This is one of those questions where there is no right or wrong answer – it all depends. My parents and elder siblings would argue strongly that the only way to pay for anything was cash. "If you can’t afford it, you don’t need it. If you need it, save up for it".
I also know of people who don’t use cash at all. They carry one credit card to pay for everything. Totally impractical if you ask me but that is their lifestyle. It may well be that they have enough cash to clear the credit bill every month so there is never anything to pay apart from perhaps an annual fee.
As I said there may be no right or wrong answer but what if you are in the middle? What if you use both cash and credit are you making the best use of your financial resources or are your lifestyle needs more important?
Simply put it all comes down to money management. Part of the problem is that we live in a world where a piece of plastic has become far more important than hard cash. If you are able to manage both successfully from month to month, if you are able to clear all your outstanding credit bills without incurring any interest charges then it is not so much as case of a cash versus credit lifestyle but more of a cash and credit lifestyle. With the added convenience and additional benefits credit companies offer you to stay competitive shows good money management. However, what if you are relying far too heavily on credit because you do not have enough cash or the income to cover all of your lifestyle expenses?
Take this scenario – It’s the winter sales and you see a new television set that you quite fancy reduced from $850 to $695 and you buy it on your credit card. Problem is that takes your card to its limit and you certainly do not have the cash to clear the whole debt. Like many others you are now in the trap of paying the minimum monthly amount to safeguard your credit rating as well as trying to reduce your debt. Credit companies will love you, the ideal customer. By the time you have paid off the purchase price of the television and the interest charges you have accrued, the total cost of the product that you just had to have was $935. This sale purchase has cost you an additional $240 because you could not afford. Bad money management and you know you shouldn’t do it.
It is tough to have to go without but it is a lot tougher living with the stress, anxiety and worry of not being able to manage your cash and your credit. If you find yourself in this situation, see if this helps:
Actually instead of calling it money management, let’s call it cash management because that is where the real focus needs to be.
- To arrive at the amount of cash you will have to work with, set up process such as direct debits and standing orders to cover your fixed and variable monthly outgoings such as mortgage or rent and your utility bills. Leaving a small amount in your checking account, withdraw the remaining cash to cover your monthly lifestyle needs such as gas, food, clothing, entertainment and so on.
- This step may seem somewhat archaic with all of the modern technology available. Just remember you need to resolves the cash flow problems you have so let’s look at a simple method for doing so. Divide and allocate the cash you have into the amounts you need to cover the different monthly expenses and put the cash into different labeled envelopes.
- Here’s the cash versus credit tough part. Once you have used all of that cash and you still have days left in the month, that is it, no more spending until your next salary or paycheck arrives in your checking account.
- It will be tough for a few weeks but stay with it, manage your cash as well as reduce your outstanding credit by as much as possible and finally get rid of those nasty interest charges. Manage your cash in this way over a few months and you will be surprised as the amount of available cash grows.
Get the balance right. Reduce your credit to a manageable level get yourself out of the cash versus credit rut that so many people find themselves especially in today’s economic climate. You will be a lot better off financially and a lot less stressed. Need a Payday Loan or Cash Advance? Visit us at
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