Ditch The Credit Card And Save Yourself 12-18%

by The Happy Rock on June 10, 2007

I admit it, we do 95% of our spending on plastic. We have been using our debit and credit cards for years to pay for just about everything. The discipline is there, so everything is paid in full at the end of the month. $20-$40 cash lasts me the whole month. The system works for us, because we have discipline and are not big spenders. Also, downloading the transactions to Microsoft Money is a quick and convenient way to track your spending.

creditcardoffers.jpgWith that in mind, I remembered Dave Ramsey saying that you spend 12-18% less when using cash. Spending cash hurts. Here is someone offering me a better return than any savings account or mutual fund out there. I have always glossed over people saying that using cash saves you money, but I really should take a look at this. Any credit card rewards pail in comparison to 12-18%. I mean, credit card companies most likely offer the rewards since it provides a net benefit to their bottom line. Maybe part of the benefit is that people spend way more than the 1-5% reward that they give back. Plus without using credit there is no chance that I can go into debt.

Where I am going with this? The same place we should all go when someone positively challenges our way of doing things…to the laboratory. Experimenting with potential growth areas is must on our journeys toward freedom. The great thing about experiments is that if they fail or we don’t like them, we can easily resume our old ways. If I can save even half of the suggested numbers, it will probably be worth the effort. I will have to do some more research on ditching the plastic, but my first thought is for plastic free July.

{ 4 comments… read them below or add one }

Medicated Money June 10, 2007 at 2:51 pm

Although I almost always agree with Dave Ramsey, I must admit that I disagree that using a credit card will result in spending more money. To be honest, for us, we spend more money when we use cash. I think this has to do with the fact that with cash, we can’t track it as well as we can when there is a paper trail behind it.

We try to stick to a monthly budget and therefore, we normally do not take out random cash, but I guess if you budget the cash appropriately, you might spend less.

It will be interesting to see your results from the experiment.



TheHappyRock June 11, 2007 at 10:20 am

Thanks for the input.

I agree with everything you said, and I especially like how convenient it is to track electronic payments. That being said, the cash savings is worth an experiment. If we don’t like it or we spend more than with plastic, we will head right back to the old plan.


Thecpa August 27, 2007 at 1:32 pm

Happy Rock,
Excellent post! Did you make it credit card free in July? Or are you shooting for August? Did you save receipts or keep a log and compare to a year ago July? Or will you at the end of August? How much are you saving? If you have already posted this, please give me the link and forgive me for not reading 100% of your posts.

You have posed an interesting hypothesis and we are most interested to see the results of your tests.


The Happy Rock August 27, 2007 at 1:53 pm


We did make it through July credit card free. I do have all the receipts, but have yet to tally them up. The experience was pretty terrible, but we will see what the final numbers reveal. Look for a post in the next little while with the wrap up!


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