, etc…remind me why I love online shopping so much.
  5. I sure do miss the days when I used to have Chevy Chase Bank and you could find an ATM pretty much anywhere. Although I don’t miss running to the bank, scouring my ash tray for $4 in coins to meet the monthly checking fee when I was a poor college student.

So can yes folks, it is possible to live without your credit card, but it sure is inconvenient. But with credit card companies changing their terms so frequently these days, I think we’re going to minimize our card usage as much as possible. If you’re considering cutting up your cards without closing the account, be aware that some companies may be instituting inactivity fees, so you may have to start reading over correspondence from your credit card companies that say, “Important Changes to Your Account” rather than simply throwing them away – even if you use credit responsibly.


Straight Cash – Part 2

March 18, 2010 1 comment

We are now 18 days into the cash challenge. Week 1 wasn’t too bad; weeks 2-2.5 have been tougher.

  • Going with South America’s suggestion, my wife and I decided to penalize ourselves whenever we needed to use a credit card. We modified his suggestion though: we multiplied the amount charged to our credit card by 110% and we will be adding that to our tithe for the month. Currently, that amount stands at $90 b/c I had to buy stuff from Amazon for my dad’s shop. The cost difference in buying from other retailers – both online and B&M – was significantly greater than the 110% “penalty.” Note: the penalty was instated after I ordered $150 in grill parts.
  • Speaking of Amazon, the only way to obtain an Amazon gift card with cash is a Coin Star machine. If much of your online purchases are through Amazon, going straight cash is going to be very difficult for you.
  • Through a pre-approval process where we discussed the matters beforehand, my wife and I did decide to give ourselves 2 Use Your Credit Card Free passes: 1) I took some members of the praise team out to dinner after a sound conference – I didn’t feel comfortable carrying around $100+. 2) I went in to work down my gym membership and was willing to pay 2 years in full if I could get the price down to $800 for the both of us. Since there’s a daily ATM limit, I’d need to go to my bank.  My gym is 2 miles from my house; my bank is 15 miles in the opposite direction.
  • I still think Credit Card companies are evil, but after using them extensively for 7 years, living without it is pretty inconvenient.
  • Once again, not having money makes it tough to buy things. For example, late last week, I was down to my last few bucks for food for the week. I was at McD’s for lunch (GIVE ME THAT FISH!) and after ordering 2 filet o’fish, I found I only had $2.07; the total was $2.10. I had to order one less fish, which was better for me anyway.
  • So far, we’ve stayed far under budget every week. This is mostly due to the fact that we keep leaving the house without money.

Next week should be very challenging! We have my mother-in-law and my father’s birthdays coming up. And the following week, we plan on going on a small trip somewhere to celebrate our 5-year anniversary.

Has anyone else gone w/out using credit cards? How was your experience?

Straight Cash – Part 1

March 8, 2010 7 comments

The cash challenge has been interesting thus far. And despite only being a week into it, we already “cheated.”

  • Having coins rattling around in my pockets isn’t fun – especially when the relaxed fit jeans I bought some time ago are no longer relaxed. Every time I’ve had to get my keys/cell phone out of my pocket, I’m dropping coins.
  • Someone asked me if I had change for a $5 bill last week. Out of habit, I gestured to my pockets as if I’m feeling to see if I have my wallet and said no…oh, wait…I do. That was the first time I’ve had change since forever.
  • As I suspected, seeing my cash on hand dwindle from $20 to $15 to $8 to $1 had much more impact on my psyche than swiping my credit card for a $5, $7, $7, and $1 purchases.
  • I haven’t had this scenario play out in a LONG time: I go to a fast food restaurant and the total is $2.12. Seeing as how I didn’t want to put another $0.88 of change in my “relaxed” fit jeans–where are my JNCOs when a fat boy needs ’em?–I found I had a quarter and several pennies in my pocket.  So I gave the cashier $2 and started searching for my change. He opened the register, put in the $2 and awaited my $0.12. I gave him $0.27 and he had a really puzzled look. He said he didn’t need the 2 pennies since it was $0.12. I had to explain to him that I’d rather not carry around pennies, and by giving him $0.27, I would get back a nickel and a dime. He continued to look puzzled. This stare down could’ve continued indefinitely, so I took back the 2 pennies and he gave me 2 nickels and 3 pennies. Great…
  • Not having a credit card for online shopping is like going to a food place only to find a sign w/ the words, “Cash Only.”
  • The “cheating” occurred at Sam’s Club. I had to drop off prescriptions for my mom and while there, realized we needed milk. If I were to stick to my guns, I’d have driven home, gotten some cash and come back. That would’ve wasted gas so I gave in and used my debit card. Debit cards are technically akin to using cash so I didn’t feel too bad.
  • I’m going to have to cheat for real this week. I need to order parts for my grill and smoker from Weber and they only accept credit cards over the phone. I searched around for a cash gift card but most of them have activation fees of $2.50.
  • This sounds stupid when I type it out: it’s hard to spend money when you don’t have any. But it’s true. Having a credit card gives me the notion that I have money at all times. And since I don’t see the consequences of my actions until the end of the month, it’s easier to spend more than I intended to.

All in all, it’s not terribly difficult living without credit cards; you just need to plan out your spending a lot more. The first two months of 2010, we’ve gone over-budget in most categories; last week, we were under-budget by quite a bit.

Cash or Plastic?

February 25, 2010 6 comments

For the past few months, I’ve been receiving notices of changes to card holder agreements from the various banks my wife and I hold credit cards with. I wrote them off as innocuous b/c 1) we never carry a balance so changes to interest rates didn’t matter and 2) we try not to go above 15% of our available credit for any card so we weren’t concerned about decreases in our credit limits. Then recently, I noticed several articles including one from the Wall Street Journal that talks about banks using inactivity and annual fees for certain rewards cards, which definitely affects us, as a response for the money they’ll lose as a result of the Credit Card Accountability Responsibility and Disclosure Act of 2009.

We have several cards that we never use but we didn’t close them on the advice of several reputable sources that closing it doesn’t buy us anything and it could even hurt us in terms of length of credit history and credit utilization factors for our FICO score. But now with potential inactivity fees, we may look into closing all but one or two accounts.

I’ll be honest. I don’t enjoy banks. The exorbitant bonuses, the customer service (and I use that term lightly), and having to monitor your account for changes and unexpected fees. For example, Bank of America decided that b/c he was a loyal customer, my dad was automatically enrolled in their advantage checking program, where he gets all these benefits that don’t make any sense for him all for the low, low cost of $20/month! Being self-employed, he tried to take a break and head to the bank and change to a regular checking account only to have the customer service representative (and again, I use that term lightly) tell him that a manager would be glad to help him resolve his concern in an hour and a half. An hour and a half! So I told him just ask the teller when he went to make a deposit. It’s not like he wanted to close or open an account – it should be pretty easy for them to do. The teller informs him that he has to meet with a manager, so after waiting in line for half an hour to make a deposit, he has to make his way over to the customer service representative who again informs him that it’ll take at least an hour. Thanks Bank of America. You ROCK!

A few years ago, the wife and I watched the film Maxed Out and it made me dislike banks and credit card companies even more. It’s an eye-opening film and remember thinking that all the students in my college group, which I was leading at the time, should view it so that they use any credit they have available wisely.

Despite my general disdain for them, I still use banks for credit cards b/c

  1. The protection it offers – if someone steals my cash, I’m done. If someone steals my card, they’ll give me a new one and I won’t be responsible for any of the charges. Travel insurance and all that is nice too.
  2. The rewards – my Citi card used to give 5% back at gas stations and groceries, but now it’s down to 1% pretty much everywhere. Still, 1% is better than 0%.
  3. Easy to keep track of expenses – you don’t have to keep all your receipts.
  4. Ease at check-out – swipe, sign, go is much more convenient than ummm…I know I had a 20 in here somewhere…ok, and I think I might have $0.37….
  5. Online shopping – yes with PayPal and gift cards, it’s still possible to shop online without a credit card, but that requires much more work.

Thankfully with good advice from friends when I got my first credit card, which I stupidly got b/c I wanted a free Maryland t-shirt and frisbee they were giving away, I’ve never had revolving credit card debt, so closing an account is as easy for me as making a phone call. But can I live without a credit card?

For the month of March, my wife and I are going to try to use cash for every purchase besides gas. For online purchases, we’re going to have to go out and get a gift card for that store. It’s going to require a lot more planning, such as going to the ATM in advance, but I think it will also provide some benefits such as:

  1. When I use a credit card, I don’t think about how much I’m spending; when I use cash, $40 seems like a lot.
  2. We try to stick to a strict budget, but since we use credit cards, going over a little bit isn’t a big deal. With a limited amount of cash to use each week, when we run out, we run out. To even go over a little bit, we’d have to drive to the ATM. This will help us be better stewards of our resources.
  3. If an opportunity to give to someone in need arises, we’ll always have at least a little bit on hand.
  4. Having to plan for online purchases will prevent spur-of-the-moment spending – which is more my issue than hers – b/c as my wife says, “Sure SlickDeals saved you 50%, but if you didn’t buy it, you would’ve saved 100%.”

So, that’s our family’s financial goal for March of 2010. I’ll keep you all updated with how it’s going.

Has anyone else tried going credit card-less? Any advice or tips?