Why You Need to Stop Borrowing Money and Start Using Cash

why cash only

Recently I was talking with someone about buying a car. First, you have to know that I hate cars. I think they’re a waste of money and nothing more than a means to get from point A to point B. When I bought my car last year I found the absolute cheapest one I could find. I did buy new, but for my situation it made sense. My wife and I both will drive cars into the ground.

My previous two cars were a 2000 Saturn LS and a 1999 Jeep Cherokee with 203,000 miles on it. That should give you an idea of how long we keep cars! In any regard, this person had just “spent” a considerable amount of money on a brand new car. The amount of money we discussed almost made me scream.

I kept thinking to myself “nobody should ever spend that much money on a car”. Then I remembered something. We’re a rental society. We lease. We don’t buy. Most people buy a new car, make the payment for a few years, then trade it in for something newer. Otherwise, they lease.

We’ve somehow become a society obsessed with renting everything. So I started thinking more about it and came up with another thought. It seems as if loans and monthly payments are giving us a false sense of wealth. If I can afford a $500 car payment, I must be doing fine.

How can this be true? A $500 car payment means that the cost of the car has to be around $30,000, give or take. I began thinking about what our world would be like without loans. A world where everyone just had to pay cash for everything.

My First Cash Experiment

A few years ago when I was single and living alone (and before I knew shit about money and budgeting), I noticed that I was spending a ton of money on random crap I didn’t really need to spend money on – things like eating out (foreshadowing, maybe?), trips to Target, video games, etc. It didn’t take rocket science, I just looked at my credit card statements – which to my credit I was paying in full each month.

I thought I’d try a little experiment at the time. I’d withdraw $20 cash per week and that was the only money I could use on anything other than true necessities, which were things like rent, groceries, and gas.

Low and behold, my checking account balance started growing and growing every month, and after a few months, I realized that it was the cash experiment that was helping me spend less money. I learned that by actually seeing cash leave my hands, it made me way more conscious of what I was spending.

11 Reasons Why You Should Switch to Cash

why you should switch to cash

There are some pretty nice benefits to using cash.

1. Realizing the Value of Money

One thing that spending all of our money via a credit card or a debit card has done has desensitized us to what the value of money is. It’s so easy when you get to swipe the same card and get it back as soon as the transaction is over to think that you’ven’t lost that much. There’s something in our brain that makes us more detached to the idea of what money is worth when we merely swipe a card, and money is transferred out of our accounts or charged.

Physically handing dollars gives you a sense of having something, and losing something or exchanging money for goods. You’re going to have less cash in your wallet after a transaction than you did before, and that gives you a sense of what

2. Distinguishing Between Wants and Needs

When you’re spending cash on things instead of charging it them, you start to distinguish between the things that you want and the things in your life that you need. Say that you put a given amount of cash in your wallet at the beginning of every week. You only have that money to spend on groceries, entertainment, bills, gas, etc. You’re probably going to be a lot more prudent when you’ve set a physical monetary limit for yourself. Most people switching over to a cash-based lifestyle see a significant drop in the amount of money they spend on frivolous things.

3. Waiting for the Things that You Want

Using cash in your life makes you wait for the things that you want. Right now, when you want, or you think you need a large ticket item, it’s so easy to charge it to your credit card and pay it off over time. If you’ve to think about that same purchase and are limited a cash budget you’ve set for yourself, you probably won’t just fork over the cash for that new TV or car that you’ve wanted. Switching to cash it going to force you to save up money for the thing that you want. You will get in the practice of saving money and setting it aside for the things that are important to you.

4. It Pushes You to Be Creative

When you give yourself less money to spend on a weekly or monthly basis, it pushes you to be a more creative person. It’s so easy to go out and spend a ton of money to entertain yourself with dinner, drinks, movies, clubs, shopping, etc. that we often forget how to treat ourselves and others. Putting yourself on a cash budget will force you to be more creative with how you handle yourself and the ways that you spend time with others.

5. Living Debt Free

One of the biggest pluses for most people who decide to go into living a cash-based lifestyle is getting out of debt. When you live and spend wildly and buy everything that you want and need, it’s easy to overdraw on your bank account and build up a lot of credit card debt. Some people put themselves into a crippling amount of debt on an annual basis and then spend the rest of the year trying to get themselves out of it. After you pay off your credit card and get out of debt, you won’t get yourself back into debt if you’re living a cash lifestyle. We do recommend leaving small monthly purchases and subscriptions on your credit card and that you pay them off regularly so you can keep your credit score high, but if you want to go card free, that’s your call.

6. Financial Freedom and Burden Free Living

When you escape that credit card debt and pay off your other debts, you won’t owe anyone anything. How freeing of an idea is that? Instead of spending all of your time working on the things that you hate and putting in more hours at work just to pay your debt off, you’ve more time for your hobbies and the things that you want to do.

7. Cutting Back on Spending After Making Big Purchases

One way that cash keeps us honest is that it teaches us to reel back our spending after big purchases. It’s so easy to get into the habit of making significant investments without even flinching, but when you’re accountable to the amount of cash in your pocket, you’re probably going to think twice the next time you’re craving sushi or getting your favorite meal out. Not only does spending in cash make you appreciate big purchases more, but it also makes you significantly reduce your spending after you make a significant investment.

8. Social conveniences

You know those times when you go out to eat with a ton of your friends and then the bill shows up on one check? From that point on fights are being had, heads are spinning, and a couple of people are doing unnecessary calculus to figure out how to split it up. If you’ve cash on you, you can immediately escape that situation. Having cash with you allows you to throw in all of your money for the bill and the tip so that you don’t have to be apart of the battle that ensures the delivery of the check.

9. In the Event of Emergencies

It’s never a bad idea to have cash in the event of emergencies. There are those times when card systems and technology gets shut down, and you need money to be able to make purchases. It’s also never a bad idea to have some cash in your car for tipping and parking too.

10. Security from Hacking

One of the biggest reasons that we enjoy the idea of living a cash-based lifestyle is that it makes you more resistant to having your information stolen. It’s so easy for someone to take the numbers off of your card when you’re not looking and use them to later to “borrow” your money and buy things for themselves. If you’re only carrying cash and never have a card on you, someone would have to rob you to take your money physically.

11. You Can’t Spend What You Don’t have

Cash honestly makes your life simpler in so many ways. If you give yourself a given daily, weekly, and monthly cash budget, you will never be able to spend more money than what you’ve got on you. When you two or three cards on you that you’re always using, it’s easy to lose sight of how much money you’re spending and how much debt you’re racking up. If you can only spend what you’ve on you, you can never spend more money than you have.

10 Things That Would Happen in a Cash-Only World

cash only world

If you didn’t have the money to pay for something today, you couldn’t buy it today. Here are a few things I think could happen if the world became cash-only:

1. More people would live below their means

People would soon realize if they can’t afford something, they can’t have it. This would force people to save their money and only buy things they can afford. In turn I think this would cause us to live below our means.

2. More frugality may impact jobs

If people are buying less, demand for goods and services would decrease. This would mean that many places would either go out of business or have to cut their workforce. This may further increase the number of online businesses.

3. We’d be renting or living in smaller homes

Unless we saved a significant amount of money, we’d be living in smaller homes or renting. This isn’t a bad thing. I imagine those who saved a lot of money and wanted to live below their means would still choose a smaller home. But with a cash-only society, it’d be difficult for people to live beyond their means.

4. More economical cars

We’d be buying used, smaller, and more economical cars. Also, I imagine that we wouldn’t even make as many big, expensive cars. At least not at the same level. If everyone had to pay cash, car manufacturers would have to produce something that everyone could afford. Or better yet, maybe we’d all be driving hybrids!

5. A healthier society

In a cash-only society, I would hope that some of us would abandon cars altogether and just ride bikes. This would keep us in great shape and be better for the environment, which leads to my next point.

6. Environmental impacts

With less access to money, businesses will have to change some of their strategies. This could reduce pollution, gas emissions, and wood-clearing to build McMansions.

7. Things may become more affordable

We pay for things like data on our smartphones, cable TV (some of us), and other forms of entertainment. The profit margins on these types of services are insane. If we only had a limited amount of money to spend, prices would drop on things like tickets to sporting events.

8. No debt

This one is pretty obvious, but with a cash-only society, there’d be no debt. At least no formal debt. I can imagine there is a black market for cash loans. Ahh… humanity never ceases to amaze me.

9. Higher savings rates

As this shift in our culture is taking place and people are becoming more frugal, we would begin to save more money. Since there are no loans, it’s safe to say there is no interest. But that doesn’t mean the value of the dollar wouldn’t increase. As people are hoarding their money, demand is going to drop for goods and services. This means a possible reduction in prices, which means our dollar will go further. Win-win.

10. Weddings would become more realistic

My wife and I got married in St. Lucia – just the two of us. Then we had a family reception when we came home. It cost about a third the cost of a traditional wedding in the United States. This is getting out of control. It’s one day, people… quit spending upwards of $30,000 to get married! And we can’t forget the costs of the ensuing divorce…

4 Ways You Can Be More Proactive With Cash

get ahead with cash

Changing to an all-cash society will never happen. But that doesn’t mean we can’t take some steps to improve our society’s money problems. Here are a few steps you can take now to make an impact:

1. Pay off your debt

The more debt that’s out there, the bigger these credit card companies will get. This means more offers in the mail, easier access to credit, and compounding debt for us.

2. Live below your means

You don’t need a cash-only society to live below your means. At its most basic level, start to spend much less than you earn. Use tools like Mint to track your spending and see where you can cut back.

3. Get rid of things you don’t need

That’s right – declutter your home. Get rid of crap you don’t need. The more things we have, the more stress we have. And the more stress we have, the more likely we are to get sucked into DIIP.

4. Get help

You might be reading this thinking “well yeah that’d be great if I could just pay off my debt and live below my means, but I don’t make enough money.” Stop it. Yes, you do. You just have to want to change. I believe that we all have the ability to live below our means and become rich.

It’s just a matter of priorities and sacrifices. What are you willing to give up to create a better situation for you and your family long-term? This might mean not spending $40,000 on a new car. It might mean not having the latest iPhone with loads of data. It might mean not buying a home that is bigger than you need.

There are also services out there to help you. Credit counseling is an excellent way to help you pay off your debt. But you have to be willing to stop using your credit cards. Again, this is a sacrifice to some. There are ways to make it work, and the sooner you do, the better off you’ll be in the long-haul.


There would definitely be pros and cons to an all-cash society, but I would love to see what it would be like. In the meantime, let’s all commit to making one simple change to get us there sooner.

Question for you: what one thing are you willing to do to push us toward a cash-only society?

25 thoughts on “Why You Need to Stop Borrowing Money and Start Using Cash”

  1. Cars are money decisions that impact peoples overall finances in such a perpetual way, and they really don’t even realize it. Make a shift from buying new and on credit to buying used with cash is a really good start of changing how one thinks about money.

  2. There is a whole pile of truth in this article. I’ve written before about how the easy availability of credit is ruining many of our futures because of how painless it has become to buy things *before we have the money* for those things. Things like electronics, appliances and, of course, cars.

    It didn’t used to be that way. Before easy credit, homes were smaller (like you said). We bought more sensible cars and led lifestyles that were vastly different than we have today. In 2009, for example, American spent a whopping $1.9 trillion on discretionary spending. Trillion…with a T. How much of that was spent on credit? Yeah, MOST of it.

    We overbuy because, well, we can. It’s easy. Anyone can get a credit card…almost as easy as getting a driver’s licenses in this country. Easy credit. Easy debt.

    I think if Americans simply viewed their credit cards as simply a means to *make transactions* instead of carrying around wads of cash, this problem would soon go away. Today, Americans think of credit cards as something much more. They are not just a means to make transactions, but they provide a way to spend money before we actually have it.

    This is one thing that my dad taught me well as a child. It is okay to use credit cards, but only if you’re able to pay off that credit card in full at the end of each month. Have the money first, then spend it by using a credit card if you wish.

    Wonderful post. Keep up the awesome work, Chris.

    1. Thanks Steve. Yeah it’s way too easy to get credit now. They’ve tried making it more difficult for kids 18-20 to get a credit card (you basically need a co-signer now) but still, money habits are money habits. I’ve actually found myself spending more money even when paying my credit card in full. Something about making a purchase with a card as opposed to cash leaving your hand… it’s different. My father in law still uses cash for everything he buys – he doesn’t even have a debit card. He’s also been retired since his 50s. Thanks for another fantastic comment Steve.

  3. I feel the same way about cars. Point A to Point B, don’t give me any headaches please.

    I think we’ve become a rental society because of the headaches part. A new car is nice but a new car is also reliable. No headaches. People are willing to pay for no headaches, even if they’re overpaying.

    Couple that with instant gratification, DIIP as you said before, and you get the situation we see now — new stuff, purchased on credit, and people being disconnected a little bit from the consequences of their decisions.

    1. Yep – I bought new to avoid headaches, and fully knowing I’ll drive the car until it doesn’t want to be driven anymore. If I had to do it again, though, I’d probably buy a 2-3 year old used car. Someone recently told me they got a new car but it was okay because “the payment was the same” – what it seemed like they didn’t grasp is that it was the same payment, but a new loan. Ugh. Thanks for reading Jim!

  4. Chris, I think of my house as a box. My car is a box on wheels. (I had a Jeep Cherokee too.) I would never buy a box on credit. Weddings? Don’t get me started.

    Are credit card companies still pitching tents on college campuses and enticing students with the lure of buy-now, pay-later’ IMO that should be completely banned. Putting plastic in the hands of young men and women only encourages them to go out and buy shiny objects.

    1. Not as much as they used to – because if you’re under 21, you now have to have mommy or daddy co-sign for your first credit card. It helps a little but as I mentioned above, there’s still the fact that money habits are what they are. It doesn’t matter if you’re 18, 21, or 51… if you can’t make good money decisions, it won’t matter. Our society in general pushes this “have now, pay later” mindset like you mentioned. I can’t even recall the last time I saw a car advertisement that talked about a loan – it’s always leases now. It’s getting out of control.

  5. I was just urging a group of college student to start using cash instead of swiping a card. They were all asking about how to build credit to buy a home–but they are 18 and 19 years old and just hearing this credit rap from older people. I asked if any of them were planning to buy a home this year? Obviously not, so pull your credit score when you’re saving that down payment and maybe you’ll have built it other ways than getting into consumer debt.

    All that to say–Amen to this post! We are knocking out that last of our debt, the mortgage–in about nine months and never want to be in debt again.

    1. Congrats on getting rid of the rest of your debt!!! That’s awesome! I’m so glad you were able to help those college kids think in a different way. I see that a lot too. People want to build credit for the sake of building credit. There’s no other purpose other than to buy stuff on credit. Cash is king! Thanks so much for reading!!

  6. A great ‘what-if’ piece!

    I’ve seen some disagreement about how widespread frugality would affect the economy–some think it would be good for businesses due to increased investments; others argue that the decrease in consumer spending would tank the economy.

    Frankly, I don’t think anybody can tell what would happen. Economies are just too large and too complex to predict with any accuracy! But whatever the outcome, a lot would change before the ‘new normal’ settled in!

    1. Very true – it’s definitely a ‘what-if’ and honestly kind of a dream. I can see both sides of the argument, but it just feels like this shift toward buying everything on credit (or just renting) creates all sorts of other problems. Thanks for reading FS, and I hope all is well with you!

  7. I like this post. Everyone has to be responsible with their finances. Debt doesn’t have to happen. If we didn’t have credit, people would make smarter decisions with their money.

  8. Another thought provoking post Chris. I’m not sure what the economic ramifications would be of a cash only society, but the personal ramifications would be profound.

    I stopped relying on credit several years ago and my financial situation has improved considerably. Cash provides security, peace of mind, and options. Credit just gives you some stress in the long run.

    Enjoyed the post!

    Laura Beth

  9. The way you broke this down is amazing! Without even realizing it, I’ve already been living my life as if society is “all cash.” It just makes sense and is genuinely the quickest way to have a stress-free, happy existence. If you don’t spend money you don’t have, you won’t have to stress about it. It seems like it should be simple, but people make it surprisingly complicated. Of course, it’s not helped by our societal “norms.” Breaking free from the scripts we’ve been raised with requires intense self-reflection and research. (Which is totally doable and if you’re weird like me, even fun 😉 )

    1. That’s so cool that you already live that way! You’re already way ahead of the curve. Sadly, many folks can’t wrap their heads around living “all-cash”. Unfortunately we live in a world where we want anything we desire, and quickly. Credit and loans allow us to do this. Pretty sad. Thanks for taking the time to read, and I’m glad you enjoyed it!

  10. We found that once we went primarily to cash spending, it was liberating! No more worry about whether we would over spend in a category. It really helped a natural saver like me to spend with the comfort of knowing all of our expenses were being met. Having a monthly spending plan and using cash (to prevent spending overruns) works great and only takes a few minutes to prepare each month (after you have a little experience!).

    Great post.


    1. Hey John! Thanks so much for reading and commenting. I’ll have to check your blog out today too. That’s great news that cash spending worked for you. It’s a big adjustment for a lot of people, especially if you’re doing ONLY cash spending. What kind of specific success have you seen using cash? Have you been able to pay off debt or rack up some nice savings?

      1. Chris,

        Thanks so much for your reply and I hope you get the chance to check out my blog as well. Feel free to comment – I know how much more enjoyable it is to have “audience participation!”

        Regarding the use of cash, BY FAR the greatest savings for us was in the food category. I was shocked how much we were spending! Since moving to a cash only system for the grocery store, we’ve seen a substantial reduction in our costs (like about 1/3)! Here’s the shocker though: we didn’t even notice the difference in the pantry/refrigerator. When using cash only, we prioritized our purchases, still got everything we really wanted, and stopped the impulse buys. This is a home run in my opinion.

        We don’t have any debt, including no mortgage, so we were able to channel the spending reduction into both savings and increasing some spending elsewhere (that was more important to us). Saving more & spending more in important categories – what’s not to love!

        Keep up your good work here!


  11. Thanks for such a great and inspiring article. I’m aspiring to that. I cancelled one credit card last month and will cancel my other last credit card in January! Cash-only 100%


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