Debt settlement services are all over radio, TV, the internet. They seem like a shot at redemption for many people, but often the solution to our biggest problems can be found in the little things we do every day.
Overspending is a classic cause of debt problems, but how we pay for products and services we buy can contribute as well.
All credit problems start somewhere, and I don’t think it’s much of a stretch to say that they typically start right about the time that we begin to become comfortable with debt—not so much being in debt, but when we begin using it and thinking of it as a convenient tool.
Not so long ago, when people tended to avoid debt, paying in cash was as natural as eating and sleeping. In today’s paradoxical marriage of convenience and complexity, paying in cash seems almost exotic, but for people having debt problems it could be the financial salvation they’re hoping to get from debt settlement services.
What are some of the advantages of using cash-on-the-barrel to get out of debt?
Paying cash means learning to live without credit
The first rule of getting out of debt is not to use it. Only when you stop adding to your debt can you begin seriously paying it down. Paying with cash (or checks or debit cards) is a major step in that direction. Continued use of credit is like playing with fire.
Often, the difference between people who pay their credit card balances in full each month and those who carry a constant balance is a steady paycheck. Once that paycheck is gone, the credit card habit that was mostly for convenience and cash back rewards can become an unexpected burden.
Suddenly, the cards that were faithfully paid each month, slide into next month, then another and still another. Now you’re carrying a balance that you can’t payoff out of a shrunken paycheck and you join the ranks of the revolving debtor class.
No bill to pay next month
Do you know anyone who enjoys paying bills? I’ve never met anyone who does and I suspect that’s because the majority of people have to do at least some stretching in order to balance their finances each month. Bills mean stress, and the more bills you have, the more stress in your life.
We have enough bills to pay without adding last months’ excesses to the pile, and that’s the position credit puts us into. How much fun is it to open up your credit card statement from the previous month only to find out that there’s a discrepancy or a complete mystery charge appearing on the statement? Now you have to play detective, and initiate a series of phone calls to the credit card company and the vendor to get it straightened out.
One of the unheralded advantages of paying by cash is that if you use it faithfully, you also reduce stress in your life. Paying by cash represents a series of small financial transactions that we deal with one at a time. Credit represents the accumulation of many transactions into a small number of larger payments, and that can create stress in a hurry.
The smaller your pile of bills when you pay them, the more control you’ll feel and the less stress you have to deal with.
No chance of debt if you can’t pay your credit card in full next month
Even if your custom is to pay your credit card balances in full each month, the potential for a windfall of bills in any given month is always there. When it hits, and funds to pay the credit card in full aren’t there, you’ll be tempted to roll the balance forward to the following month. Do that once and there’s more than a remote chance you’ll do it again.
If you’re using credit for regular expenses, you’re courting the potential to run up debt at some point in the future. Credit becomes a habit, and whether they’re good or bad, all habits are little more than comfortable traveling companions that we come to develop a benign view of.
If you pay by cash, there won’t be any excess debt to carry into the next month.
No chance of identity theft
One of the unsung advantages of paying with cash is the complete absence of the potential for identity theft. Cash leaves no paper trail, no personal information on file, and no opportunity for manipulation of charges after the fact.
The counter argument is that credit cards limit the loss on fraudulent charges, usually to $50, thus insulating the card holder from financial disaster. While that may be true in a strict financial sense, there’s far more at risk than just money.
When a thief has access to your personal information, the far greater risk is that it could be used to hijack your identity to gain more credit or some other negative purpose. Information is often more valuable to a thief than money, and often the real target of the theft. When we use credit, our information is laid out on the table and we’re completely at the mercy of those we provide it to.
When you pay with cash you have none of that concern and can leave each and every merchant you frequent with complete confidence that your identity was safe when you left the establishment—safe because it was never provided.
No bargaining with the Devil to see if you can afford something
Most of us know whether or not we can afford to buy something. When the plastic comes out, it’s usually an unconscious admission that we can’t.
When you’re on a cash-only spending diet, either you can afford to buy something or you can’t—there’s no inner conflict. Credit is a form of financial scheming that puts us in negotiations with ourselves or our spouses in order to come up with a way to pay for something we know we can’t afford. Plastic makes it too easy.
If we only pay with cash, we’re limited by the amount of cash in our wallets, forcing us to acknowledge that we can’t afford something. In a way, admitting that to ourselves is a form of liberation; there’s no agonizing over trying to come up with a way to twist reality so we can buy it. We can’t afford it, so we move on…
Paying Cash = Spending with No Strings Attached
This one is really a summary of all the others above. Paying with cash is virtually the simplest way to transact business. You drop down your money for payment, take your merchandise, walk away and forget about it. Every transaction has a period on it.
No bill will come in next months mail, no debt will accumulate, your identity won’t be compromised and the debts you do have will gradually melt away if you do nothing more than make the scheduled monthly payments and don’t add any fresh charges.
Paying with cash is simplicity at its best, in a world where simplicity itself is something of a revolutionary act.
Do you try to pay with cash? Have you ever thought about making the switch? If you didn’t, what stopped you?
This post is from FiscalGeek staff writer: Kevin Mercadante. I’m very excited to have him contributing to the site. You can find out more about him at his own blog OutOfYourRut.com.
(photo credit: stopnlook)