The Pros and Cons of Living Cash-Only

It wasn’t so long ago that living cash-only was the only option. But now, many options exist to pay for your needs and wants. Some argue that these options have made it easier for people to acquire unnecessary debt, but living cash-only has its own set of pros and cons. See what they are so you can compare them and make the right decisions for your lifestyle.
Pros of a Cash-Only Lifestyle
Cash-only living isn’t just about ditching credit cards. It can mean that you only pay with paper currency or your debit card. This means you’re using money that doesn’t have to be paid back, unlike credit cards or loans. Using only money that is readily available has advantages.
No Worries About Fees or Extra Expenses
When you pay only in cash or from what’s available in your bank account, you don’t have to worry about any fees that may be tacked on from using a credit card or taking out a loan. These can include monthly and overdraft fees or interest charges.  Dave Ramsey , author of “The Total Money Makeover,” calls these “gotcha” fees and advises that people can reduce their spending and debt by avoiding them.
Money Management Skills Increase
Whether you only use cash or you use a debit card attached to a checking account, you’re likely to increase your money management skills by always knowing how much money you have available. Since there’s no backup method for emergencies, you learn how to save money for unexpected circumstances and are more apt to only spend what you have to spare. Having a $500 emergency fund can ease the financial burden when things pop up, such as when your car breaks down or your refrigerator dies.
You Can Avoid Debt
Sean McQuay, Nerdwallet’s Credit and Banking Expert, says, “Taking on debt to cover the gap between income and expenses is a short-term fix with costly long-term results.” Nerdwallet reports that it costs the average American household about $1,300 annually just to carry credit card debt . Living cash-only can help you avoid debt because it forces you to weigh your spending choices. If you don’t have the money to spend, you can’t spend it.
Cons of Cash
There’s always another side to the story, and cash-only has one, too. Keep these points in mind before going strictly cash-only.

If You Lose Your Cash, It’s Gone
Carrying around cash for everyday expenses may not be a big deal, but almost everyone has bills to pay. Some of your big-ticket bills may include:

Mortgage or rent
Car payments
Utility bills

You’ll probably be withdrawing a lot of cash and carrying it with you to send off on payment day. Keep in mind that cash doesn’t have a digital footprint. Once it’s gone, it’s gone and there’s no way to track where it went. If you accidentally lose your cash or because someone takes it from your wallet or purse, that money is gone and no longer available to pay big bills or anything else.
E-Commerce Sites Don’t Take Cash
People can find great deals online, but paying in cash isn’t usually an option. When you choose to go cash-only, you’re limited to shopping the deals you can find locally or those you’re willing to travel to take advantage of. But any extra travel may negate the savings because you’ll be paying for other expenses like gas just to get there.
You Can’t Make Reservations With Cash
It’s beneficial to make reservations for modes of travel to ensure you reach your destination. You may also want to make reservations for your accommodations so you’ll have somewhere to stay once you get there. But when you live cash-only, you can’t make reservations because reservations require a hold on your credit card . Even if you use a debit card, you’ll have to make sure the funds are available because the hold may be there a while.
You Miss Out on Cash-Back Opportunities
Many credit card companies offer incentives to earn cash back when you use your credit card. The percentages vary, but some offer as much as 3% cash back. Others may offer other incentives such as frequent flyer miles or discounts for products and services. Not having a credit card means you miss out on these opportunities and the money associated with them.
Cash Doesn’t Build Credit Scores
Using cash and avoiding all forms of credit could make your credit score suffer, and ignoring your credit score could mean trouble. Credit scores aren’t just used to determine your credit eligibility for car loans, mortgages, other loans and luxury items. Employers may also look at your credit score to determine if you make sound decisions, manage money well and will be a good fit for the company. When you only use cash, your financial savvy won’t be reflected in your credit score, and that could cost you a job.
Tips for Choosing How to Pay
Deciding to go cash-only is a big decision. Much of that decision will rely upon your needs, goals and financial comfort levels. These tips can make the choice a little easier.

Determine your immediate financial needs
Set short- and long-term financial goals
Know your own limitations and set yourself up for success
Weigh your options and go with what fits now and with your future

Life is a balance and so are your financial decisions. Do you live a credit card-only or cash-only lifestyle? Let us know why in the comments below!
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