Monday, February 9, 2009

Cash Only, Please

So D and I decided to go on a cash only policy this year. In our systematic approach to paying off debt, it just seemed to make sense to forgo having even trifling amounts on credit cards and to focus on getting rid of (1) the car payment; (2) his student loan; (3) my student loan.

As I have quickly discovered, paying off the credit cards wasn't that hard. It is keeping the balance at zero that is the KILLER!

It's a vicious cycle, right. I paid the $200 so the balance is at zero. But now I don't have the $200 cash that I would have had. So I can't buy the bag/shoes/shirt/Valentine's day wreath/yarn/circular knitting needles/jacket-on-super-sale/darling polka-dot swim suit/earrings/notecards/whatever because I don't have any extra cash.

But if I put it my credit card, I will have the extra cash next month to pay it off, right? So, why not? I mean, I'm paying the balance in full, right? Might as well get the miles/points, right?

No. That is not the point of cash-only. Cash only means saving up cash for what you want. And paying cash. (Or, possibly, putting it on credit card to get miles but then paying it off right away.)

I have always been pretty responsible with credit cards but, in keeping with our new financial strategy, I now have to admit that the Target credit card is too much for me. I am weak at Target. Something in the air there. Having a Target credit card -- unlike any other store or any other card -- makes me buy things I would not normally buy. I tell myself that buying more now will save me money in the long run. Not true!!! See, the gimmick behind the Target card is that for every $1,000 you spend you get one day of 10% off shopping. This might be worth it if you were going to spend responsibly on necessities at Target and then buy a Dyson vacuum on 10% off day. Otherwise, it is so not worth it. So I am canceling my Target credit card. They'll get plenty of my money without it.

So that's my story. Cash only feels un-fun when I leave Target without the ruffly pink shirt I really wanted, but I know that when I am in London this summer, I will be very glad we did this.

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