I have a confession to make. We are a “no cash” family. I say that as a confession because it goes against every money wise guru’s advice out there. We use credit card for almost everything.
We are proud of the decisions we’ve made with our money. In our almost 13 years of marriage we have not carried any debt outside of our mortgage and 2 small car loans (that only totaled 1.5 years of our marriage). Of course, we just started a new car loan. bleh. However, it is small and we hope to have it paid off soon. We do not live hand to fist. However, we do make sacrifices.
We also do not have a real budget. This may shock some of you. We have tried to institute a budget several times in our marriage. Every time we do it causes friction. When there is no detailed budget we rarely fight over money. I have never read a case study by Dave Ramsey such as ours, but I’m just keeping it real here.
Instead of a budget, we have goals. We are both big picture people. Perhaps that is why we start to seizure when we go on a detailed budget? Here are what our big picture goals look like.
Tithe and other giving (for us this is a non negotiable)
Save 10% net of each paycheck
Pay one extra mortgage payment per year (we apply an extra amount per pay)
Save $100 per paycheck. This savings is for our “big bills”. We have our car insurance, life insurance, pool membership, vacation, Christmas money, ect divided out over the year. This is the amount we need to save so that when the bill comes we have the money.
$4800/year on groceries.
After that there is no real budget. We try to keep our eating out minimal. The other way we “manage” money? We simply check our credit card bill several times per month. We know what the amount needs to be at to easily pay our bill and still have extra for savings. So that is our “goal”. If the bill is getting high, we put our spending on hold outside of necessities. That is the goal at least. We all know it doesn’t always work out like that. So, I guess in a way we “monitor” our spending.
I am in no way advising ANYone to manage their money this way. For us, it has worked well for the past 13 years. However, I have been tossing around going to a cash based system. It is scary to change because what we do has worked for us. Though I wonder if we could do better?. Lately it seems like expenses are coming faster than ever before.
I’m going to be honest. It feels overwhelming to switch. We have always tended to spend cash quicker than credit (at least it feels that way) so I am a bit intimidated. Plus the idea of budgeting everything from doctor appointments to haircuts seems stifling.
So, I would love to hear your thoughts! Have you made the credit to cash switch? Do you have a budget or do you have big picture goals? What has or hasn’t worked for your family?
LOVE LOVE LOVE this.
ReplyDeleteSo, do you use a debit credit card, or do you use credit? Big difference, no?
I LOVE your big picture goals. That is definitely how we handle it. And I love that you have a specific grocery goal. Keeping a specific goal in an area that can easily expand is important.
great post :)
No we rarely ever use a debit card...we get charged each time we use it (even as a credit card). So yes, we are really money rebels. And of course I just paid bills RIGHT after I wrote this post and wasn't able to save the 10% this pay. uugh. We had car and dental expenses that pushed us out of saving. But we paid it so I guess we will just have to work harder next month.
ReplyDeleteWe've used a variety of systems over the years. The one that worked best for us in terms of keeping expenses down and savings up was a budget with debit card purchases. Our categories were pretty broad for discretionary income: tithe & other giving, groceries, clothing, household (shampoo, cleaning supplies, etc.), entertainment, vacation, gifts (Christmas, birthdays, etc.). We've been off that for the last 2 years and our spending has gotten way out of control.
ReplyDeleteAfter going through a Dave Ramsey course a few years ago we got rid of our credit cards. When we used credit cards we found that we weren't actually living on today's income but were living on next month's check. We would have been in trouble if we had to pay off the cc bill before the end of the month. This was a big signal that we needed to change. We use mostly debit cards now. I keep thinking about switching to cash only but the convenience of a debit card vs going to the bank stops me every time. If you are being charged for debit card purchases you need to switch banks/credit unions!! We are charged a fee for using our debit card in an atm that isn't our bank but other than that we aren't charged. We use a local credit union that is near our house. We don't pay for our checking account and have unlimited # of transactions. We just have to keep a balance of $400 and have automatic deposit for my hubby's check.
Anyway. That's what works for us right now. :)
I <3 this post!!! My hubby and I budget much the same way you do- big picture (we run into struggles every time we do a budget)
ReplyDeleteWe took Dave Ramsey's Financial Peace University and it has transformed our lives in just about every aspect but we just can't make a budget stick without too much sacrifice in the "happy, non-fighting relationship" department.
The big difference for us is that we use our DEBIT/Check card for everything. We swipe as a credit card but it comes directly out of our checking account.
I'm nervous to switch completely to cash because we are more apt to just buy. (generally guilty pleasure things like a sweet tea at McDonald's- if you have cash it's so easy to do, but you look silly to pay $1 with a card)
Just my thoughts for ya... thanks for the confession- it makes me feel more normal!
We're pretty much the same!! I feel like we're oddballs because the Dave Ramsey method never really worked for us. We are debt-free besides our mortgage and we just don't spend money unless we need to. For a long time, we were trying to budget and use different plans, but we realized we need to do what works and this works for us.
ReplyDeleteThanks for the honest, real post!
Great post! We have always had a strict budget (but no debt except mortgage) and used our credit card, not debit, for everything! However, in the past 2 months we've looked closely at our spending and decided to switch to paying cash for groceries, out to eat, and gifts. We still use our credit card for everything else for the month but set a strict $1000 limit per month. The credit card bill cannot go over that. We bumped up our savings and bumped up our mortgage payment (to pay down principal). I am going to do a thorough review/report on this new cash system at the end of the month on www.dearlydomestic.com. But perhaps it is something to consider? Switching just some categories to cash only?
ReplyDeleteWe manage money almost the exact same way... I've been tempted to try cash, but I just know it won't work as well for us. With cash you have to write EVERYTHING down. That doesn't work for us. We're too lazy. We miss bits. When we put everything on credit, there's no way to hide; it's all printed right on the bill for you, like an auto-listing feature. We also don't always know who's picking up groceries on the way home... depends who gets home earlier. I'd hate to not have dinner until 8pm because my man had the cash and he got caught late at work. Yep; some may say it's lazy, but cash really just doesn't work for us.
ReplyDeleteMelanie,
ReplyDeleteLOVE your suggestions!! I was actually thinking about something similar. Keeping our system but TWEAKING it. I will be excited to see your post on this!
The cash system never worked for us either. However, we do have goals too and adjust during the month to meet those goals. Our savings basically comes from my paycheck and is sucked right away into retirement accounts. I don't even miss it. My paycheck also pays the main bills of the household. My husband is self employed so every month the take home is different. We budget his pay to care for business expenses, his credit card and anything extra goes to making another payment to retirement or to our mortgage. We have paid all our other loans and refinanced a lower rate on our mortgage. That extra money right now is going right to our retirement first. We do not have any money sitting around in our checking account at the end of the month, but it works for us. We have changed our strategy over the 13 years of marriage and have always been open to communicating with each other about our finances.
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