VOL. 127 | NO. 189 | Thursday, September 27, 2012
Rays of Wisdom
Dana and Ray Brandon
Discover How Different Paying in Cash Feels
By Ray and Dana Brandon
Ray’s Take Credit cards make shopping so easy. A simple swipe, one signature and you’re done. Then 30 days later the bill comes due and you wonder how you managed to spend all that money.
That is the problem with credit cards. Unless you constantly check your accounts online, deducting already “spent” money from savings goals, or accumulate and total up your various receipts, that monthly bill can come as a complete shock.
However, if you always use cash, you know where you stand. Your wallet tells you loud and clear each time you open it. Unlike credit card purchases, the minute you make a purchase with cash the money leaves your possession. It’s gone.
Think how much easier that makes it to keep to your budget. By laying out cold cash instead of swiping that card, you’re more conscious of how your money is being spent. It’s easier to resist impulse purchases – especially big-ticket items like the latest electronic fad. You have to purposefully stock your wallet with cash and then lay it all on the counter. That’s enough to make anyone think twice.
Debit cards might work like cash, but unless you keep meticulous records, you could wind up with the same problems as with credit cards plus paying hefty fees. Also, it works as smoothly and easily as a credit card, so it psychologically trivializes purchases in the same way.
Try carrying around cash for your day-to-day purchases instead of using a credit card. Even if you are one of the few who faithfully pay off your cards each month and never carry a balance, you may be surprised at how paying cash reins in impulse spending. Help your savings grow and stop worrying about frequent flier miles or other distracting credit card perks.
Dana’s Take It appears paying with actual money is actually greener than using credit cards too.
Most credit cards are made out of polyvinyl chloride (PVC). Not only is it made out of oil, it’s hardly ever accepted by community recycling programs. Plus it releases dangerous dioxins if incinerated.
Paper money doesn’t last as long as plastic, but American dollars are made from recycled, low-quality cotton and linen waste typically destined for landfills. Coins draw heavily from the environment when they are originally cast, but they have a long life and are also recycled by the U.S. mints.
In addition, while paper money has to be physically moved from one place to another, the countless servers and other electronic communication technology that track credit card purchases also have a significant carbon footprint. Only a solid sustainability study can show which process uses more energy.
However, the biggest environmental impact a credit card makes is not in itself, it is in the numerous needless impulse purchases it inspires. All that stuff has a carbon footprint. Plus, it can stomp your budget all out of shape.
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at email@example.com.