Why Paying Cash For Everything is a Misnomer

04.07.08 | Consumerism, Money | 1 Comment | by junger

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One of the bigger "disagreements" in the personal finance blogosphere is whether or not it's better to pay for everything with cash, use a debit card, or rack up rewards on your credit card (if you pay your balance off each month).

My personal spending habits are to use my debit card for everything. If I purchase something with my debit card, I know that I can see the transaction online, which carries over to my Yodlee monthly spending reports. I rarely carry cash because I rarely go the ATM (or maybe it's the other way around).

Others say that you should only use cash — specifically, what you have in your wallet. Once you see it leaving, you realize you don't have it any more.

The discrepancy in advice doesn't necessarily mean that some folks are wrong and some folks are right — everyone is working toward the same goal: spend less than you earn.

When you spend less than you earn, you're only buying things with money you actually have. That's "cash" in hand, whether it comes on paper or from your debit card.

Your preference — using cash or debit — depends on your ability to manage your spending. You need to figure out what works best for you.

The only wrong answer is spending beyond your means.

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