When I was paying off my debt I would track my spending religiously with Mint.com. Then I got out of debt, and my spending got into a nice pattern and I didn’t see the need to use Mint.com anymore, so I stopped. Then I moved to Halifax, and the slow creep of overspending started.
I think it was a combination of the temptation of restaurants and bars, and my new rewards credit card. I was putting all of my purchases on this credit card, but that made weekly spending hard to track. My husband and I are both paid every week, so we break up grocery and entertainment spending into week-by-week amounts.
The problem with using a credit card for weekly spending is that sometimes transactions don’t show up right away, so when I’m adding up how much we spent this week, I think it’s $75, but it’s actually $100 because of that charge I forgot about that didn’t show up for several days. This is how our spending creep started.
So I started tracking my spending two months ago. I do it manually using a spreadsheet, and it has been…illuminating. My husband and I had definitely been overspending, and even though I’m tracking our spending, we’re still over spending. It was just too easy to tap that credit card. Something had to change.
Enter the cash diet.
My husband and I needed to detox from our willy-nilly credit card spending ways of the last few months. We talked about ditching the credit card and going back to debit-only (which was how I operated during my debt repayment days) but I thought we should try something a little more extreme. For the past two weeks, we’ve been on a cash diet.
How a Cash Diet Works
My method is not as extreme as Gail Vaz-Oxlade‘s method. There are no jars with different amounts of cash in them. Here’s what we do:
At the beginning of every week, my husband and I withdraw in cash our allotted budget for groceries and entertainment. Once that money is gone, it’s gone, and we have to wait until the next week to withdraw more money. Simple, right?
We still use our credit card for larger or non-standard purchases. Things like purchases for the house or for the pets, or for gas. Then I just pay those purchases off with money from our joint savings account.
We’re in our second week of this new way of living and so far I’m loving it. It’s just so easy and simple. No consulting the credit card statement or tracking our spending to make sure we’re not overspending each week. All we have to do is look at how much cash is left in our wallets.
The only downside of the cash diet is that it makes tracking our spending a little difficult. I’m still getting used to asking for receipts from vendors and if I forget then I need to write myself a note in my phone or something reminding myself what I’ve spent money on. I still want to track my spending because I want “before and afters” of before the cash diet and after.
The Cash Diet is Not Forever
As I mentioned above, this is kind of like a detox diet. I was in a pattern of weekly overspending and it had to stop. With the cash diet, I’m very aware of overspending, because I’d need to use my credit card to do so. I think I’ll try and stick with the cash diet for a few months, and then go back to just using debit. I may eventually return to using credit cards for day-to-day purchases, but I’m in no rush.
Have you ever tried a cash-only spending regime before? Tell me about your experience!