No More Credit Cards?

Believe it or not, there are functionally adult humans out there who don’t have credit cards and they don’t write checks. How do they survive? Cash. They use the green to pay for everything and when they run out of it they don’t break out the plastic. The most popular form of cash budgeting is the envelope system.

You may have heard or come across someone that has used this system. Cash goes into category specific envelopes to pay for items in that category. Popular categories are Bills, Groceries, Entertainment, Gas & Car Maintenance, Home Improvement, Savings, Clothes, and Kids. A benefit of the envelope system is that you can have as many categories as you need. You can separate your monthly bills individually. You can either include your bills in the system or use envelopes for everything after bills are paid, since your monthly bill payments will need to be paid completely.

Then take the rest and budget cash amounts to each category. Then you use that cash and that cash only for the specified category. So if you budget $250 a month for groceries you will take that envelope with you every time you go to the grocery store and draw from that envelope to purchase your groceries. Guess what happens when your grocery money is gone? You don’t get to buy any more groceries.

Ok, so no one is going to physically stop you from buying more groceries if you run out too soon. But you will then be drawing from another budgeted category and hurting your budget overall. So you will either need to readjust your budget to account more for groceries or you will need to monitor how you shop for those groceries.

Once you have the system figured out you may be finding that you are not using all the money in each category. This is where the benefits of a good budget come into play.

You now have some options for the excess cash. You can roll it over to next month in the same category and extend that categories monthly budget.

You can take all of the extra money and put it into your savings account.

You can set up another envelope for extra money and use it for a vacation or even better, use it to make extra payments to eliminate your debt.

There are some things to consider about the envelope system. Carrying around wads of cash can leave you less than secure. Plastic provides security if your card is lost or stolen, while cash does not. You do not want to carry all of your cash with you at one time. For instance, you may budget $100 for gas a month (even though you will probably need to consider more with the prices raising daily, but that’s a different article.) Keep $20 at a time locked in the glove box instead of the whole envelope full. Keep envelopes that are not in use at home in a safe.

Hold onto your receipts to keep track of where the money is specifically going. Just place the receipts in the cash envelope. The receipts should add up to the amount of cash that was spent.

If you eliminate all credit from your financial life it may hurt your credit score. You may want to consider a low interest line of credit to protect your score.

You may want to have a debit card linked to either a checking or savings account. That way if you do happen to run short on cash at the grocery store you can save time and embarrassment of having to remove items. Just make sure to account for the extra and note the amount that was taken from the account.

The envelope system requires strict self-discipline. It can be a real eye-opener to see how close or how far you are from your budget when you run out. If you are new to a cash only system it may take some time to get used to and adjust for.

Honestly, this may not work for everyone for whatever reasons. If you try it and are not comfortable with it or you find it hard to keep track of then you will want to find another way to budget. No matter how you budget, becoming less dependent on credit cards will leave your finances better off and your credit cards dusty.

Pioneer Credit Counseling is a bonded, non-profit credit counseling agency offering debt management programs, financial counseling, bankruptcy counseling and housing counseling nationwide. Call our friendly counselors today at 800-888-1596 or visit

Our accredited credit counselors will help you take control of your financial life and get out of debt faster than you can on your own. We offer a debt management program that will stop the collections calls, lower your monthly payment and provide you peace of mind. Our pre and post bankruptcy counselors provide an easy process for you so you can focus on rebuilding your financial being.

It is our policy at Pioneer Credit Counseling not only to help people get out of debt, but also educate in sound budgeting practices.

Pioneer Credit Counseling can help you get out of debt faster. Find out how through one of our Debt Management | Debt Management Programs | Credit Counseling | Financial Counseling | Housing Counseling | Bankruptcy Counseling | Financial Educational Materials

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