How to Get Out of Debt: 7 Reasons to Only Use Cash

When I tell you to pay everything you can with cash, I do not mean every single bill. For example, if you have negotiated your bills down to the lowest amount possible, you might be comfortable with those bills being automatically debited from your checking account.

Other than that, I highly recommend taking a look at your average monthly spending, creating a budget based on that, and taking out the relevant amount of cash for each category.

You could keep it in envelopes labeled with the categories or a mini binder with different slots, or whatever system works best for you and your family, since everyone is different.

I am getting ahead of myself. Why would you use cash in the first place? Let’s talk about it. Here are seven reasons why I love spending cash instead of charging things on a credit card.

1. You are emotionally tied to cash

It might sound silly, but when you have cash in your wallet and you reach in to pay for something, you actually feel it more. You feel the amount of cash in your wallet going down and you acknowledge the transfer of money.

With a credit card, you might not even remember how much you have paid once out of the store. It actually hurts to pay cash, and retailers are using it by making it easier to pay for items with credit cards or even Apple Pay, because it makes you more likely to overspend.

2. Gas costs less if you pay with cash

Have you ever noticed that at the gas stations they have two prices? There is a cash price and a credit card price. You are actually paying more for the gas in your car by charging it on your credit card than by paying cash. So if you want to save money, use cash.

3. Avoiding regret

How many times have you swiped the credit card and thought to yourself that it is a treat or found an excuse why you deserve it, taken it home and then got that credit card bill the following month and realized you had to pay for it with your next paycheck, and you do not even want it anymore? In order to avoid this, simply pay with cash.

4. Cash keeps you accountable

If you go to a store and you pay for a certain item in cash, it is done, and you can take the item home to enjoy it. With a credit card, you get a bill the following month. What happens if, say, you do not have enough money to pay for the entire item?

Then whatever is left over gets added on with interest, and if you are late on your payment, now you have the item’s value plus interest and a late fee on top of that. The longer you stretch out the payments, the more interest is going to get added on, and you end up paying much more for your purchase than you could have with cash.

5. When you use cash, you are in the present

This might seem a little silly, but it actually bothers me that when you are using a credit card, you are waiting until the following month and the paycheck that comes with it to pay for that item.

Instead of living in the present, you are living in the past. To me it felt like a hole that I was trying to get out of, and by the time I get out of it I make another purchase and get back in, paying for something from the past again, whether it is a meal that you ate a month ago or an item that you bought.

By living in the past, you are never going to be able to get out of debt.

6. Using cash keeps you motivated to spend less

When I started paying cash for my groceries, I started coming up with creative ways of using the groceries that I had left over from the previous week to come up with additional meals in order to stretch my grocery shopping a day or two. Sometimes I can even go three days over. By postponing my shopping trip like that, I save money on my groceries in the long run.

7. Cash rewards is a trap

I used to have three credit cards that I tried to charge as much as I could on, because with every purchase I would get cash back points. I was really surprised as to how many points I had accumulated at the end of the year, and I was so proud of myself because I thought I had received all this extra free cash.

In fact, however, once I started really looking at my budget, I realized it was not free cash at all. On top of my credit card bill every month, I was paying a membership fee for each one of those cards, which does add up down the line when you use multiple cards.

Plus, by using credit, I was still using money from my paychecks to pay for something for the month before, which reduced the amount of money I had left over at the end of every month that I could use to pay off our debt.

Most people spend 12-17 percent more by using a credit card than by paying in cash, and that absolutely makes sense when you start looking at your transactions.

In the back of your mind you think you are earning free cash but really that is not the case at all, so do not be fooled by those extra cash rewards that you can get with certain credit cards. If you pay cash in the first place, you are ahead of the game.

How to get out of debt

I hope I have convinced you that one of the first steps in how to get out of debt fast is switching to paying with cash.

What are the reasons that resonate with you the most? Do you normally pay with cash or card? Let me know in the comments!

Next, are you Living Paycheck to Paycheck? Here's Some Advice From a Money Coach.