I hate cash

Screen shot 2009-12-03 at Dec 3, 2009, 10.10.43 PMHave you heard people say “Don’t use plastic because you tend to spend more money when you do.”? That is another piece of financial wisdom I have decided to ignore. I never carry cash on me, and when I do get some greenbacks, I take it straight to the bank to deposit. A lot of PFers, Dave Ramsey included, preach the wonders of being on a “cash only” system. Their main argument is this: People tend to spend less when they pay with cash because giving tangible money tends to ‘hurt’ more than swiping a card.

I am absolutely, positively, 102% against the ‘all cash’ plan. It just doesn’t work for me. I’m a pretty disciplined dude, but dollar bills are my kryptonite. They sit in my wallet, taunting me, whispering from my right butt-cheek “Hey Ninja, why don’t you put me to use and walk over to Rite Aid and buy a tub of  ice cream?” Seriously, cash is evil. If I have it on me, it will most likely be spent on unnecessary, unbudgeted, and unsmart things (I love making up words).

For me, it ‘hurts’ a zillion times more to put it on my credit card. I pay my CC balance in full each month. Do you know what that means? I get to watch the damage accumulate over my 30 day billing cycle. As the balance grows, I become more and more frugal. Paying between $1,000 to $1,500 each due date, totally motivates me to minimize my spending so I have to pay less on my CC balance. Seeing the damage in it’s entirety, as oppposed to incrementally, influences wise spending choices.

I’ll be honest. I don’t have the discipline (or the desire) to work an envelope system. With the envelope system, you put X amount of cash in the “groceries” envelope and use that as your guide for the entire month. If you run out of grocery money, you starve (or borrow from another category envelope). If you have the discipline to stick to your budget ALL OF THE TIME, than the envelope system is definitely something you should consider. But if you haven’t noticed, I’m kind of a bada$$ and I sometimes like to spend outside of my budgeted parameters. Envelope system=good for people who have a lot of discipline. Envelope system=ineffective for 99% of the US population.

What about you all, Do you prefer using cash or a card? How much cash do you keep on you at any given time? Do you think you spend more when you swipe? Anyone out their like-minded and struggle to keep cash in their wallet?

Wife = asset or liability?

Screen shot 2009-11-17 at Nov 17, 2009, 8.15.38 PMSo I have this great plan in my head: Get married and get rich. They go hand in hand right? Okay, I know it may not be all gravy, but I still can’t wait for the days of being a DINK (Dual Income No Kids). I’ve got a gameplan in my head, but I wanted to run it by all you married folks to see if it was reasonable.

The plan is simple: Live off my income, put wife’s income in the bank. Let’s pretend I get married in a year. At that point, I’ll be making $62,000 annually. That is easily enough money for both me and the Mrs. to survive on. Let’s not forget she will be working as well. I’ll assume she will be making roughly $40K/yr. Whatever is left after taxes are taken out of her paycheck, will go straight to Roth IRA’s and savings (probably about $25K/year).

I’m not naive though, I’ve listened to my fair share of Dave Ramsey and it is not uncommon to hear a caller indicate his wife is responsible for accumulating a significant amount of debt without his knowledge (Don’t label me a sexist, I know this works both ways). The power of a larger income can lead to a tendency to live a more frivolous lifestyle. New cars, lavish vacations, and dining out become the norm. High income often causes increased spending.

The main reason I want to be able to survive off my income, and save hers, is I don’t think my wife will work forever. Once baby ninjas enter the picture I want her to have the option to stay at home. If we allow ourselves to become accustom to surviving off both of our incomes, it would be super difficult to take a $40K hit in income for her to stay home. I feel like a lot of people purchased huge homes based on their dual income, and now find themselves struggling as one lost employment or decided to stay home with the kids. I would like to avoid that situation at all costs.

If I play my cards right and buckle down on the budget, future Mrs. Ninja and I should be able to comfortably live on my salary and take hers to the bank. Hopefully accumulate $100K in savings come time to make a home purchase, and then she can quit and stay home with the kids. Am I living in a dream world? Is there something to the DINK formula I’m overlooking? For current Dinks, is it totally awesome? Have you become dependent on both incomes? Has the dual income caused any issues? I need all the info I can get so I can plan accordingly.