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Queen of free: Use cash to defeat your debt

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Want to kick debt in the teeth in 2014? Want to radically change the way you handle money? Want to come in on budget, quit overspending and save a few bucks, too?

Each and every time a money-saving lord or lady asks me how they can best do all of the above, my answer is one word, nay one syllable: Cash.

That’s right, spending cash only is the absolute best way to save, quit overspending, come in on budget and alter the way you handle money. But if you have grown accustomed to our very plastic society, the shift might seem archaic or even too difficult.

Operating on a cash-based budget system doesn’t have to be challenging and I can promise you 2014 will be your very best financial year yet if you follow some of the following cash budget tips.

All about envelopes

Use an envelope system that you love. Let’s face it. If you’re going to be looking at anything on a regular basis, you need to like what you see. Set your self up for success by finding a system that brings you joy and even inspires you.

You can find a set of free (of course) printable envelopes on my website every day with seven different spending categories and inspirational quotes on the back.

Go to queenoffree.net/free-printables/free-printable-cash-envelopes, print them out, do some simple assembly and you’ll be ready to begin better managing your money. I carry a thriftyzippers.com system that I love.

Because I love you too, here’s a coupon. Use the code DAVE15, and you’ll receive an additional 15 percent off your order.

Maybe you will be good with bank envelopes or stationery. Maybe you are crafty and can make your own out of fabric. Bottom line, the more you love the system you use, the happier you will be to use the system.

Start small

Choose one or two categories. Can’t see yourself going whole hog with cash envelopes in every area of your budget just quite yet?

Begin with one or two categories. For most people, I suggest beginning with the grocery budget. You’ll save more money by spending cash only in the grocery store than any coupon could ever save you or any rewards program could ever give you in discounts or cash back.

Even the most astute shoppers typically overspend by $10 to $15 weekly when using plastic — even if it’s a debit card. Be honest. It’s much easier to fudge the numbers when you swipe your card than when you pull out actual bills to pay.

The best part about a cash budget is that when you run out of money, you quit buying. Your budget is hedged in and protected. Obviously, you always can you use your debit card if you absolutely can’t wait to purchase deodorant and can’t eliminate other items from your cart to make the week work out. But give going cash-only in the grocery store a try this week and see if it doesn’t make a difference. After you’ve become a master of the “groceries” envelope, broaden your cash budget system to include a “dining out” and an “entertainment” envelope. Get used to all three and you can begin to add in other categories of spending. Choosing one or two categories to begin your cash-budgeting journey will make the transition a little less awkward.

Be flexible

Of course, you can still use your debit card at the gas pump. Certainly you can pay your bills via check or online. I’m guessing the electric company would begin to think you a little odd if you monthly mailed a wad of bills to their home office. But for the majority of the transactions you make, aim to use cash.

Write it down

Write down your expenses or place receipts in the envelopes. There is a danger to spending cash without realizing where it all went. To avoid this trap, either write on the outside of your envelope amounts spent where or place the receipt inside the appropriate envelope. This helps you both know how much you spent where and also keep records to set your budget at the appropriate amount for future months.

Studies show that when you spend cash, your brain reacts as if it were in pain. It’s difficult to let go of those hard earned dollars. The reaction isn’t the same when using a credit or debit card. You don’t “feel” the expense and you are more likely to overspend time and time and time again. This year, holding real money in your hands before you spend it just might be the very best way to kick debt in the teeth.

Greenwood resident Cherie Lowe and her husband paid off $127,000 in debt in four years and now live debt-free every day with their two kids. Send questions, column ideas and comments to newstips@dailyjournal.net

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