We Decided to Pay Cash for Everything (Here’s What Happened Next!)

pay cash for everything

Do you pay with cash, debit, credit or a combination of the three? Some people use credit cards to pay for all of their expenses, earn rewards and then pay the balance off each month. 

Others use cash or debit card for everything and follow the viewpoint of Dave Ramsey – credit card rewards aren’t worth “playing with fire” that can lead to overspending and possibly, debt.

Also, the research shows that we tend to spend more with credit cards versus paying with cash.

My wife and I used credit cards as our primary form of spending for years. A few months ago we decided to make a switch to go all-in with Dave Ramsey cash envelope budgeting (see an example of this) and honestly, haven’t been happier with things since. We paid off our credit card balances and started using debit for bills and regular expenses, and cash for everything else.

Sure, it took some work to make the transition, some behavior change and giving up earning miles and rewards. However, making the switch has provided some benefits that we never would have expected. Here are five benefits we’ve found after deciding to pay cash for everything:

1. We Stopped Spending Ahead

While we’ve always used a budget and tracked spending diligently, we found ourselves spending ahead more times than we knew was probably healthy to do. We would choose to spend ahead in the areas of entertainment or dining out. Or, we would spend ahead on the kids when we felt like they needed something for school or for some other activity.

The convenience of the credit card made it easy to spend ahead a little bit and figure out how to pay for it later, or just balance it out at the beginning of the next month. Doing so put us in a catch – up mode.

Related: How to Spend Money Wisely (10 Things You Probably Aren’t Doing)

Overall, we’re not talking about a lot of debt, and we still had constraints not to spend ahead to an unmanageable amount. However, doing so is never a good practice and can add up if you’re not careful. It also started to cause stress in our relationship and we knew that was a symptom of what could become a larger financial problem.

Since making the change to cash and debit card, our choice to overspend has simply disappeared. Why? We believe it’s because we’re now forced to solve problems, or to simply wait until the money is available.

2. We Problem Solve More

Paying by cash and debit card has forced us to become better at problem-solving. As mentioned above, we wouldn’t solve our shortage problem. We’d just spend!

Now we have to problem solve. We have to seriously evaluate the necessity of our expenses, force ourselves into saying “no” a lot and spend only what we have available in our account or cash envelopes.

We can’t use credit cards to bail ourselves out even if it’s a small amount. Our only source, if the gap is truly a need and it’s large enough, is to use our emergency savings account. That’s obviously something we’ll always do our best to avoid unless it’s absolutely necessary.

3. We Experience Less Financial Tension

While we never argued about money or why someone had spent money on something, we did experience tension when reviewing our budget and finding shortages. This led to stressful discussions from time to time.

Related: How to Argue Less About Money

However, now that we pay with cash and debit card, we haven’t felt this type of tension in over 6 months. Why? I think we’re more thoughtful about our planning. It’s simply more difficult to use cash versus the convenience of a credit card. If we don’t have it, we can’t spend it. Easy as that.

4. We’ve Stopped Micromanaging Our Finances

Actually, I was the one who has stopped micromanaging our finances. We used to use money management software (see the best options) and have since transitioned to cash envelopes and a spreadsheet to track our regular expenses. That was a big shift for me.

I used software to track everything to the penny. I found myself tracking and reviewing spending daily and sometimes it would take a lot of my time to review the receipts, enter them into our software, review budget balances, etc.

Our finances have been greatly simplified with cash envelopes. There really isn’t any tracking to do other than thinking about how much we’re going to spend per week. The checking account is super easy to manage because there aren’t many transactions – just the bills or stuff we know we have to pay for with debit card (online purchases, etc.).

5. We Conveniently Have Cash On-Hand

I used to swear by the convenience of a credit card. I would purchase everything using my credit card, track the expense and then assign to a budget category. I always knew I needed to carry a little cash just in case I needed it, but I never did. And it was always a pain when the kids were at the park and wanted a cash-only treat, or when we needed money for valet and didn’t have it.

Related: I’m Done with Credit Cards

I always reasoned a credit card was absolutely the most convenient and safest way to pay. I no longer believe that. There is a great convenience about having cash that makes it handy to pay for little things and you never have to make an emergency run to the ATM! And a debit card can easily cover electronic purchases in your budget.

Final Thoughts on Deciding to Pay Cash for Everything

You already know that to pay with cash or debit is nothing new. Dave Ramsey’s been preaching about the benefits for years. Now I can agree in confidence that it works and does make a difference. It certainly offers more benefits than just staying out of debt.

What do you think about our move to pay with cash and debit vs credit? Would you be willing to stop your credit card usage for 3 months to see how the change impacts your life? Let us know in the comments below.


    Speak Your Mind


  1. I’m a big fan of using a credit card before this. I noticed that I spent money like crazy when I used my credit card and I bought too many unnecessary items and end up didn’t use it frequently.

    I stopped using the Credit card, and use Cash for 1 month, I can see the improvement. I’ve no longer do impulse purchases anymore.

  2. Avatar Ted Reynolds says

    In the modern woke environment we live in, I don’t see a time when cash will go extinct. It’s too convenient and infused into our society. From POC, homeless or the undocumented that don’t have access to banking, significant portions of our country function using 100% cash. Many of those people are voters.

  3. cash is king! it is not tracked nor traced. helps people see what they are purchasing physically. I Have AMEX green card I used to spend a lot without knowing. Now started cash budget, I am seeing where my money is going with me physically pulling cash out. Remember those rewards credit card companies are giving come at the cost of some one paying 21 percent interest. I also have discover cash back debit card, it gives 1% cash back on a debit card!!! love that.

  4. As a business owner, cash sucks. There is more to worry about and documenting with cash. When cash becomes extinct, you can always use money orders, checks, or credit cars responsible used.

  5. I never use a debit card; don’t even have one; I feel the only people benefitting from this is the vendor and the bank. Plus, as Simon mentioned, you don’t get the protection of a credit card (and also extended warranties, ease of returning a product, a way to dispute charges, etc.)

    I used to use credit only occasionally and I always pay my bill off in full every month. Within the last year, after reading a financial review from a person who wrote an article on Vanguard, we re-evaluated using credit cards. Last year we earned more cash back from doing that than ever before. Hundreds of dollars. We simply use the credit card to pay for everything that we would normally write a check for and then just write one check per months (saves on checks too!). And we signed up for a couple of new credit cards that gave us back $200 – $300 dollars after charging $1k within 3 months. Again, no expenses that we wouldn’t normally pay by check (phone bills, utility bills, insurance for the house/car, gas and finally the hardest for me was groceries! -if they don’t charge a fee to use a credit card, we put it on credit.) One CC pays 5% back on certain revolving categories; another pays 3% on groceries; another pays 5% on office supplies, etc. I had to make me a cheat sheet to keep in my wallet and on the desk at home to remember which card to use for what but it is worth it. Hundreds of dollars worth it. The key is only using it for what you would pay cash or write a check for and then paying it off when the bill comes in.

    Hey, we’re making little to no interest on the money in the bank. Why not let the banks pay me to use my credit card….the interest is much better than a savings account :o)

    And, yes, my second best form of payment is cash. Love it. Always keep some in my wallet. But I do still write checks as well to those companies who don’t accept credit cards without a fee.

    The key is developing discipline. I found out long ago that if I didn’t visit the mall I didn’t see things that I might desire. If I DID see something I “wanted” I made myself wait two days and then revisit it. By then I didn’t want it so badly and 95% or more of the time I chose not to purchase it.

    So I advocate using credit cards wisely and paying off the balance when the bill is due. Don’t charge unless you are able to pay for it right away.