Matt Jabs at debtfreeadventure.com wrote and interesting post about spending journals.

I love that he is trying to reign in discretionary spending, however I believe that the cash envelope system is a far better way to do that.

A spending journal is reactive. Cash envelopes are proactive.

With cash envelopes I don’t have to record every purchase and I get to allocate my money when I am doing my budget each month. It’s the difference between making a grocery list and eating before you go to the grocery store Vs going to the grocery store when you are hungry without a list.

Since I know the purpose of each envelope I don’t care where I spent the money so long as I don’t spend the grocery money on beer. However, beer can be bought from the miscellaneous, restaurant or entertainment envelopes.

Credit Cards to start charging for not being in debt .

In an effort to increase fee income Bank of America announced, “Starting next year they will charge a small number of customers an annual fee, ranging from $29 to $99. The bank has characterized the fee as experimental. But card holders who have never carried a balance or paid late fees could be among those affected.”

Stop the credit card addiction!; use cash or a debit card. This is crazy.  The milage points and the cash back promises are just not worth it.  A free debit card from you local bank can do all the good of a credit card and none of the bad.

Isn’t it time to give up the idea that credit cards are necessary?

If you think you are getting rich by getting 3% back on your credit card purchases think again.

This is directly from an article called “Why Get A Merchant Account” by a merchant processor named Approved Payments. See what those who sell credit card processing are saying about you.

• Consumers tend to spend more when using a credit card than when using cash. There is no imposed spending limit like there is with cash, so it’s easier to keep spending.
• Accepting credit cards help customers make faster buying decisions. Impulse buys are more likely with credit cards than with cash or checks.

It is common knowledge that consumers spend between 12% – 30% more when they use a credit cards Vs cash.  The exact percentage cited varies depending on the purchase type, but the fact that you will spend more remains the same.

If you were getting $400 a year back on your cash back credit card, based upon 3% back on all purchases, that would mean you are charging roughly $13,333 dollars per year on your credit card.  An overspend of even just 12% is $1600.

I don’t know about you, but I have no desire to unconsciously spend $1600 to get $400 of my own money back at the end of the year.