Photo courtesy: Grand Haven Tribune
(WZZM) - Dave Ramsey preaches it and a Dun & Bradstreet study showed why we should do it. What is it?
Paying for everyday purchases with paper money.
With so many Americans reaching for their debit card or credit card, it is rare to find someone who still uses this age-old currency, but according to studies, we should.
Dun & Bradstreet did a study a few years ago that said Americans save between 12% and 18% on their spending when they use paper over plastic. Financial expert Dave Ramsey explained, "If we're not careful, we disassociate spending with money. For instance, when you spend with cash it hurts and you spend less than with a card. When you buy a shirt, for example, you'll tend to accessorize and take the additional item when you put it on a credit card, versus 'Well, this is all the money I've got' and you stop because you have cash."
Staci Moore of Wyoming agrees. Her family of four just started on a cash diet less than a year ago.
"It hurts to break a $20. Then I've got all this change. When you debit a dollar, you don't really think about it like it actually comes out of your bank account."
Staci and her husband used to use credit cards and debit cards but last Autumn her husband came up with the cash diet plan.
"He said, 'Let's try this cash thing and we'll be able to save and pay things off,' and I thought, 'this isn't going to work,' but it really is working," said Moore. "We usually take out $300 each pay period and $100 usually goes to gas and $100 goes to groceries and the other $100 is for fun. When that allowance is gone, then we have no fun."
In less than one year of being on a cash diet the Moore's results are staggering. They've paid off about $7,500 in debt, paid off their car and even had enough left over to purchase a new swingset for their daughters.
"So we are virtually debt free except our mortgage."
The only problem Staci has come across in this new way of spending is going into the gas station to pre-pay for her gas. It forces her to take her four-year-old and nine-month-old daughters out of their car seats for the quick trip inside.
But clearly a little bit of inconvenience is going a long way for this family.