I was having lunch one day with a very close friend of mine. We live in different cities so we don’t get together nearly as much as we would like.

The bill came for lunch, and I noticed how close attention she was giving her bill and counting out dollars to a tee. Then the waitress mistakenly brought her back the wrong change. My friend proceeded to tell me that she had recently started an all-cash plan for expenses and does not carry her credit card any longer.

The financial coach in me was intrigued, and I was hungry to learn more about her experience. I decided to interview her to learn all about it.

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What prompted you to put yourself on a financial diet?

I was putting everything I purchased on my credit card. I was doing this so I could earn “cash back” or get perks from my credit card. I rarely carried cash anymore.

It had become so easy to buy whatever I wanted, whenever I wanted, but not what I necessarily needed. I found I was spending more than what I was bringing in. Numerous times, I found myself having to transfer money from my savings every month. I hated that!

I also saw that my savings were no longer growing, because I would have to take the money that was being saved and put it toward my credit card bill to pay it off every month.  

Where did you learn about the concept? From a friend, book, etc.?

I didn’t get the idea from anyone, per se. In the past, when I wanted to tighten up my finances, I used to write everything down on a monthly spreadsheet. That was fine, but I didn’t maintain it every day, and I would forget. It took up too much time, and it was hard to get into a habit of doing it.

I needed to try something different. Something easier… an all-cash diet! This way, when the money is gone (no, it’s not time to pawn), I’m done spending. This just seemed like a logical next step. It’s also the first diet I haven’t been hungry on! Bonus!

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Explain the process you put in place for the month.

I leave my credit card at home. I allot myself $1,000 cash per month. This must cover all my groceries (items including laundry detergent, TP, make-up, etc.), gas, clothing, and going out/fun money (restaurants, beers, day-to-day small expenses, etc.).

It does not include my set payments every month, like my utility bill or my car payment. I always keep an extra $20 in my car, for any emergency. I really must think about where I’m going and how much money I will need to have on me. I then take that amount of cash.

Do you consider yourself successful at this exercise?

Yes! It’s like giving up chocolate for Lent. It’s not easy, but it’s worth it at the end. In fact, it’s now become a challenge to see how much money I can have left at the end of the month.

The most satisfying thing is to get a credit card bill with nothing on it, or with a minimal amount on it. (I have a charity I donate to and monthly dues that are automatically charged to my card.)

At what times did you feel the most tempted to spend?

Any temptation has been taken away, especially impulsive buying, because I simply have no means to pay for it.

For example: I’ve found that if I’m in a clothing store and I see something I like, I still try it on, but I don’t buy it because I don’t have the cash on me. If I continue to think about that piece of clothing throughout the week, then I decide if I want to spend the time and energy to go back and purchase it or not.

I’ve thought many times to myself, If you still really want that, maybe you can get it next month. It takes away the “want’ vs. the “need.”

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What barriers were there?  

So far, I’ve only had one incident. One day, I did have to call my husband and have him bring me some cash. I had forgotten about an appointment I made, and I didn’t have enough cash to cover it!

What did you learn about yourself and your spending habits during the process?  

It’s really helped me to step back and ask myself, Do you really need this? Overwhelmingly, the answer has been no. I don’t need more things to be happy.

Sure, who doesn’t like a new pair of kickass shoes? This isn’t like I can’t have things I want, but it does make me stop and think. What’s important?

This also made me more aware of what items cost. This may sound foolish, but when I paid with a credit card, I just threw things in the cart and whatever the cost was, I just insert the card. But when I’m paying cash, I look at each item and know what it costs.

Like when did the cost of deodorant go through the roof? Seriously! There are many other little things I now do including: If I’m in the grocery store, I estimate my total or when I pay for a dinner, I count every penny I should get back. Yes, I did all these things prior to this diet, but it heightened my awareness. And that’s not a bad thing.

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Is this something you will continue to do or some form of it?

I am going to try to stick with this for six months. My goal is to not touch a penny from my savings account.  

Have your thoughts about having money and keeping more of it changed? If so, explain.

When I was growing up, my parents did a wonderful job of teaching me the value of money and how to respect and save it. This instilled in us that you don’t spend more than you make. However, the rest of the world, as we know, has made it very easy and convenient to spend it.

I found in the past year or two, my spending habits were getting loosey-goosey. My spending was never out of control, but I was just lacking some self-discipline. You always must keep yourself in check…because no one else will. 

What advice do you have for others on this topic?  

I encourage anyone who is struggling a bit in seeing where their money is going every month to give it a try. It’s simple and easy. You can’t spend what you don’t have.  

What great insight. I firmly believe the best learning experiences come from talking to others. Next time you are out to dinner with friends, strike up a convo about money. You will be glad you did.