Our biggest concern about starting the cash-centric Envelope System was ditching our credit cards – and the rewards we get for using them. We figured that if we got 1% cash back by using our credit card, we were saving money. And who doesn’t love the offer of free airline tickets, etc, etc? And since we used our credit cards like cash – anything we bought our credit cards got paid off in full monthly – we thought we were doing just fine.
My second concern was that I’d spend the cash faster than I’d spend on our credit cards since every time I went to the ATM the cash I got was gone in a second.
But our friend Jenna convinced us to try the cash method. She and her family had huge success with it, and she assured us that spending cash makes you think a lot more than handing over your credit card. The philosophy behind it is that if you’re handing over cash – and you know that there’s a limited amount of it – you’re going to think twice about purchases.
So we figured we’d try it for a month. And there was no looking back. We truly do think before making purchases. Every Target or Grocery trip with a couple extra $5 or $10 items starts to add up over the course of the month.
And since we’re all about keeping it real here, I’ll give you some numbers. We thought before purchasing so much that we saved $500 of the money that we budgeted to spend in the month of January – and we ate out, went to the bars, bowled with our family, etc. Those savings are beyond money that we saved just by establishing a budget that limited unnecessary spending anyway. All in all, we saved over $1000 that we would have normally spent using our credit cards during the month on random purchases. That’s way more money than we would have received with our 1% cash back rewards. Needless to say, it’s love.