Why Paying in Cash Is a Better Choice by Agu.Hidayat


									                   Why Paying in Cash Is a Better Choice

Making purchases with cash can strengthen your ability to budget, save and invest your
money. But with so many books on personal finance that are packed with as many tips as
possible, it's hard to put even a few principles into practice. Sure we'd all like to spend
less than we make, but with credit and debit cards as convenient as they are in a world of
hectic schedules, we don't always make the time to go to the ATM machine for cash even
though we should.

Thanks to credit card companies targeting consumer vulnerabilities, we live in a plastic
paradise. You can customize your credit card with the graphic of your choice. With the
exception of a few mom and pop stores, most credit cards are accepted as cash. Your
personal identification number (PIN) usually protects your debit card and with a signature
and sometimes a PIN too your credit card is protected. But with cash, the only protection
is your ability to defend it should someone want to take it from you. But regardless of the
conveniences debit and credit cards afford us cash is still the better choice for making a

Credit and debit cards give consumers a false sense of security, encouraging us to spend
more than we intend by giving us access to more capital. For people who make purchases
with cash, spending more than they intended means a trip back to the ATM to get more
cash before going back to the store to finish their purchase. During the trip back to the
ATM they have time to weigh whether their budget can handle the strain of this purchase.
When you carry cash you're better prepared to pay for a given product and not for
features you don't need.

By paying with cash you'll avoid over-shopping. A Dunn & Bradstreet study found that
people who used credit cards spend 12-18% more than they did when using cash. This is
why making a list of things you need before you go to the store and carrying only enough
cash to cover those items is the best way to stay within your budget. Motivated shoppers
also look for discounts or use coupons to make the cash they have go even further, saving
enough cash to buy themselves a luxury item.

Aside from encouraging us to spend more, credit card companies also make it easy to
only pay a minimum balance every month and then charging us 15% or more in interest
on the remaining balance. Do yourself a favor and leave the credit card at home. In fact,
you should leave your debit card at home too. Despite the overkill on ATM fees and
foreign ATM fees, debit cards make it hard for consumers to track their money flow.
When it comes to $2 here, $7 there, another $3 over here, it's easy to lose track of how
much money you spent in a day, let alone a month. When your monthly statement arrives
in the mail it's no wonder you're shocked and by then it's too late to do anything about it.
With cash you can literally see the damage as it is being done and hopefully curtail your
spending before it gets out of control.
If you struggle with over spending, leave your credit and debit cards at home and only
carry small amounts of cash. Big purchases that require a military loan will be avoidable,
and you'll stay within your budget and avoid impulsive buys that are made easier with
credit and debit cards.

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