Cash vs Credit Card

Cash Vs Credit Cards: Where Do You Stand?

I’m not expert with money and finances. But we are focusing on our budget this year. A huge topic is cash vs credit card. This is where we stand with that.

Isn’t this a question that keeps going around? There are sooo many people one the cash side and tons of others on the credit card side. See where I lay in the cash vs credit card debate.

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I love Dave Ramsey! He is a very smart guy. I’ve read his book (The Total Money makeover), and am almost done reading his daughters book. (Love Your Life, Not Theirs). I know there are many others who say NO to credit cards.

cash vs credit card

Here’s my take on the whole cash vs credit card. Again, my take and thoughts!

We have tried using just cash. I hated it! It was a pain to remember to get to the bank on time. I didn’t like having so many different stashes of money. I really disliked paying for gas inside, even less after we had kids. So we stopped. We stopped using all cash.

I still get cash out (when I remember) for our blow money. But that is usually it. Now we pretty much always use our credit cards. Let me tell you why.

In all of my years of having credit cards I have only not paid in full twice. The first time was when I started teaching (and started my master’s program, so smart to do both at the same time…) and bought a new laptop.

The way it worked was I didn’t get paid until after about 2-4 weeks of teaching. I didn’t have the money. I shouldn’t have bought the computer when I did. Lesson learned. When I got paid for the first time I paid off my credit card balance with the laptop on it.

The other time was when we just got married and were on our honey moon in Mexico. We forgot to pay it (we were a little busy with planning a wedding…) and didn’t want to do it in a random internet cafe in Mexico. So we waited until we got home.

cash vs credit card

Other than that we have always paid our monthly credit card payment in FULL! Always. Just because we have a larger credit line then money in our bank account we DO NOT OVER SPEND!! Never!

Well, sometimes we overspend. But we have never overspent to the point we could not pay our payment in full. We just went a little crazy here or there. But we had the money in our bank account.

The main reason we use our credit cards for everything is because we earn miles. And we have redeemed our miles SO MANY times. These are the times we’ve “cashed in” on our credit card miles:

  • Eddy and I flew to Hawaii over my teaching spring break in 2010
  • Eddy and I flew to Michigan in May 2011
  • All 5 of us (at the time there were 5 of us and we lapped our 11 month old baby) flew to Pennsylvania in 2016
  • All 6 of us (we lapped out almost 2 year old) flew to Hawaii in 2018
  • Our whole will fly to Florida later this year

This is not for everyone. Some people may think we are crazy. And maybe we are. I would stop the second if we ever got out of control and didn’t spend within our means. But have you met me? My money anxiety would probably kill me if we did that.

You will need to decide what’s best for you: all cash, half and half, debit cards, credit cards, a mixture. This is a time YOU need to be very SERIOUS with yourself and your partner in money spending habits and your financial goals and where you stand. What are you capable of? And go from there.

I have been reading books recently on budgeting, etc. One book (The Money Saving Mom’s Budget) suggested having all of the money in your account upfront to spending in case something happens and you can’t make your monthly payment. That made so much sense!

So we will have the total amount of money we expect to spend each month in our bank account at the beginning of the month. In the book by Rachel Cruz she is all for never opening a credit card, and I totally get and understand why. She also says to do your budget and “spend” your money before the month starts.

So for February Eddy and I sat down. We used our Excel spreadsheet we created and said how much money we were going to spend for the month. There was already one date planned, so we planned a certain amount of money for dinner. We celebrated our daughter turning 6. So we budgeted a gift for her and going out to eat as a family.

We also knew that with restarting our budgeting this year we needed to get back on top of things. This meant having a very low spending month so we could make sure we have enough money in our account for everything we plan on spending in March.

How did we do this? We cut our grocery budget, by a lot! We mostly bought milk, eggs, yogurt, produce, and bread. We used our freezer and food storage for breakfast, lunch, snacks, and dinner. Did we completely gut our food storage? No, not even close.

We just got creative with what we had left over and used what needed to be eaten and used. I made more things from scratch. And we did eat a lot of produce. In March we will go back to our “normal” grocery budget.

We also really cut our extra spending. We did one date night out, a free date out, and two date nights in. We only went out to eat once as a date and once as a family. That meant no quick trips to grab $1 hamburgers or getting a treat. Instead we made treats as a family and spend more time together at home.

So, let me ask you! How do you fair on the cash vs credit card? Are you on the fence? Or are you on one side or another?

Some Tips to Help You with Cash vs Credit Cards

If you are someone that struggles with paying your credit card in full every month then you need to stop using your credit card right now! I’m not being judgmental!! I’m just trying to help you get your budget on track.

Take it out of your wallet and put it in a water and into the freezer, hide it in a safe place that you will remember, give it to someone you trust who will not use it nor give it back to you until you are ready to use it properly and responsibly.

When you are only paying the minimal payment on your credit cards you are racking up debt in a bad way. So the first thing you need to do is STOP USING YOUR CREDIT CARD, pay off your credit card debt and start using cash. This will be a pain! This will also help you get your spending in control.

Research the clip method, the envelop method or the many other ways people use cash. But start using cash until you have a handle of spending only what you have planned in your monthly budget. Next month we will dive into how to get a handle on your spending.

If you can use your credit card, stay within your means, and pay it off in FULL every month, then keep using it if you want. Here are some things you need to do in order to keep using it responsibly:

  • Have the total amount of money you need for the month before the month starts in your bank
  • Only spend what you have planned for (if it’s an emergency then use money from your bank, not your credit card)
  • Never overspend or reach your max spending limit
  • Pay off your credit card in full every month
  • Keep track of your spending and purchases each month with your budget (either write them down, keep a spreadsheet, use an online app, use notes on your phone)

Being in debt really sucks! I absolutely hate owing people money. I hate student loans, and our van loan, I hate that we owe money on our cell phones and our security equipment. That’s a whole lot of hate… 😉 If I could do things over then I would.

But at the time we did the best that we could. Now that we are looking back we have learned a lot that we can pass onto our kids. One of those things is learning how to stay within a budget and stay out of debt. Then we will talk to our kids about credit cards and how to use them the correct way. Maybe they won’t want to open one up, and that is okay!

Where do you fall on the cash vs credit card? Happy budget planning and staying on budget this month!

Xxx, Steph

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  1. My financial plan is to use my AMEX card to earn travel points, but I pay off the entire amount each month. In the two years I’ve done this, I have never carried a balance on that account past the one month billing cycle. It works for me!

      1. We pay cash via our debit card for everything. We have one credit card for emergencies that we pay off immediately. The only debt we have is our home so not only are we basically debt free, we are also stress free!

    1. Nice! Sometimes a mix is very helpful. I always worried when I was out of the country to have a lot of cash. It’s been far too long since I’ve been out of the country though.

  2. We have always paid off our credit card every month, too! And we love Dave Ramsey. He has some great info.
    We use the cash back on our credit card to buy Christmas gifts each year. It has worked well for us.

  3. This is a great reminder that I need to get back to tracking my budget. I also like your tips about credit card debt. My goal this year is to eliminate some of my student loan debt.

    1. Awesome Brittany! 🙂 I have another post on budgeting, check it out, it might help get you back on track with tracking your budget. Good luck with tackling student loan debt! You got this!!

  4. Great post. I’m heavily on the credit card side. We almost never use cash for anything. Just keep it on hand for babysitting or house projects. And I love that I have credit cards that earn me money back and points for travel. Overall, always pay my cards in full and on time. So for our family credit is the way to go.

    1. Nice to meet another credit card family that uses the rewards. We also like to pay our babysitters in cash, and have money on hand for the tooth fairy (we got 20 ones for our son). Thanks Maria! 🙂

  5. I have also read Dave Ramsey’s book and my husband and I followed his method to get out of debt. We are completely debt free (although we are buying a house so will have a mortgage soon). We rarely have cash on us, though, since we currently don’t have a branch of our bank anywhere near us, and I also refuse to pay for gas inside when I have my kids with me. We put almost everything on our credit card, pay it off in full each month, and use the rewards to buy Christmas gifts each year. ☺️ Works for us!

  6. Great read! We also use our credit card to earn points, but it is easier to just swipe away and forget about that budget, so we have to stay strict about logging what we buy, saving receipts, etc. I wish I carried at least $40 in cash tho – that is a habit I would like to start! I always hate buying something for less than $5 and having to use my card.

    1. Thank you Lauren! It sure can be easy to forget, that’s why we’re trying to keep a record of certain things (groceries and other) throughout the month. I usually have my blow money, which is cash, on me. It is nice to have a bit of cash for those super small purchases.

  7. I use cash for some things (mostly fun money) but mostly credit cards for the points and then pay it off every week. To be honest, I hate carrying around cash and my kids go through my wallet so many times that it became a big hassle to have to find all the cash they stash around the house.

  8. I am not a fan of either when I think about it. Lol.
    Cash: you often don’t pay attention to how much you spend, it can be stolen and is gone forever, it is dirty and has been through so many hand
    Credit Cards: it may be easier to spend because you don’t have to leave, some places are cash only, if you want a large sum the bank has to be open
    Soo ehh. I honestly keep both but I hate em all. 🤣

  9. We have recently started listening to and reading Dave Ramsey. I like his plan about having no debt, but I think we are going to keep the credit cards and using them responsibly for now. 😊

  10. Team credit card all the way! We pay off our credit cards and enjoy the rewards for flights. It’s so tough for me to remember to stop to get more cash. I just don’t feel as comfortable carrying around enough cash for a big purchase.

  11. I am not a cash fan and generally don’t have any on hand. Use of credit card and pay off the balance monthly to earn travel points for sure.

  12. Awesome tips! I’m definitely for credit cards and we do need to implement some of these suggestions for budgeting. Thanks for sharing.

  13. Such a helpful post – I have one credit card that I ALWAYS pay off in full every month, no exceptions. I think if you can do that then they’re a good thing, but you need to be strict with yourself because it’s not free money, it’s the bank’s money and they’ll sting you if you can’t pay it back!

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