Take The 3-Step, 7-Day Money Challenge

If you’re trying to get your spending under control, try taking Bankrate’s 7-day budget challenge.

1. Estimate a week’s worth of expenses: food, gas, coffee, movies, cd’s, etc.

2. “Be honest. Don’t deliberately overestimate…”

3. Put the needed cash aside and try to make it without credit or debit cards.

If you get through the week with the cash set aside, congratulations! If you need to make a trip to the ATM, it’s OK. Review your purchases and see where you could have trimmed costs.

In one of his podcasts, Merlin Mann talked about good habits being like a rope. Each time you repeat the good-habit action, another strand adds to the rope and strengthens it. If you’re having trouble getting your monies under control, doing a quick test like can help get you on the right path. Give it a shot and let us know how it goes!

Spending too much? Try the 7-day challenge [Bankrate]
(Photo: decaf)

Comments

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  1. bbbici says:

    If i didn’t use my credit card i wouldn’t get airmiles. what a waste!

  2. jeffj-nj says:

    Cash? People still take that?

    ;)

  3. FLConsumer says:

    Or… just pay for it all via credit card and look at the pretty online statement. If you use Quicken/MS Money to download the info and have it automatically categorize the transactions. No need to carry a notebook around, starve, go without, etc. THEN you’ll have a truly accurate picture of how you piss away money throughout the week.

    Who comes up with this stuff anyway?!?

  4. arkan says:

    FLConsumer, I think you’re missing the point. I’ve recently switched from carrying my debit card around with me to carrying around just cash and I can tell you it has made a huge difference in the amount of money that I spend. It really causes me to think before I buy anything. Its too easy to whip out the debit card to buy a coke here or a coffee there.

  5. ladycrumpet says:

    I think the idea behind this suggestion is that it’s a lot easier to make impulse purchases when you’re using plastic, than when you’re looking into your wallet and seeing what’s left of your cash. It’s a psychological thing – you’re much more conscious about your purchase when you’re paying with cash than you are when you’re racking up charges on the credit card.

    It doesn’t seem so crazy – whatever works for people to learn how to plan their spending and curb their impulses and avoid debt is a good thing.

  6. FLConsumer says:

    arkan: The opposite happened for me — switching to putting as many purchases as possible on my credit card saved me a ton of money. Now I didn’t have a crumpled up or folded up pile of receipts to go through to figure out where my money went. I just turn on the computer and there it is, in pie-chart form.

    It’s far tougher for me to make an impulse buy with plastic as I don’t have the balance right in front of me to go on, whereas with cash, I’d look in the wallet, see a nice wad of it, and spend.

  7. FLConsumer says:

    Two other things paying with plastic also helps me with — reimbursables & deductions. Without the detailed papertrail, I often missed out on items I could get reimbursed for or deduct from my taxes.

  8. @arkan:
    “coke here and coffee there”

    Different strokes for different folks.
    Having cash tends to burn a hole in my pocket, so I just make a point of not carrying much and refusing make under 10$ purchases with the card.

    First job spendthrift –> not setting aside for a rainy day –> 1000$ car repair bill that I had to put on the card –> Johnny now brings peanut butter and bread to work for a weeks worth of lunch, coffee out is now a reward I give myself once a week.

  9. arkan says:

    @FLConsumer – yeah, I can see your point. I really don’t think in terms of tax deductions because my only real tax deduction is about 5 months old and wakes me up every morning at 3.

    But I think it goes back to the point that you and krylonutraflat both made about which is easier for us to spend… for me its plastic because in my head that’s not really spending money, but for y’all its cash.

    My wife and I get together every Thursday night to reconcile the accounts with the money we’ve spent over the previous week… it keeps us honest with our spending and gets us ready for the week ahead. When my daughter was born our income dropped by half and we decided that we would do what we had to do to make it work just on my income so we have really grown with regards to our financial decisions since Zoey was born. Even though though we’re only making half as much now, I have more money in the bank than I ever did before and not really missing anything because of it.

  10. bbbici says:

    i have a full-on income statement and balance sheet spreadsheet and i keep track of everything over $0.50. it’s on my work computer, so i just get a receipt for most everything and enter the numbers every day; it only takes a minute. then i know exactly how much money i can put into rrsp every month, i have upcoming big expenses planned (car maintenance, travel, gift-giving season, etc), and can be utterly amazed at how much automobiles cost.

  11. Soultrance says:

    I wouldn’t exactly call this a challenge, myself.

    I had some money issues when I was younger and built up a bit of debt, so my wife and I switched to a 100% cash budget to avoid using credit or debit and adding further amounts to our debt.

    Before we were cash only, we ended up in the negative every month, simply because of impulse buying with credit and debit cards.

    Carrying a limited amount of cash has made a huge difference to our budget, we’re not only paying offer out debt, but we’re saving money and living comfortably now.

    Working from a Cash only budget has been a fantastic switch for us. The only time we use credit cards is for buying online and we pay them off in cash the day we use them. After all, have to use them every 3 months or so to keep the credit score decent.

    Cheers

  12. anatak says:

    @Soultrance:

    Congrats on switching to cash. Unfortunately few are open-minded enough to actually try it. Thats why its called a challenge.

  13. jeffj-nj says:

    Switching to a cash only “diet” seems incredibly similar to when alcoholics stop drinking entirely. If they have one drink, they’ll inevitably have ten, so they keep themselves from having even the first. The plan makes sense, of course, only if one truly does lead to ten.

    Here’s the thing, though. I can charge one thousand dollars on my credit card without the fear that I will then immediately charge ten thousand.

    It isn’t “close mindedness” which is keeping me from switching back to cash; it’s that I just plain don’t need to.

  14. enm4r says:

    @anatak: I don’t think it has anything to do with being open minded. I seems painfully obvious to me that if you have trouble buying coffee everyday you could, you know, just not buy it.

    Like krylonutraflat and FLConsumer I use plastic for everything. Because that’s the way I’ve been conditioned for years, if I have a few bucks here or there in cash, I write it off as no big thing, and am more willing to spend it. I’m not sure where there is this implication that being plastic only equates to impulse buyer, because I know of many people who operate similarly.

    I’ll take an interest free loan out every month from month, be able to see an accurate and detailed representation of everything I’ve bought, earn cash back, and generally have an accurate depiction of my finances everyday of the month.

  15. ladycrumpet says:

    @enm4r: “I’m not sure where there is this implication that being plastic only equates to impulse buyer, because I know of many people who operate similarly.”

    I’m sure there are more complete materials out there, but the following capsule article mentions how there are studies out there that show differences in perception and usage when it comes to people using cash versus plastic for purchases.

    “Paper or plastic? Kids should pay with cash”
    [deseretnews.com]

    It’s really about knowing what kind of consumer you are and managing your behavior accordingly. For some people, using cash is what works best. For others, it’s plastic. Good for you if you have your money managed well – it’s still a problem for a lot of other people who need to establish practices that work for them.