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Cash Only Spending Experiment Analysis

by The Happy Rock on January 9, 2008

Time to clean house. I have been carrying this dirty laundry around, since August.

In July I started an all cash experiment to test the Dave Ramsey argument that you can save 12-18% just by spending cash. View the cash only experiment details here and the benefits of spending cash here.

Some readers have asked me for the results of the experiment while back, but I admit I have none to offer. It took a few months, but I am finally willing to admit that the experiment was a failure. I apologize.

We didn’t fail to complete the actual experiment. We did go all of July without swiping plastic once, but what broke down was my ability to analyze the results. I still have an envelope with the receipts I was able to save from the experiment, but I don’t think I will be able to glean much from the incomplete set of data.

sweep-money-under-rug.jpgThe truth is that the no cash month was such a radical change in my habits that I was beat down by the end of the month. I didn’t have the energy to stay on top of things during the month and I was so discouraged at the end of the month that didn’t complete the analysis. I think part of me didn’t want to see that it saved money, because I wasn’t ready for the change. Another part of me wasn’t sure that I had been diligent enough in my record keeping to make the data meaningful.

I have wrestled with it and tried to slide it under the rug, but the spirit in me that desires change won’t let it go any longer. The Happy Rockette also added some words of encouragement.

Yes it seems silly that a trivial change like spending only cash got the best of me, but it really did stress a large number of ingrained habits and required a lot of energy complete. I am OK with failure as long as it is a pathway to growth. With this admission, I think it will become just that. The time and energy was by no means a waste. The next time I try the experiment again or even different experiment I will have more insight, wisdom, discipline, and knowledge to bring to the table.

Sorry to disappoint anyone that was truly interested, but I hope to resurrect the experiment again with much better results. Is there anyone that would be willing to join me in the next effort? With a little more planning and discipline I think we could get some meaningful data out of it. Data that can help save money and improve lives!

{ 12 comments… read them below or add one }

Tim Diehl January 10, 2008 at 4:28 pm

atta be bro. if you don’t fail you’re not trying very hard. thanks for being transparent. i’d say i’d join you, but we switched to cash only years ago so my results would be a little dated…or fabricated. neither of which would help you. however, i can say that spending cash helped us immeasurably by allowing us to ‘feel’ what we were spending. just swiping the card made it easy for spending to get out of control. this was fine when we had no children and were both working full time. enter children and Tracey going part time and suddenly we didn’t have money to burn. going cash only helped us to be much better about managing our money and living within a budget. we swear by it…

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Ed B January 11, 2008 at 11:40 am

I like the idea. However, in an increasingly cashless society. It was difficult for us. It rarely go to the bank. When we were doing the cash thing I had to stop at the bank and withdraw hundreds of dollars each week.

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Sue January 15, 2008 at 2:23 pm

We tried cash only also. We got Commerce debit cards. Unfortunately they did not work well at the gas stations. Cash only can help get a handle on credit card spending. I would like to go back to cash only if possible. Rather than only cash you could use checks also.

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Will January 17, 2008 at 2:06 pm

Cash spending does help you to feel like you are actually spending your hard earned money, however if you limit yourself solely it could actually cost you more. If you are a savy consumer buy online deals the amount you can save some items is huge. Online you are very limited in your payment methods and even if you don’t use a credit card you will have to use another “atm” type option that still will not feel like cash.

I would also argue that resposible credit card spending can have many more benefits than cash. I look at it as a “free loan” for a month, as I have never carried a balance. Throw in credit card rewards and you actually get paid to use someone elses money. In many cases the rewards may not be worth it for some people but I recieved well over $1000 last year in free gift cards.

Granted if you are solely looking to get out of debt and have a tendency to not have a high level of self control with your credit limits, I would never suggest getting another card. Just my 2 cents!

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The Happy Rock January 19, 2008 at 2:55 am

From what I have read plastic is still plastic. Swiping a card seems to increase consumption, although using debit will get you into a lot less trouble. Also I have the ING Electric Orange Checking account, so I don’t have a paper checkbook anymore.

Thanks for the comment, Sue. Good luck with the cash spending!

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ExperienceNewThings January 30, 2008 at 1:55 pm

WHAT?
You did all the work then quit right near the end. There has to be some other explanation. All you have to do is add up all your receipts and compare that to what you normally spend a month.

What was so hard about using cash to pay for things? Did a debit card count cause that sounds like it would be just as easy as credit. I rarely use my credit or debit card.

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Livingalmostlarge February 3, 2008 at 3:24 am

Well truth is we spent 70-80% less using cash. I became the worse cheapskate. We only went cash for groceries and eating out, pretty much the only categories we spend on anyway. And??? Less than 1/3 spending, we rarely ate out (because I’m on a diet) and our groceries I forced us to eat from the pantry. It is just deferring costs because we’ll have to replenish the pantry.

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The Happy Rock February 12, 2008 at 10:25 am

@Livingalmostlarge – Sounds like those are some skewed results, maybe it would be worth trying and not being so afraid to spend cash. I know it was bad for me, but it sounds like your experience was worse. Let us know if there is an update.

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Elena July 17, 2008 at 8:38 pm

yea, I’m trying to cut the plastic habit and go cash and I would love to buddy up with you on this. I know I overspend on stuff like eating out at work and coffees because the debit card is so convenient. I definitely underestimate this kind of spending. Occasionally I get disciplined enough to take the debit card out after I use it for basics like gas & groceries and spending on the nonessential stuff goes way down. My debit card is like a security blanket though, I feel naked without it.

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The Happy Rock July 17, 2008 at 10:06 pm

@Elena – I don’t have a second attempt planned, but I will let you know if I do get a second attempt going. Start small if you want. In the mean time, I would just start. Set a cash amount for lunches for the week and use only that for the week. If you run out, then find a new way to eat! Set small experiments that you know you can win, so that you can change your behavior.

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The First Creditor August 20, 2008 at 11:05 pm

As counterintuitive as it may seem, I feel I spend more when I have cash! I know that credit is too easy, and that often leads to more consumption, but I feel my habits are such that I am inclined to spend less with plastic. With a card, I have to worry about the debit coming out of my checking account, or seeing the expense again on a credit card bill. But with cash, wonderful, beautiful cash, I feel like I am under the radar and can spend without leaving a paper trail. Simple conveniences of cash such as not having to wait to sign at a restaurant, makes me spend more, or at least inhibits me less.

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Jonathan@Friends&Money November 27, 2012 at 4:46 pm

I’ve got to be honest I am a plastic fan, but I like to pay off my card at the end of each month AND most importantly I never spend more than I know I have in my bank account, that way there’s no temptation to get into debt.

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