Cash vs. Credit Cards

In January, David and I decided to go on a budget. 

We set up a simple spreadsheet and allocated numbers to different categories.  It's super novice, but it was a start.

For the first three months of the year, I've been paying with cash.  Grocery store?  Cash.  Target?  Cash.  Out to dinner?  Cash.  My wallet made room for wrinkled envelopes as I pulled a 30-something Michelle Dong (my beloved mama) and paid in cash.  She taught me well.  It's true-- it's certainly hard to part with cash!



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David was supportive, although after two weeks he said it felt like we'd been on a budget all year.  "We have," I said.  "2011 just started!"  He didn't think that was very funny. 

He's been on board with me paying with paper rather than pulling out plastic, but he kept saying how we miss out on all these great rebates by not using credit cards.  For example, he uses credit cards for all his work travel, hotels and meals when he's on the road.  We get a rebate on that card-- and I get free starbucks because of it!  He'd have to spend that money anyway (or at least his company would), so we might as well get a rebate on it, right?  There's a point to his logic I guess.

Everyone says paying with cash is mentally more "intentional" and painful (yikes!).  No one likes to pull out three twenties to buy a pair of shoes-- they litterally watch the money leave their pockets!  But plastic- credit cards- painless.  Swipe, sign, smile.  Much easier to swipe a card then to count a bunch of ones to see if you have enough.  At least you know if you have enough.



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We decided for the next three months we'd go back to credit cards and see how we do.  We've always paid off our credit cards in full every month, but will it be easier or harder to track if we're on budget?  Will saving receipts work?  Will we spend more?  Less?  The same?  We were under budget every month while using cash.  Can we do it with credit cards too?

I guess we'll see.