The Thing About Credit …
Monday 21 March 2016
I’d always been a fan of the credit card. But a few years ago, before my banking app let me instantaneously track my spending, I found myself in a bit of a parallel universe. One where I discovered that credit might not be all it’s cracked up to be.
I’d moved into my own apartment and needed to buy furniture, and a few other bits and pieces. Then, after another few months of sizeable bills and ‘surprise’ credit card statements (a couple of which were virtually heart-attack-inducing), I starting thinking: What would it be like living without credit for a year? In fact, could I take it one step further—what would it be like to go back to the 90s, the era of Madonna’s Vogue, and use cash to make all of my purchases? Could it be done in this day and age? Could I do it without tearing my hair out? I decided I’d find out.
First of all, I want to make it clear that I didn’t do anything so dramatic as to cut up my cards, though I’m sure that would have felt pretty good. No, I just sealed them up in an envelope and stashed them at the bottom of my sock drawer. After all, I didn’t know how long this experiment of mine would last. One year? Month? Week? No idea. So it began.
The argument for the Plastic Fantastic
- Buying big ticket items: Buying a couch or a computer isn’t an issue if you’re carrying a credit card. Forget about it if you’re paying in cash—it’s just not safe carrying $1,000 or more around. I had to forego those purchases. Or ask my burliest mate to accompany me (his move to NSW halfway through the year put the kibosh on that). And no spending money online—not even to pay bills. Get your head around that one.
- Stashing the cash: Let’s face it, it’s a real pain visiting your bank or your bank’s ATM a couple of times a week or more. I started pulling out at least a couple of hundred at a time, leaving a chunk of it at home in a safe place. You probably won’t believe this, but there were a few times when I actually forgot where I’d hidden the $$. Yup. On the positive side, I suppose the sweet day will come when I open up my copy of War and Peace for a quick read and $200 in unmarked bills drops to the floor. Thank you, Tolstoy.
- Dirty looks from the barista: You won’t risk becoming known as that crazy woman who pays for everything in cash. You know, Waitress-In-Café to Guy-Behind-Register: “Oh god, here she comes again.” Never forget—no $100 bills for a latte, no bags of coins for a new pair of jeans. It’s just not polite.
Back in time: the argument for cash
- Track what you spend: Having real money in your hand somehow makes you appreciate it more. You watch it grow, or decline, in real time. And it makes you feel responsible.
- Back to basics budgeting: You actually have to learn how to SAVE UP FOR THINGS, just like our grandmothers did. It’s a radical idea I know, but in this consumer age when everything is so readily available the satisfaction of walking into a shop and putting your money down after you’ve spent the past month saving for that hot-ticket-item has become a novelty, and is pretty hard to beat.
- Zero heart palpitations: You’re never going to get a nasty shock when your statement arrives and you realise that those lunches you’ve been buying every day have amounted to mucho $$ over the month. Spending in cash slows you down— it forces you to take stock and really think about what you’re buying. Do I really need it, or do I just want it? That’s a pretty powerful thing, especially if you’re serious about saving money.
In case you were wondering, I lasted out the year, and yes, it was an interesting experiment, in human psychology more than anything else. After that I compromised and got myself a debit/VISA card. An app from my bank has helped too. So now I have the best of both worlds—the convenience of credit but I’m also able to keep an eye on my spending, and I have the satisfaction of knowing I’m spending my own hard-earned money. And as I watch my app and see my bank balance diminish with every purchase (and my sense of short-term financial security along with it) it’s a good reminder to pull the reins in if I need to.
The system isn’t infallible—there are still months when I spend more than I’d budgeted, and not always on essentials. But it happens less often, and I feel much more in control. Those paramedics can put their defibrillators away.