Let me ask you a probing question. How often to pay with cash? Of course I am not talking about always carrying a wad of greenbacks around in my pocket. I almost never carry cash. I do you a debit card, or if I am serious about building some air miles, I will use a credit card. Regardless of which method I use, all bill are paid in full at the end of each month. This is what I mean about paying with cash; that is waiting until I have the funds to cover the expense of whatever purchase I am desiring to make.

In my opinion, the bottom line is this: when you pay with cash, you will buy less. You will pay less. You will want less. I have repeated read that consumers purchase one third less when paying with cash. The flip side is that when you use credit for purchases, you may buy more than you could possibly need or use, pay more for the item, and pay more interest. When you overspend, you not only pay much more, but you also severely slow down your ability to save and invest.

All the places that are trying to sell you everything from cars to furniture to LCD and plasma HDTV’s, also entice you to sign on the dotted line by offering so-called “free financing,” 90 days same as cash, interest-free credit, no payments until…etc. Often if you will open an account, they promise a gift. Of course, we’ve all heard the saying, “there is no free lunch.” And so true it is. Nothing in life is free. It all costs you something. You will pay for everything, and sometimes very dearly.

When you are about to be enticed by these sales clerks, TV marketing or newspaper advertisements, pause and think it through. Ask yourself what is the real cost of the item if you purchased it via a credit account.

• Is it really something you need, or just buying on impulse?
• Exactly why do you want this item?
• Just how much and how long will you really use it.
• If you think that you need it, stop and think; if you had not gone shopping today, would you have even been considering it right now?
• If you truly do need it, is this the best price?
• If this store is able to offer “interest free” credit, will the next store discount it if you pay cash?
• Can you afford this purchase?
• Does it make good money sense?
• What will happen if you cannot repay the loan?
• Will making this purchase bring you closer to your financial goals?
• Is this really such a good deal? If it all seems too good to be true, then perhaps it is.

What are the advantages of paying cash?

Consider the following list:

• You will be less inclined to think you really need the item.
• You will delay your purchase as long as possible to preserve your cash.
• You won’t be the impulse buyer you would be when using credit.
• You will always attempt to purchase at a discount to use less of your cash.
• You won’t have to worry about destroying your planned budget.
• You won’t have to worry about making payments.
• You will choose your purchases more carefully.
• You will not purchase your wants before your needs.
• You will be at peace and the purchase will seem more satisfying when you pay with cash.
• You will take better care of your purchase when you pay with cash.

So let me know; have I confused you or convinced you?

Content © Rich Brott, 2011

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