It is Time to go on a Cash Diet
No, I am not going on the traditional diet. I have also not found the magic pill. This is a budget diet! Overspending is just like overeating. When you do it in excess, you feel terrible and you have regret. At least, that is how I feel. They both work the same way with aftereffects as well.
When you overeat, you gain weight and your health suffers. When you overspend, you get into debt and your financial health suffers. Both are bad and both sometimes require diets to get back into shape. After a month of my indulgences getting the best of me, I am going on a cash diet!
What is a Cash Diet?
You won’t see this one on too many infomercials or any for that matter. Cash diets are not the next big thing, but they do wonders for your budget. When you are overspending, a cash diet could help you get control. A cash diet is simply replacing your credit or debit card spending with cash. You take your budget and pull out money in cash to handle a spending category. While I tend to not go all-cash for paying bills and such, I do like the idea of using cash for my “entertainment” category.
If my “entertainment” budget is $100 per month, then I would have to pull out $100 at the beginning of the month. I am supposed to spend the cash wisely over the course of the month. Once you spend all of the cash, then you are done for the month. If you blow it all in one day, then you are done. You can’t go back to the ATM and pull out more cash. The cash diet keeps you honest with your spending. You know exactly how much you have and there is no fighting math.
Why Go on a Cash Diet?
Cash diets are actually pretty well known in the personal finance community. Many people use them for everything they purchase. I don’t typically buy anything with cash as I don’t like carrying it around. The problem with credit/debit cards is you can spend more than you have. This can cause more debt and pesky fees when you overdraft your bank account. No one likes that. So, for the sake of staying away from debt, I am embarking on a cash diet.
I have decided to pull out cash for my entertainment and food budget categories. All of the other categories deal with static bills and gas. I tend to overspend on entertainment and food categories when I am going through a stressful time. Excess food gets purchased and little things are bought here and there. $5 purchases over and over again can lead up to quite a bit.
Cash diets are great at fending off the overspend. While you might think you are giving yourself an allowance, just think of how this can help your spending. It is impossible to spend more cash than you have in your wallet. If there is no way to get more cash, then spending more is not possible. Stores and restaurants don’t tend to barter.
You probably hear many top personal finance people talking about all-cash diets. The age of plastic is upon us and the paper is not used as much in traditional spending. As I have said, I don’t use cash much. I am not sure how this happened, but over the years I have had less and less cash on hand. This is going to change now. While it is not a new year’s resolution, it is a resolution all the same.
I am going on a cash diet until I can get my food spending under control. This is going to be the best way to curb my urges to spend money on fast food. While I do need to address the underlying cause of my food addiction, this is at least a proactive measure. By the way, my underlying problem is stress. I will get back to a point of working productively and efficiently and the stress will disappear. As the stress disappears, so does my urge to eat fast food. Now, onto the ATM to pull out my cash for this month.
Have you thought about going on a cash diet? If you have, how did it go? What in life tends to trigger an overspending episode for you? What spending areas would be good candidates for a cash diet for you?
Photo courtesy: Tax Credits
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