Loyalty points on credit vs. Paying Cash

iVillage Member
Registered: 07-26-1999
Loyalty points on credit vs. Paying Cash
5
Sat, 04-26-2008 - 2:15pm

Quite awhile ago a friend explained to me that he pays cash for everything, it is an easy way to budget. It made a lot of sense. For a long, long, long time I have been considering starting to use an envelope system and paying cash for things, but I always have the same excuses.

One is that when I use a card, I have an electronic record of where I've spent my money. However, I think I spend money alot more freely when it is just electronic and not cash that I have to part with.

The other huge excuse I have is that I won't be getting any more bonus points on my MC. I get about $10 a month of points to use on free food at the grocery store by charging on my MC. I have never paid any interest on this card so it is truly free stuff with these points. However, by using my card I have never learned to budget like I would if I had money divided into envelopes.

I am getting to the point (with my work situation and the rapidly rising cost of everything) that I don't really have much choice but to start taking set amounts of money out of the bank for each category and putting what's left into savings. As it is I spend whatever I need out of my account without any set amounts and $$ are not going into my savings account. It's just that thought of no longer getting those bonus points that pains me....

iVillage Member
Registered: 11-17-2007
Sat, 04-26-2008 - 4:41pm

Paying cash is good for some people but not great for everyone. I would never do it.


First I use my citi dividend for almost everything It

iVillage Member
Registered: 04-12-2007
Sat, 04-26-2008 - 5:44pm

DH and I have found something that works perfectly for us.

iVillage Member
Registered: 08-29-2006
Sun, 04-27-2008 - 12:58am

I agree with Robyn's SOP of taking out the amount just charged from the checking account immediately. I read that years ago in a financial self help book. It's the thing to do in order to keep you honest with yourself when it comes to charging your purchases and you will avoid paying interest fees.

I agree with the previous posters.

iVillage Member
Registered: 12-07-2003
Sun, 04-27-2008 - 10:07am
Could you carry around an index card with the amounts in each of your budget categories? So like it could say, Food-- $200, Gas-- $100, Lunch Money- $50 or whatever. Then each time you make a purchase on your Mastercard, subtract the amount from the total. So if you go to the grocery store and spend $49.53, you'd subtract that from the $200 on your card leaving you with $150.47 for two weeks or month or whatever. It might take more discipline than using envelopes, but then again using envelopes takes discipline too-- especially when the ATM machine is lurking around the corner. . .
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Avatar for mahopac
iVillage Member
Registered: 07-24-1997
Sun, 04-27-2008 - 4:57pm

I just want to say, I think it is great that you identified where you are likely to overspend and you pay for those things with cash. Very smart!! I should do that with clothing, the area where I am most likely to overspend for myself and my teenage daughters.

Kelly