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The All Cash-Diet: Will it Really Help You?

Budgets like diets can often be hard to keep. What looks good on paper may not work out in reality. However, desperate times call for desperate solutions, and just as someone who is battling obesity has to go on an all-out diet, so, too, someone who is battling financial woes has to go on an all-cash diet. The question is: “How does this type of cash diet work and will it work for you?”

Pros and Cons of the Cash Diet

Admittedly, only using cash for your purchases is a rather drastic way of handling your money. On the other hand, this old-fashioned method of finance may be just what you need to turn your ship around 180 degrees.

The downside of this method includes:

  • You earn no interest on your money
  • You need to go to the bank or ATM often
  • You may have to carry large sums of money on your person

However, there is also a major upside, which may very well outweigh these three inconveniences: You can only spend the money you have. This means you won’t be tempted to borrow any money from your credit cards. When you pay everything in cash, it really makes you think about where you are spending your money. You become much more conscious of the difference between necessities and luxuries.

Using Cash in a Cashless Society

Money is becoming increasingly intangible–digits in a computer, rather than paper or coins in your hand. This makes it easier to carry a plastic strip to handle all your transactions.

Difficulties using cash arise when:

  • Paying off large amounts like car payments and mortgages.
  • Booking a flight reservation for a hotel room.
  • Renting a car.

The workaround to this is to either find a way to not incur these expenses or write a check or use plastic only for these predetermined expenses and to quickly bring your account balance up-to-date.

The Famous Envelope Method

Numerous budgeting methods have been devised to help people structure a cash-only financial plan, but there is nothing that works as simply and as effectively as the envelope method.

Here’s how it works in three simple steps:

One, cash out your paycheck.

Two, create a list of categories that you spend your money on and how much you put in each one.

Three, label each envelope with the name of the category and put the amount you need into its respective envelope.

Frequently Asked Questions

  1. Is it realistic?

    It is not easy, but it can be done. Financial guru Dave Ramsey is living proof of it. Dave Ramsey, the host of “The Dave Ramsey Show” and the author of “The Total Money Makeover,” has not used credit cards for over 20 years.

  2. What actually is an all-cash diet?

    Definitions differ from one person to another. For some people, an all-cash diet means only using notes and coins. For others, it includes debit cards and checks. Others are even more liberal, including credit cards with the caveat that these have to be used only in those rare instances when cash, debit cards, and checks are not feasible options.

  3. Who should go on an all-cash diet?

    Basically, people who need to take drastic steps to improve their financial lives. This includes:

    • People who tend to spend more than they earn. These people are impulsive spenders and cannot summon up enough willpower not to buy something that appears to fulfill an urgent need.
    • People who lose track of how much they’re earning and spending.
    • People who are highly-stressed about managing their money.
    • People who use retail therapy as a way to feel better.
  4. What results do people experience?

    Generally, most people experience rather dramatic results. According to Gail Cunningham from the National Foundation for Credit Counseling, it’s not uncommon for people to begin saving up to 20 percent of their money. Apart from no longer racking up interest rates on credit cards, people also become much more conscious about what they are spending money on when they have to count out their dollar bills to pay for an item. This results in them rethinking their spending patterns.


An all-cash diet is usually used to reset out-of-control financial affairs. It improves money management because it forces you to keep track of where your money is going. Once these lessons are learned, it is possible to transition back to cashless transactions without falling back to financial chaos. In essence, then, an all-cash diet teaches you about how to be a conscious spender.

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