Early last month, I decided to leave my credit card in my wallet throughout November. Over the last few years, I’ve been using a rewards credit card to pay almost all of my day-to-day expenses. I never pay interest charges because I always pay my credit card in full before the due date. I buy what I buy, and the form of payment is irrelevant. If I spend $30 on music with my credit card, I would spend just as much with cash. The bonus cash back provided by the credit card would effectively leave me with more money once the points are cashed in.
I spent less in November than I have since October 2006. Before October 2006, the most recent month in which I spent less was January 2005, the earliest date for which I have data in Quicken.
My biggest concern when starting this experiment was my ability to track everything spent with cash. I was careful to collect my receipts and record transactions in Quicken within a few days.
The use of cash was not the only aspect of my spending that resulted in a month with low expenses. I spent a week with my family in California, and I had very few expenses during that time. Without working during this week of vacation, I did not purchase my lunch every day, nor did I need groceries for other meals. I also had no restaurant expenses during that time.
With an entire week of practically no expenses, I can’t completely call the experiment a success. I left a few recurring expenses, such as a monthly charitable contribution and my cable television payment, on the credit card. It would have been a hassle to change my settings. In these cases with set expenses, there is no opportunity for me to automatically spend less just by using a check or a debit card rather than a credit card.
Since November was mostly inconclusive, I will continue this experiment through the end of the year. December should be a month with more expenses, particularly due to holiday gift giving.
Updated May 26, 2009 and originally published December 1, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.