I was just over reading The Happy Rock’s analysis of his cash only spending experiment that he started back in July. He and his wife (or girlfriend, I’m not sure which) went the entire month of July without using any plastic. Why? Because he was testing Dave Ramsey’s argument that people can save 12 – 18% by spending only cash. How Dave came up with that number is anyone’s guess (the same thing can be said for his “personal finance is 80% behavior and 20% head knowledge” saying*).
So did The Happy Rock save 12 – 18% during July? We don’t know because he never finished his analysis. Why? Here’s what he had to say about it:
The truth is that the no cash month [I think he meant “no plastic month”] was such a radical change in my habits that I was beat down by the end of the month. I didn’t have the energy to stay on top of things during the month and I was so discouraged at the end of the month that didn’t complete the analysis. I think part of me didn’t want to see that it saved money, because I wasn’t ready for the change. Another part of me wasn’t sure that I had been diligent enough in my record keeping to make the data meaningful.
I gotta say, I respect his honesty. Anyway, I have to hand it to The Happy Rock for giving it a try.
Personally, I think going all cash would be a pain in the butt. You can still cut your spending, you just have to be more diligent about doing it. For those who have SEVERE problems with overspending, then the cash-only option might be best as long as they stick to it.
*Incidentally, I asked one of Dave’s associates about Dave’s soundbite and this was his response:
“JLP, this is not really a quote that can be attributed. Dave never says “You know what they say…” or “Studies show that…” prior to making that statement. This is something that Dave has learned after decades of helping people with their personal finances. The point is that a lot of people can know the math of personal finances and still be broke if they can’t control the person in the mirror.
BTW, this is not an official statement on behalf of our company. It’s simply me answering a question that you asked.”