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Article - paying with cash costs you more

Discussion in 'Off Topic' started by ATCclears, Oct 11, 2013.

  1. ATCclears

    ATCclears Seattle area, WA Well-Known Member

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  2. huthuthike

    huthuthike Hillsboro OR Active Member

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    If you look at costs to convert a paycheck into cash then the argument could be made I guess. If you are talking about the flow of bills from person to person then obviously it is not more expensive. They also seemed to ignore other factors like identity theft, cash loss/theft and processing fees from non-cash transactions.

    Maybe I should get a million bucks to study something stupid...
     
  3. Modeler

    Modeler Molalla, Oregon Soccer Fan

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    I can see where they're coming from. ATM fees, fees to cash your paycheck, fees from getting cash off of the prepaid debit card your paycheck goes to (if your boss is a complete asshat), gas and time driving to the bank...

    OTOH, they forgot to include the money saved by not spending when you don't have cash. If you have to make a deliberate choice to go to the ATM or the bank every time you want to make a purchase you tend to not make as many purchases. I tend to hit the ATM when I'm at work (my CU is right next to a place I frequent as part of my job) and there's another branch on the way between work and home.

    And there's the MIT "paying with cash hurts" study made famous by Dave Ramsey:

    Spend 'Til It Hurts - Carnegie Mellon University | CMU

    I've never been in a better financial position than the last few years when I stopped using credit. Debt is slavery!
     
  4. Allfat

    Allfat Marion County Active Member

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    Can't agree more. My wife and I have switched to cash only and are paying down our debt Dave Ramsey style. My wife was skeptical at first, but over the past 8 months we have paid off over $18k in debt and are on our way to being debt free. It is almost hard for me to spend money now, even when we budget for it. It really has changed my outlook on the way we use our money. This never would have happened if we were still using credit cards and piling on more debt instead of paying off what we already owe.

    Using cash definitely saves you money, hands down.
     
  5. oknow

    oknow amboy wa. Well-Known Member

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    if you pay your credit card off each month and depending on which cc you have you can actually save money (discover) you get cash back, it just takes some self control on your/spouse part and living within your means. but like mentioned before you don't have to worry about id thief using cash.
     
  6. Modeler

    Modeler Molalla, Oregon Soccer Fan

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    Even if you pay it off every month it's still debt :thumbdown:

    I'll pay cash :thumbup:
     
  7. Allfat

    Allfat Marion County Active Member

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    Yeah, I get that. I had a Discover card and used the cash back, and it was nice. But it is too easy to spend money that way, at least for me and my wife. The system we have now works for us, all large purchases are discussed, and if the money is budgeted for, spend away! Last month we had a bunch of money left in our restaurant fund, so we went out for a nice steak dinner! My wife no longer looks at me sideways as I sit at the computer with my credit card in hand...

    If credit works for you, great, but cash works just great for us!
     
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  8. oknow

    oknow amboy wa. Well-Known Member

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    in that case it is debt when you pay with cash. also more money going out for the stamp to mail if not local or money for gas if local.
     
  9. Modeler

    Modeler Molalla, Oregon Soccer Fan

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    How so? When you use a CC you're buying something with money that's not yours with the promise to pay the money back later. You "pay you credit card off" (your words) at the end of the month. Debt is the only thing that gets "paid off".

    And what do you mean by "the stamp to mail"? I don't mail cash, and if I buy something online I use my debit card (which uses money I already have that is my own, not money from a large corporation that I'm borrowing for a few weeks).

    I'm not seeing how paying with cash is debt; I have the cash, I give it to someone and they give me goods or services in exchange. I don't see any debt there...
     
  10. rufus

    rufus State of Jefferson Well-Known Member

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    Phooey! The banks charge at least 3% when using credit/debit cards for starters. Cash is king!
     
  11. Modeler

    Modeler Molalla, Oregon Soccer Fan

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    And you can often negotiate a better price with cash for large purchases :woot:
     
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  12. oknow

    oknow amboy wa. Well-Known Member

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    if your paying that they saw you coming before you knew you were going there.
     
  13. oknow

    oknow amboy wa. Well-Known Member

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    I do that with cc's too
     
  14. oknow

    oknow amboy wa. Well-Known Member

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    Ok I'll give you that, although I have on 2 occasions run into a problem where they did not take cash and I know someone will call :bsflag: and if I could remember where I would pass that info on but at this time I will let the bs fly with no rebuttal
     
  15. 45 for me

    45 for me Oregon Well-Known Member

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    Whether or not I'm going to buy something isn't based on whether I have cash in my wallet. It's based on if I have the money overall, and if the value to me to warrants a purchase. Debt is not a bad thing in and of itself. Every penny you own is a potential investment. Balance the risk versus the return and make smart decisions.

    For instance: I use credit cards to purchase whenever possible. I don't purchase anything I don't already have the money for in the bank. So, when the bill comes I can pay it in full. I used the banks money for free for a month, and because of the fees the seller paid, they even give me cash back. I charge my business travel and expenses for the same reason. Right now I have nealry $1500 of cash back available for my two credit cards, which I never paid a penny of interest or fees. That is pure income.

    Furthermore, the vast majority of the money I have on hand is in a brokerage account making money on itself. Every month that goes by that it is still in my account is money in my pocket. The credit card allows me to have that money there for 40 or so extra days every month.

    When I bought my car, the factory was offering 0% financing, so I financed 2/3 of the price. That is free money that I will retain and make income off of until the car is paid for. I could have paid cash for the whole thing by selling investments, but why? On the other hand, I did put 1/3 down, because I was being responsible, and wanted lower payments that I could keep up with, and didn't want the debt to be as big.

    Borrowing responsibly to buy a house makes perfect sense too. I put down 20% to get the lowest interest rate and not pay mortgage insurance, but It would have been a much smaller house if I had to pay cash. Over the long haul, the house will increase in value about what the interest rate is, so at the end of 30 years, I will have a much bigger nest egg.

    Borrowing responsibly also gives you good credit, which lowers insurance rates, phone rates and many other things you don't think about. For instance my bank wants my business, so I get better accounts that charge me nothing. In fact, they paid me $100 to open a savings account. I always carry cash, in case it is necessary, but I never pay a penny for that.

    Now doing all this assumes you have some money in the first place and are not living paycheck to paycheck, which I am definitely not. But it wasn't always so. When I got out of school, I had no money. I lived below my means until I did. Beater cars and crappy apartment, and saving until I could afford better. Do that and articles like this are laughable.
     
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  16. Mark W.

    Mark W. Silverton, OR Bronze Supporter Bronze Supporter

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    I use no credit card I have no debt card. I stop by the bank on the way home from work and cash my check Put my spending money in my pocket and the rest into the household account. The wife uses a Debt card (which means her gas costs more then it should) and does most bill paying on line.
     
  17. MrNiceGuy

    MrNiceGuy between springfield and shelbyville Well-Known Member

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    I was out of checks a few years ago and I tried to pay rent in cash. The apartment manager said they don't accept cash because it's harder to trace if it disappears. I guess the old manager collected rent in cash and never reported it.

    Oh well, apartments aren't very fun. I dont live there any longer.

    Same thing happened with my old insurance agent, Kenneth Reinking.
    Insurance agent arrested in fraud investigation | OregonLive.com
    He started pocketing the cash payments. Good thing I always kept my receipt.
    When the new agents took over his clients, they called to find out why I hadn't paid my insurance for a few months... Needless to say once I got everything resolved, I went to a different company.
     
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