To start with, we cut off our satellite TV service. We installed an antenna we already owned and hooked it into our digital TV. I subscribed to Netflix and had them send me the free disk so I could stream it through my Wii. Since I won’t be letting my internet go unless I’m desperate, I figure I should make the most out of it.

We’re saving $40 a month and spending an additional $9.82 a month. That’s not a bad bargain, and the Netflix setup is amazing.

I cut my grocery budget from $110 a week to $90 a week. So we’re saving $80 a month.

Just these two cuts have given me an extra $110 a month to pay on debt. That kind of money adds up. It also means I can go from paying just over the minimum payment on the Amex to $250 a month. That’s $1,000 every 4 months!

I will certainly be on the lookout for more ways to cut. I want out from under some of these monthly bills, especially the debt payments.

Have you ever made drastic cuts to pay more toward your debt?

My debt repayment has been drastically slowed because I’ve cut my work hours. I went from working 3 days each week to 2 days each week, and I’m working towards quitting my job entirely and staying home to improve my family’s home life.

I have NOT accumulated any additional debt. My cash based living experiment continues to work well, but as yet, I won’t be able to actually quit my job for quite some time. I’m down to about 16 – 20 hours a week. I want to go to about 11 hours a week, but the budget just won’t allow for that yet so I’m still picking up some extra work hours from home through the week. (I work from home about 50% of the time for my job as it stands right now.) The 11 hours would allow for 2 days of work while the kids are at school.

So that’s where I’m at.

There is some bad news in all this. Last year my husband was receiving a miscellaneous payment from his employer that related to a health insurance rebate of some kind. That payment stopped on the first January 2010 paycheck. I knew it was only for the one year, but when I had reduced my hours from 3 days to 2 days, this money helped cover that gap. Now I don’t have that nearly $200 per month of income and it’s seriously hurting my budget.

Steps I’ve taken to ease the crunch

Got rid of caller ID and call waiting = $6 per month savings

Turned off the data package for my smartphone (I don’t have cell service at home anyway so the only place I could use this was when I was taking the kids to and from school so this wasn’t a big hardship for me) = $31.00 per month savings

Downgraded my satellite TV package = $22.00 per month savings

That’s $59.00 per month and I’m still looking for other cuts I can make.

I’m going to reduce my grocery budget but it won’t be by much, because I’ve always been pretty efficient with that anyway.

I’m about to read “America’s Cheapest Family” and see what tips they have but I don’t hold out much hope that I can reduce things any further than I already have.

Unfortunately, to pay off my debt faster, the only choice for me is more income, and that’s not on my agenda just yet. I need to take care of family and home first. However, I am still paying as much as possible and still have payoff of debt as my overriding financial goal.

Come bonus time for my husband (and he’s been assured that bonuses are coming) I plan to use that to pay off as much as possible of the only credit card debt I still have.

After having my husband’s car die a horrible death a couple of weeks ago and having to buy another one (because my husband is/was positive this car could not be fixed for less than it would cost to buy another car) it occurred to me that I might just be going about my debt snowball all wrong.

First, let me say that we replaced the dead car with a more expensive car, at $8,990 plus tax, title, etc. The loan ended up at $10,589. However, we got a 2008 automobile that still has warranty, and we’ve agreed that our goal is to make this car last 10 years, so we can get it paid off in 5 years (if it takes that long, and it might) and have 5 more years to save for another car.

Several things about this purchase bothered me though, and the main one was my husband’s inability to separate out the fact that affording payments does not mean you can afford the loan.

The thing is, when you have a spouse who believes you’re able to afford something just because you can make the payment, you really have to watch out when you start paying off debt.

As one payment falls to the debt snowball, I worry that my husband will want to buy something else to take its place. (History shows a track record for this and I’m not one to argue with history.)

I’m sure I’m not the only person trying to deal with a somewhat uncooperative spouse who just doesn’t seem to get it.

I’ve discovered that there might be a way around the fighting and worrying. It’s less like a row of falling dominoes and more like the collapse of a house of cards, but it just might work.

Don’t pay off your smallest debt first. Pay off the debt with the longest term first (with the possible exception of your home loan, depending on how much benefit you see from the tax-deductible interest).

By choosing to pay off the debt with the longest term, you eliminate the worry that freed up cash will be diverted from your debt snowball and used to make another payment for something your spouse wants to buy.

Without true cooperation from your spouse, it’s unlikely you’ll ever be truly debt free, but that doesn’t mean you can’t try. I certainly intend to do my best at it!

In the future, I will be able to spend less time worrying about what will happen when we get some of our debts paid off and we have cash available to make bigger extra payments.

Until now, my strategy has been to pay off some relatively short-term debts that should be paid off within the next year or so. However, I’m already hearing rumblings from my husband about that boat he wants to upgrade to—and how wonderful it would be if we had just a little extra money so he could make the payments.

Since I have no intention of letting this happen (if he really wants it, he’ll have to find a way to start saving for it!), I have begun to rethink my debt payoff strategy.

My camper has a higher interest rate than many of my other debts and a relatively low payment (about 1.1% of the principal). I intend to start putting any extra payments I can make toward it, instead of the other shorter-term, higher payment credit card (about 2% of the balance).

This way, I stop the “we have enough for a new payment” problem before it even becomes a problem.

Unlike with a traditional debt snowball, where you use freed up cash to pay extra on other debts in a rollover fashion, where your debts begin to fall like dominoes, this method will pay off your debts with the shortest terms on their regular schedule. This means that you’ll see more debts fall at about the same time.

Basically, I can put off the obvious freeing up of cash by saving on future interest, reducing the term of the debt by paying more principal each month, and having several debts paid off at around the same time frame. Paying extra on the camper loan should allow me to knock down 4 loans at about the same time.

I also believe this will give my husband the encouragement to save that he needs when we finally have free cash, because he will be able to “see” how possible it will be to save for a large purchase when we have so much cash freed up.

That’s the plan, anyway.

This might reduce the motivational boost I would get from paying off smaller debts faster, but it just might get me significantly closer to my goal of paying off as much debt as possible without having to worry about my husband eyeing the extra cash!

Today, I feel good about the decision, but last night, I really struggled.

My problem is in defining at what point I should stop throwing every extra cent I have at my debt so that I can live a reasonably balanced life, buying what I need and occasionally, what I want.

Yes, you could take your lunch to work every day and save a ton of money. But do you have to, just because you’ve decided to live a cash based life and get completely out of debt?

Should you feel guilty if you buy lunch with cash that you could have spent on paying down debt?

If you broke your camera and needed a replacement, should you not buy the camera because you could use that money to reduce your debt even further?

Besides, can’t one consider a family camera a necessity these days? If you want photographs of your family, you’re not going to find them cheaper at a photographers studio than those you’ve taken on your own!

Last night I finally decided that there are limits to my dedication. I want to pay as much as possible on my debts, but only after deciding on a reasonable amount to reserve for family use.

These “rewards” for staying within budget and paying down debt at the predetermined rate I’ve set are deserved and necessary to my future momentum.

Deserved because I am dedicated, but I don’t know if I can sacrifice all the joys that come with living within a fixed budget and knowing you have some extra money to play with every so often.

Necessary because if I continue to adjust my debt payments every time I have a few extra dollars, I worry that I’ll burn myself out of never spending any of that extra money on things that can make life a little easier or more enjoyable now.

This month, I spent $99.99 on a camera, and reserved $75 for the family and extra entertainment this month. (I include dining out in that category also.) As for debts, I chose to pay my normal debt payments, which is the budgeted amount I previously set for paying down my debts.

So, ultimately, I decided to stick with my budget and use my extra money for other things, because if I had been outside my budget this month, I would not have had this extra money.

What about you? Do you think I made the right decision? Do rewards help or hurt your progress to get debt free and live a cash life?

Allie is a close friend of mine who has also embraced the idea that now is the perfect time to get out of debt, let go of old spending habits, and start fresh with a cash-based life. She recently took a vacation, and this is her story of budgeting and saving success in an area where it’s often hard to impossible to keep spending under control.

Allie’s story

My Vacation

So it took some doing, but I was finally able to brow beat my husband into a mini-vacation during Spring Break. The kids were free. The husband had some vacation to burn. But really, we didn’t want to push too much into the short time we had. That’s why we went to the old standby…Gatlinburg, TN.

When I was discussing with Kate that my goal was to pay cash for as much of the vacation as possible, and that I’d found such a great deal online, she asked me to guest blog about it. So here’s what we did.

First, we set a budget. We hoped not to spend more than $500 for the total trip (approximately four days and three nights). The total budget had to include the hotel, entertainment, food, fuel, and souvenirs.

The next thing we did was make a wish list of places to go and see while there. We knew the primary place we wanted to take the kids was to the Ripley’s Aquarium. We also wanted to take them to the Dixie Stampede dinner show, but really didn’t know if that was in the budget this time around. But since this was a “wish” list we put it on there. And basically those were our two primary entertainment costs. The other places were all about nature—and free.

With the money and wish list in mind, I searched online for any deals or coupons that would save money. Now I want to note here that there are a lot (and I mean A LOT) of places online that say they have good deals. But don’t be fooled. There are tons of vacation destination places that will take your money. I’ve heard horror stories of this happening. Or they’ll give you that special rate if only you’ll take a half or whole day of your vacation listening to some spiel about a condo.

Being very aware of this, I started with the city’s main site and worked my way around to the sites for the two places on the wish list (Ripley’s Aquarium and the Dixie Stampede). Now Ripley’s had some pretty nice deals if you were interested in doing more than one of their activities (Ripley’s Believe It Or Not or the Ripley’s Motion Theater). But with one child barely two, that wasn’t an option. [Special note here...don't forget to check restrictions on age, weight, height, etc. before buying tickets in advance!]

Not finding what I was looking for, I went on to the Dixie Stampede’s site. And there it was. I found a link on the combo deals page that led me to the Greystone Lodge at the Aquarium’s website. They had a super special going on through April 31st that gave you two nights stay and tickets to Ripley’s Aquarium for $101.00. It was definitely the best deal I’d found, so I called the hotel and had a wonderful lady help me work out our best deal.

We were able to book two nights at $30.00 per night and add an additional night for $30.00 more. Plus, we were able to get four tickets to Ripley’s Aquarium and three tickets (as my daughter is too small to have her own seat) to the Dixie Stampede. All of this, plus tax, only came to $234.00! It was awesome!

That left us over $250.00 for fuel, eating out and souvenirs.

The room and entertainment taken care of I went in search of coupons for restaurants we like to eat at, and I went to the grocery store for snacks, drinks and sandwich fixings for the trip. The hotel had breakfast covered, so I knew I only had to deal with lunch and dinner. We were going to be there four days and three nights, so here’s what we did.

Day 1

We took our time on the trip up—starting out just after having a big breakfast at home—and stopped off in Knoxville at a little drive-in we’d seen on a Food Network show. We ordered one chicken strip dinner and one order of onion rings. We ate so bad, but it was so good. And those two items were enough to feed all four of us lunch. Did I mention we aren’t really big eaters?

Now I don’t know about your husband, but mine can’t let the opportunity to visit the Bass Pro Shops big store in Sevierville pass him by. He had to stop. Very fortunately, the sales weren’t all that good and we made it out with only a pair of sunglasses for him. :-)

Then on to the hotel. After settling in, we decided to eat a good dinner. My son wanted shrimp and ribs. That left us with a few options, so we settled on Ruby Tuesdays which gave us more options and was less costly than one of the more specialized restaurants.

Day 2

We ate breakfast at the hotel, and headed out. We’d decided to break up our outings and not overtire the kids, so today would be a trip to the Roaring Fork Motor Trail, a little hike through the streets of Gatlinburg, and then on to the Dixie Stampede that evening. So we took our cooler and headed out on the trail. We had a picnic lunch, and then ate the wonderfully pedestrian fare the Stampede had to offer that evening. The largest cost this day was fuel. We’d forgotten to fill up before heading back to the hotel the evening before, so we ended up paying a bit more than we’d have liked. The good news is that this fill up lasted us all the way home in my very economical Kia Sorento.

Day 3

Again we ate breakfast at the hotel, and then headed out to the Aquarium. This would be our most costly day and we knew it. We’d planned accordingly, saving the bulk of our food and souvenir monies for today. We spent our time in the Aquarium wisely. We looked over every nook and cranny. We also took in with us snacks and drinks for the kids. This is one of the few places that I’ve found doesn’t mind if you bring in food. By the end of our wondrous journey, however, everyone was starving. So after picking out a couple of “clearanced” t-shirts for the kids and a couple of stuffed sharks, we headed further into Gatlinburg. We decided to eat at the Bubba Gump Shrimp Co.. The price was a bit high, but they had chicken and fries for the kids as well as shrimp for us and we were able to order one kids meal (for the little one and me) and one shrimp sampler plus (for hubby and oldest kid) and a side salad (for me) to share. I admit I did try the shrimp and would have probably been tempted to eat more than my fair share, but I didn’t want to over do so late in the afternoon knowing we planned to go to Pigeon Forge shopping.

And we did. We did a little shopping at the outlets, being careful not to overspend. And then we ended up at O’Charley’s. We had a coupon for $5.00 off $20.00 and with some careful planning we were able to get out of the restaurant very satisfied with a bill of less than $20.00 for all four of us.

Day 4

Our last day was sad. We hated to leave the relaxing fun we’d had together, but on the other hand we were very glad to be headed home. We grabbed our breakfast at the hotel, and loaded up. We still had a few snacks, so we opted not to stop for lunch until we were near Knoxville. We also knew we needed to stop by a Wal-Mart to look for a bat, but that’s another story… We chose to eat lunch at the Turkey Creek Steak N’ Shake. The cost was less than $20.00 for all four of us.

Epilogue

When our trip was over, we felt good about it. We hadn’t overspent and we didn’t have to worry about paying off the trip later. It was paid for. And we’d enjoyed ourselves without the worry and stress that could have come afterward. I’d definitely recommend trying it sometime. —Allie

Here are the highlights

1. Spent too much at Christmas and used my Discover card which I intended to pay off in full. I’ll still be able to do that, but it took some serious finagling and a stroke to luck.
2. Intended to refinance my home loan to take advantage of lower interest rates and get 10,000 cash out to pay for a truck we need.
3. Refinanced home loan but got no cash out.
4. Put the family truck up for sale because it can’t haul my RV camper long distances.
5. Prepared tax return so I would know what, if any, cash I could expect to get refunded.
6. Looking for a truck and a way to pay for it that won’t put me back in debt up to my eyeballs.

Christmas spending

I knew going into the holidays that I didn’t have enough money saved up for Christmas. I intended to cut way back on my spending this year, but when the numbers came in on my Discover card, it was clear that my spending hadn’t decreased at all. If anything, it went up. Take that on top of the $389+ I had just put on there for my refrigerator repair and my bill seemed overwhelming.

When I paid the first statement, I paid it in increments throughout the month until the full statement amount had been paid. I took the $389 from savings and the rest from my bonus and some overtime my husband worked. The dates crossed over onto two statements thank goodness, splitting the amount owed into two payments that wouldn’t cost me any interest since I wouldn’t be carrying a balance from one statement to the next. That left the next statement, which still came in at $1,118. Eeik!

So, lesson learned? Cash, cash, cash. I should have carried cash and stopped spending when I hit zero.

I’ve already talked to my husband and he agrees that this is what we’re going to do next year. We’ve also added $50 a month to our savings so we have the money when the time comes. That’s approximately $11.60 per week and we think we can handle that okay.

Refinanced home loan to save money

Our original plans when we started talking about the refinancing of our home loan was a simple re-fi to cut our interest rate. Then my husband started talking truck. Now, I understand the need for the truck. The truck we have won’t pull the camper more than a twenty or thirty miles before it starts acting up. It’s a 1994 model and it doesn’t have the power needed to handle the weight of the camper. I want to take some trips this year to some campgrounds that are farther from home. I mean, we bought the camper; we’re paying for it, and I want to use it.

But the numbers didn’t make sense and we had to sacrifice the dream of having a few extra dollars on our house payment and no other payments and a newer used truck.

The refinance of the principal only incurred no fees (at our local small-town bank) and our interest rate went from 7% to 5.75%. Before you mention that I could have gotten a better rate somewhere else, you might be right, but we’ve never had to have an appraisal and we paid $0 in fees.  This is just a 2 year balloon based on our original construction loan. We won’t qualify to get a traditional mortgage with all the associated fees and hassles until we finish our master bathroom’s shower and some additional work on our staircase. I like having my loan at my local small-town bank and will probably keep it there for as long as possible.

The refinance to get cash back, however, was a different story. The rocky economy has made even my small-town bank nervous. To get the $10,000 cash out, we would have had to get an appraisal and pay fees and it would have cost about $1,500 total. Not worth it in any universe. I want to reduce my debt not add to it, if that’s at all possible!

Finally, my lender asked if I wanted my first payment due in January or February. I said February. And just like that, I had the money to pay my Discover card. :-)

Buying a truck

Okay, so I’m not sure how this fits with my determination to get debt free forever, but here you have it. We need a truck. We’re going to buy used, and since my husband is handy with the autos, we’re hoping to get the best deal possible. But that still means $6,000 to $8,000 we need to come up with.

$500  – Tax refund

$1,000 – Bonus (fingers crossed for more!)

$2,400 – Truck we’re selling (if we get within a few hundred of our asking price)

$145 – Difference in old house payment and new house payment

Finally, we’re going to get rid of our third car. At the moment we have two small cars. One, my husband drives to work (80 mile commute, 5 days, 34 mpg) and one, I drive (112 mile commute, 2 days, 34 mpg — BUT I get reimbursed for gas based on actual cost). Two days a week, I’ll drive the truck to work. My husband will start driving my car, since we’re going to sell his. We should come out with no changes to our gas budget, since my car is the family car and will remain the vehicle of choice for weekend and evening driving.

So, that gives me the last bit of money we need to pay for the truck.

$2,000 – Car we’re selling

Closer than ever to living debt-free

Despite all that’s happened in the last few months, I feel closer than ever to living debt-free.

Going forward, that $145 difference in our house payment is going to go toward one of my current debts (see my NetworthIQ for details of my debts). I’m excited. Once we have this truck, we’ll have everything in place to start moving forward, and barring any emergencies that we aren’t yet financially prepared for, we’ll have time to start saving now for future purchases.

Following that definition, I just went into debt again after getting out from under my cell phone contract. I say this because when I sign the contract, I’ve just made an obligation for myself to pay a certain amount of money to Verizon for a certain length of time. It’s a debt and there’s really no other way to look at it. Other than death or other dire disaster, I’m probably not going to be able to get out of paying out that contract.

So, this week, I re-upped my contract for my cell phone for another two years to get a new phone. I could afford to pay for a phone, but it wouldn’t have been a very nice phone, or I could have kept my other phone and been contract free. However, my husband’s phone was broken. He could still use it, but it is on it’s last leg and I doubt it would have lasted another month before the entire think broke the rest of the way in half. We talked seriously about going with a tracfone or other pay as you go phone. We could have. But I drive long distances to work and so does he and I want to be able to use my Bluetooth headset so I can talk to friends and family on my way home. It’s expensive to buy those kinds of phones outright.

Ultimately we decided to stick with Verizon and sign up for another two years. I got a really, really nice phone for $0 and my husband got a nice phone for $28.88 at Wal-mart. We did have to pay an upgrade fee we wouldn’t have paid through Verizon with an over-the-phone or online upgrade, but the price difference was staggering at a net of $51.10. (See my note at the bottom of this post for details of the price difference.)

I question whether it makes sense to think of debt this way and if that means I can never have a contract for a service if I want to live entirely debt free. What do you think? Should those of us who want to live a cash based life avoid all contracts that obligate us to pay future amounts for services, even if those services are pseudo-necessary?

What do I mean by pseudo-necessary? I mean things like cell phone service, where I could certainly live without it, but don’t want to. I’ve had break-downs before where I had to walk to a house and make a phone call. I got stuck on a college campus when a tropical storm was only hours away from hitting the area where I live (very, very rare, but it happened that night!), and I’ve had to catch a ride with a stranger when my car broke down too far from anyone’s home to walk there. I have kids these days, and I’m not nearly as comfortable with the idea of those kinds of incidents happening to me while they’re with me.

Does it make sense to balk at the contract when I’m getting the free phone that has all the perks, when I don’t plan to drop my service unless the direst of circumstances hit anyway? Am I going too far in my definition of debt, or not far enough? What are you thoughts about this?

(Despite what we were told by the online salespeople for Verizon, Wal-mart was by far the cheapest phone provider with our upgrade/contract renewal. The thing is, Verizon Online was going to charge us $69.99 + $49.00 = $119.98 after rebate for the phones. Wal-mart charged $28.88 + $20 upgrade fee + $0 + $20.00 upgrade fee = $68.88 for the exact same phones. Walmart.com doesn’t seem to have the same prices.)

If you want to see my Net Worth just look to the right hand column for the NetworthIQ box. It sums up all my debt and assets.

What is net worth?

Net worth is the difference between what you have and what you owe. Doesn’t matter if it’s money or some other thing. I’ll admit, I’m simplifying enormously here, but for the purposes of this blog, that simplification is more than adequate. If you want to get technical, net worth is your total assets minus your total liabilities, and it’s a value determined at a specific point in time. Today’s net worth isn’t likely to be the same as tomorrow’s net worth or next week’s.

Real progress is in the details

Net worth isn’t my preferred way to keep an eye on my financial health. It might be okay for someone who needs to be heavily leveraged to generate income, but with my goal of becoming debt free and living on cash, my net worth isn’t going to be the best way to gauge my progress. I have to keep an eyes on the details.

If I were to have $400,000 in assets and owe $300,000 at the end of November, my net worth would be better than it is today. However, I think I would be farther from my goal than ever because right now, I’m only $183,393 from being debt free but in November I would be $300,000 from being debt free.

How important do you think net worth is and why? I would love to know your opinion.

How I implemented a cash budget

1. I listed all my bills that I would be paying by check or that are auto drafts from my checking account.

I converted anything that wasn’t monthly into a monthly amount.

If you pay an amount:

Weekly multiply by 4.3333
Twice a month multiply by 2.1667
Every three months multiply by 0.3333
Every six months multiply by 0.1667
Twice a year multiply by 0.1667
Once a year multiply by 0.0833

My goal was to have a comprehensive list of money that would be coming out of my checking, for regular bills. What I didn’t include was my gas, grocery and entertainment money, because all these things can be paid by cash and honestly, although I don’t like the idea, if I’m short of money, these are the expenses that will have to be cut. I can’t very well not pay my debts or my utilities, or anything I’ve committed myself to paying, such as my cell phone and my satellite television.

I believe strongly that when I create an obligation to pay something, that I should actually pay it. I get mad at people who think they can sign a two year contract for a phone and then just not pay because they no longer have the money to pay it. These people have only themselves to blame for buying something they couldn’t afford.

I’ve done it myself.

I like my cell phone, and sometimes I even think I need it, but when I pay that bill every month, I get a little disappointed in myself for having taken on that obligation. But you know what? No one twisted my arm. I had a choice, and I made it in favor of a two year contract for a low cost cell phone.

2. The next thing I did was to list my monthly income.

3. I subtracted my monthly checking expenses from my monthly income. That’s the amount of money I could take out each month for cash expenses.

Since my husband is paid weekly and I’m paid bi-monthly, I converted that amount to a weekly amount that could be withdrawn from the bank and split between us based on our gas needs. After that it just depends who is going to be doing the grocery shopping for the week and who needs dining out and entertainment money. We do a lot of stuff together, so for us the division of the money isn’t that big a deal.

We’ve been doing this for several months now, and it’s been the easiest budget I’ve ever set for myself.

I do have to keep an eye on the variable expenses like electricity and telephone so that I’m comfortable there’s enough going into the checking.

By not funneling the majority of our spending through the checking account, I’ve cut out loads of data entry of receipts for purchases that don’t really matter. I’ve been able to keep my husband from dipping into the account based on the idea that if he takes money from the checking we won’t have enough money to pay our bills.

In short, I’ve been able to relax.

We’ve already seen one benefit to this way of doing things.

I got a raise shortly after we started, and because we were used to withdrawing only a certain amount of money from the checking each week, that additional income is building up in the checking account as our cushion. My husband has worked some overtime this month and that money too is sitting there.

Future benefits

As I pay off debt, I’ll easily be able to “snowball” the money simply because it’s going to sit in checking undisturbed otherwise.

My biggest challenge with this will be my husband’s desire to replace one payment with another, but I’ll cross that bridge when I come to it.

What I had to get used to

• Paying cash at the pump meant prepaying for gas (I learned that most stations will let you fill up and pay after the fact if you just ask)
• Paying cash in the grocery meant adding my bill in my head as I added items to my cart (I really started to pay attention to how much food I was buying and wasting)
• Buying online meant I had to add cash to my checking account as soon as I bought something (I shop online a lot)

Of course, this method may not be for everyone. My philosopy is that if you don’t try it, you’ll never know for sure if it would have worked for you.

The real world would have us believe that every holiday is a reason for gift giving, that every part of our lives should be insured, that credit cards are a necessity, that consuming is the only way to save our economy… The list goes on.

I want to take exception to the latter item I mentioned. Doesn’t the real world realize that consuming is what got us to this point?

I consumed my way through a car, a camper, a house, a vacation, a lot of gifts, and plenty of insurance, and I did a lot of that consuming with credit cards. Not so much lately, but a few years ago, I wasn’t working while my kids were still too young to be in school and sometimes I even paid the bills with credit. I mean, why not? I had always planned to go back to work and pay for it all then.

Bad, bad, bad idea.

My husband became self-employed somewhere in there and we had to pay for our own health insurance. I set it to an automatic payment, and ended up using a credit card for that too.

In those days, credit cards were a necessity in my household.

I went back to work, but only part time. So we sold our house and built a new one. The new one cost 2.25 times more than we planned, so the equity we cashed out of the old house went to pay off credit card debt and pay down only a small portion of the new house. We ended up with a mortgage 1.8 times larger than we’d had, which I admit is still better than the 2.25 times it would have been without that equity.

Lucky for us that I had gone back to work.

We have health insurance, dental insurance, prescription drug insurance, auto insurance, disability insurance, homeowner’s insurance, camper insurance, and life insurance. The amount of money we’ve spent on insurance this year to date is over 11.2% of our income to date. Insurance takes some of the risk out of life and has its purpose, but that 11.2% hurts.

I’m done consuming. My husband thinks he isn’t, but these days I hold the purse strings and I’ve put us on a cash diet. When he runs out of money, he’s done consuming. He’s really doesn’t cause me that much trouble these days when it comes to money. He just wants to know where he stands—but our day will come, because he and I have a few very different opinions on the feasibility of living a cash-based existence. I believe it’s very possible, and he thinks I’m crazy.

He thinks:

• if you can afford the payment, you can afford the item
• he’ll be too old to enjoy the things he wants if he waits until he can afford them with cash

I think:

• if we don’t have the cash to pay for it, we can’t afford it
• if we haven’t met every other financial goal we have that could possibly be considered a need, we can’t afford it
• a person doesn’t deserve to enjoy something he hasn’t earned

Our cash-based budget that we’ve been following for the past few months has made a world of difference to our relationship issues related to money. I love my husband. But our money fights became our bone spur.

Next week, let me tell you about our cash budget and how it’s helped us live within our means without adding stress to our lives, and how easy it has turned out to be. It’s even saved me hours, quite literally, in front of the computer doing my checkbook and bills.

You know, I said I was done consuming, but I should rephrase that. I’m done consuming what I can’t afford.

I’ve got my own ideas of how the real world should work, and I’m not going to let anyone else’s ideas of when I should give gifts, what parts of my life should be insured, whether or not I should have credit cards, or if I should do my part to save the economy by consuming even more stuff get in my way.