Stop making these 7 money mistakes!

3 Easy Steps to Stick to a Cash Budget

  January 27, 2022  |    #Eliminate Debt

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Why you should stick to a cash budget

Folks who use debit and credit cards spend 12% to 18% more respectively than those who use cash. So, cash is king, and here’s how to stick to a cash budget. Start to pay off your credit quickly with the free  7-Step Credit Card Debt Slasher here.

Cash is king, so stick to a cash budget

On episode 34 of Queer Money®, we talked about the benefit of switching to a cash-only lifestyle and how doing so essentially gives you a 20% raise. The reason cash is and always will be king has practical benefits. Studies show that people who use cash typically spend less money in addition to paying less in interest fees.

Data shows that folks who use a credit card spend 18% more and those that use a debit card spend 12% more than they would if they were using cash. This is often the case because we’re not limited to the money we have with us like when we have only cash.

A perfect example is at a restaurant when we have just $25 cash on us and we see an entree for $15 and an appetizer for $9 that we want. If we only have $25, we know we can’t purchase both the entree and the appetizer because we won’t have enough money for tax and tips.

With a debit card, we likely have access to more cash. With a credit card, there’s nothing to stop us from adding a glass of wine or cocktail to our order, since we’re overspending.

We fell victim to this bad thinking ourselves so many times when we were accumulating our $51,000 in credit card debt. Often this happened with a happy hour where we went for the obligatory one drink that turned into two or three, then food, costing us three to five times what we planned.

Reasons to have a cash budget:

  1. Cash is finite
  2. Studies of consumer psychology suggest consumers are more conscious when buying with cash
  3. Cash transactions don’t incur hidden fees, such as with credit cards
  4. Cash transactions end at the register, no future credit card interest fees or late fees
  5. Cash provides leverage to negotiate
  6. Cash transactions are private transactions

While there are disadvantages to using cash, such as ease of theft, forgery and the requirement to plan and budget (which is actually a good thing), we believe that using cash is better for most people.

Security and privacy are not the least of the reasons why.

Hear why cash is still king and how to stick to a cash budget:

Principle 3 of a debt free life: Cash is king

On this Queer Money®, we talk about the benefit of switching to a cash-only lifestyle and how doing so essentially gives you a 20 percent raise. The cash is and always will be king principle has practical benefits. Studies show that people who use only cash typically spend less money in addition to paying less in interest fees.

How cash gave us a $10,000 raise

When we had $51,000 in credit card debt, we were paying $10,000 annually in interest payments. That’s the cost of a few nice vacations or a contribution to a down payment on a home. When we paid off our $51,000 in credit card debt, we gave ourselves a $10,000 raise. This dramatically improved our quality of life.

Watch below rather than listen to this Queer Money®:

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Get more help to become debt free:

5 Building Blocks of a Happy Gay Life

We’re David and John Auten-Schneider, the Debt Free Guys and hosts of the Queer Money® podcast. We help queer people (and allies) live fabulously not fabulously broke by helping them 1) pay off credit card debt, 2) become part- or full-time entrepreneurs and 3) save and invest for retirement.

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Avoid these 7 mistakes to get on the fast path to wealth.