In my best Sophia Petrillo from Golden Girls voice: picture this. I’m sitting in a restaurant and I’ve just handed my debit card over to pay the bill. Since I’m sitting at the bar I watch the bartender run the card and as soon as he does it my phone goes off and I get a text and an email from my bank saying there may have been fraudulent charges on my debit card and that it can no longer be used.
The bartender came back and told me my card was declined. Thank goodness I had enough cash (and I never carry cash) to pay the bill. Suddenly my phone rang and it was a representative from the bank explaining that a merchant’s database had been hacked and credit card numbers had been stolen. They were canceling my card as a precaution.
The man told me that a new card would arrive within 5-7 days. There was a long pause and as if the man could read my mind, he said, “In the meantime you can still use checks or go into the bank.” I chuckled. Who is still writing checks? And go into a bank? Like actually stand in line, interact with a teller, and withdraw cash? This was going to be an interesting week.
The next day (a Friday) I found myself in an empty bank, standing before a teller, depositing checks and withdrawing cash. “How much do you need,” she asked. I didn’t know. How much money do I spend in a week on things that weren’t bills and necessities? What was I planning on doing for the next few days? Go to a happy hour? Have an impromptu lunch with a friend? Grocery shop? What frivolous things do I spend my money on? Where does it go and how fast?
Just then I realized how much I used my debit card for the little things that I never factored into my overall budget. A quick trip to the drug store. An impromptu purchase at HomeGoods or Marshall’s. Ordering another drink at dinner that only pushes my bill up higher. As long as I put some in savings, and then have the money in my checking account and am never overdrawn then I figured I was fine. So why actually keep track of purchases? I mean I kind of keep a running list in my head. Who has time to balance a checkbook? Nope. Just swipe this debit card and keep it moving.
I took out what I felt was a reasonable amount of cash and headed out into the world. I had some shopping to do, but I figured I could write a check and save the cash I had on hand. When I checked out of one store, I asked the woman, “I can write a check, right?” She paused for a minute and then said, “Ummm. Sure.” As I went to a few more stores and considered buying just one or two items, I asked myself: is this worth writing a $3.99 check for? No. Next question: do I really want to use the little bit of cash I have on this then? No. Time to leave the store.
These past few days have made me very cognizant of how I would typically spend money if I were using a debit card. Because what’s $3.99 when you can swipe that debit card for it and keep it moving? Oh. That’s right it’s $3.99 that’s still coming out of your bank account.
Of course many financial experts would advise that you budget, allocate money for all of your activities, and only carry cash when you’re out in the world. The Washington Post’s financial columnist Michelle Singletary, who believes “every penny should have a purpose,” suggests using the envelope method:
I learned to budget using envelopes from my grandmother, Big Mama. To get started you don’t need much, just a pencil and a box of envelopes. I prefer an 8-by-11-inch security envelope with a lining to shield what’s inside.
You are going to label each envelope with an expense category, such as groceries, gas, dining out or entertainment. So, for example, if you’ve budgeted $500 a month for food and you get paid every two weeks, take $250 and put it in the envelope marked for groceries.
Then when you go to the supermarket, you pay for your purchases using the cash in the envelope. Subtract what you’ve spent and keep a running tally on the front of the envelope. Using a pencil will allow you to erase the math, saving envelopes.
Once the money in the envelope is gone, you can’t spend until you get paid again.
And this is where the discipline kicks in. Don’t borrow from one envelope to make up for a shortfall in another category. Don’t use credit to carry you over. Be strong — live on what you’ve budgeted.
Singletary then suggests removing credit cards and debit cards from your wallet because it can cause you to overspend.
While I don’t consider myself to be a reckless spender and I definitely know the value (literally) of having savings, these past few days have taught me that I have frivolous spender tendencies. Yes, that’s right, I’m a swipeaholic. The first step is admitting you have a problem.
Now that I’ve done that, it’s time to evaluate how I spend and get serious about developing a budget and then tracking my finances. I’m going to give the envelope method a try, start using cash, and deliberately assign amounts for certain activities – especially shopping, dining out, and other fun things that cost money but usually don’t get priced out. I know that it won’t be easy and I’ll probably have the shakes every time I leave my debit card at home, but it will force me to choose necessities over frivolities and be better steward of my money.
I can’t wait until my new debit card arrives Then I’m going to head to the ATM, withdraw the cash I need for the week, and put the debit card away.
Are you a swipeaholic? Do you tend to use your debit card or cash? What’s your budgeting system?
Diana Veiga is a Spelman woman, a DC resident, and a freelance writer who loves cute shoes and sparkly things. Follow her on Twitter: @dianaveiga