Debit Cards: Enemy of the Budget

Credit cards
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I don’t know about you but every time I use my debit card I always forget to keep the receipt and it either ends up lost or in the “File 13″.  At the end of the week I have all these purchases and no record. We all know where this is going. It always ends up in a righteous fight with the spouse. The budget ends up busted.

I know what you are saying right now. “This guy doesn’t want us to use any plastic.” You are correct, my friend. My wife and I don’t have any credit cards. We only have one debit card that stays locked away in the back of my wallet :). Every time we use it, though, the budget gets busted. Our zero based budget is not made for debit cards.

Remember, cash is king. Statistics say you will spend more when using a debit card as opposed to cash. I don’t know about you, but when I have the option to purchase an item for less than $5 I feel I have to add something to get it over that threshold. It’s like my debit card is not good enough for a purchase of less than a five spot. I feel the bankers may laugh at a $3.23 charge. So my pride sets in, and I add another item.

What an idiotic move, but in the heat of the moment I am already doomed. That is why we have moved to a cash only household. If you want to remain financially fit, you must move towards a cash basis. Here are some tips to moving to a cash only household.

  • Cut up your credit cards.
  • Get a trusty labeler and label your debit card with some convicting phrase like “Does your spouse know you are using this…” or “Keep the receipt or else…”.
  • Designate areas to put your cash every time you withdraw from your pay check. We use envelopes. Each envelope has a name like auto, groceries, or clothing. Each pay period we divide up the money and put it into the envelopes until needed.
  • Pay Cash for everything that can’t be automatically drafted from your account.
  • This is a light hearted look at one extra step you can take to secure your financial future. Use of cash will help deepen your relationship with your spouse. Paying with cash hurts. When it hurts you tend to be less impulsive and more intentional. Intentionality is the key to winning in finances.

    Our society is moving to be fully automated. In reality, cash-only households are really weird. Is being weird the key to winning the financial game?

    This is a guest post from one of my new Yakezie friends, Chad Arnold. Chad writes for which is a straight talk no nonsense blog about life and money. He is a family man who leverages his life experiences to convey his convictions about how to get financially fit.


    1. says

      I say continue doing what you’re doing if it works for you.
      For my husband and I, we give ourselves $X/week for living expenses. We still use credit card but pay it off completely every month. To stay on top of expenses, we write every expense out on the chalkboard wall. This is for the visual effect of constantly reminding us of how much we’re spending. Naturally all the expenses are recorded on the computer but again, to write it out on the kitchen wall keeps us on track and under budget.

    2. says

      I think you found something that works for you, but not everyone. I like the proection of a credit card when buying online and for large purchases. However, I whip it out only rarely.

      I don’t overspend wiht the debit because it is coming directly from my checking account — don’t want to be overdrawn.

    3. says

      With good budgeting skills being overdrawn should not be a factor. Like I said in the post, cash only is very weird. Look at the stats though. You will spend more money if you use plastic (debit or credit). I find it interesting how much power a little piece of plastic has over our buying. In most cases it can be said that the easiest things in life are not the best i.e. fast food, etc.

    4. says

      I think you make excellent points here. We have a pretty well established budget, and I am super careful with every expense. However, I find that our grocery budget tends to be a guideline, and I go over at will. Hey – we gotta eat, right?

      We’re going to try a cash budget for those discretionary categories. The hubby and I just discussed it last night, and we’re putting an official envelope system into play. Thanks for the nudge in the right direction!

    5. says

      You should always aim high on the grocery envelope (within reason of course). Make sure you set aside a grocery and restaurant envelope. When you blend the two you will tend to rob from the grocery to pay the restaurant which is never good.


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