Quote of the day: "You can observe a lot by just watching" - Yogi Berra
So what happens psychologically when you pay for something with cash?
You give something of your own, something of value to another person or a store and they give you a service or product in return. You know that you have paid for the thing because you saw the money leaving your hand. You worked hard to earn that money and it's hard to watch it go.
When you swipe a credit or debit card you really don't feel anything. You didn't have to forfeit any material possession to obtain what you wanted. You didn't see money leaving your bank account. That's why paying with plastic is so easy and so dangerous. The money can be gone and you're still swiping. The bank loves you because now they get to charge fees, penalties, and interest...
Next month try paying for everything in cash (except where you are receiving a discount for paying online), all your bills, gas, groceries. If your mortgage is through a bank with a local branch pay in cash at the bank. Hide your debit and credit cards in a safe place on the first of the month. Withdraw only enough cash to pay specific bills as needed. Eat at home every night. Carry your lunch to work with you every day. One month, cash only, no extras. Just be sure and keep your receipts for everything. At the end of the month see how much cash you have left. If it's $0.00 then figure out where you need to cut back. If there is a positive balance add it to your growing emergency fund.
Savings tip: Use the "no heat" setting on your dishwasher. - Heat drying is not necessary after a hot-wash cycle. By keeping it off, you save energy.
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