This year we again shifted our goals and have decided to try and stick with a written cash only budget. This will allow us to monitor exactly how much we spend, and (more importantly) avoid the drift of overspending that tends to occur when you use credit cards.

The goal is to pay off loans and our mortgage as soon as possible while we don’t have much tying us down. This goal is the last of our original buckets that we have left to achieve.

January is the first month where we’ve actually set aside “grocery”, “eating out”, “misc.”, and other envelopes with cash, and so far I think we will be able to make it without having to go over.

A few times we haven’t had the cash itself on hand, and instead used debit cards to pay for things. When this is the case we immediately go subtract the total from the envelope when we get home, and set it aside since it was spent.

Let me tell you this… Using a debit card certainly FEELS different than a credit card. There’s a twinge and small tug when you realize that the money is coming directly from your account, and you think twice about the spending. 

Growing up my parent’s always told me that debit cards were more dangerous than credit cards – and had less options for getting your money back if there was fraud of some sort. After doing some research it does not appear as though that is the case, however you do lose the money directly from your account rather than having a 30 grace period. 

I waited until the last few years of college to get one having insisted on “bank cards” that could only be used in ATMs. That all changed this month.  If you are a little timid about using that direct link to your bank account every day, prepaid debit cards might be an option for you.  Prepaid debit cards (like the ones at ACE or through VISA for example) can be loaded with a set amount and used just like a debit card.

When we sat down to make our budget we went back and forth on the idea of using credit cards for certain things, like gas, and online bills. In all honesty – if we go over budget we still have to get gas or we couldn’t get to work; it’s not the same as groceries were we would have to make due with what’s in the pantry for a week. And we would be able to dip into cash reserves to pay any online bill that comes due if the envelope isn’t full enough; so for these situations the envelope is more a formality. Our reasoning was that if were going to be using the card reader at the pump, or if we had to enter card information online, we might as well be earning points and cash back.

After trying this “hybrid” envelope system for a few weeks we’ve decided that we are going to stick with only debit and cash. The final kicker was looking at my bank account, and my credit card bill, and seeing that they were both about the same. We both looked at each other and agreed that we were tired of this being the case. We would never NOT pay our credit card in full unless we had absolutely no other choice, but we also needed to monitor how we spent our money in a way that was more more careful than we could to with our current habits.

I’ll be honest – this is tough, but fun and exciting at the same time I can’t wait to pay this month’s credit card statement and REALLY start living cash only. I also can’t wait for this “final” bucket to be full and overflowing, and to be 100% debt free. How weird would we be?