Goodbye Visa, It’s been nice knowing you
I’ve always been a huge proponent of rewards credit cards – I still am, in fact. But today marks a day I didn’t see coming. Today when I get home from work, I will remove my PenFed Rewards Visa from my wallet. The only time I’ll carry it with me, is if I need gas ( 5% rewards ) or if I’m making a large planned purchase. For too long I’ve spent more than needed on eating out, groceries, and random crap.
Just the other day I withdrew enough cash to cover my food expenses for the month, and also a little extra for random crap. Not too much, mind you ( $100 ), but it should be enough. That’s right, I’m moving forward with the envelope system of budgeting. Once the envelope is empty, I’ll have to get by with what I have – no more charging.
What about the rewards?
My rewards card is amazing – 5% cash back on gas, 2% on groceries, and 1.25% on everything else. The rewards are cash, credited directly to my statement monthly. My thinking is this though – if I can reduce my grocery spending by just 5%, I still come out ahead. Spend 5% less to give up 2% less in rewards – count me in. The entire goal is to spend less, and learn to stop spending. My monthly Visa bill has been outrageous for as long as I can remember. Sure, I pay it off in full every month – but at what cost? All that extra money spent on unnecessary items could be going to pay down my car loan. Or straight into savings. Or into my Zecco account.
The tricky part
Ahh the rub. Tonight I get to ask my wife for her Visa too. That should be a blast. After all, this plan doesn’t work if only one of us is on board, right?
May 6th, 2008 at 4:12 pm
Good luck getting the wife to hand over the Visa. And good luck with the envelope system. Let us know how that goes.
May 6th, 2008 at 6:27 pm
Way to go! I’ve been on cash/debit cards for about 9 months now. There is no doubt that I spend less money. Good luck to you!
May 7th, 2008 at 1:17 pm
Congrats on making the system work Eden – I hope I can do the same.
May 10th, 2008 at 8:32 am
The trick I use is… if I don’t have enough money (cash reserves) in the bank to buy an item, the I don’t buy it. That way, I always pay off my credit cards at the end of each month.
If I don’t have the cash, I don’t buy it.
May 10th, 2008 at 10:19 am
I do the same thing Monty. My visa balance is always paid in full every month. The problem is that it’s eating away at my savings, which I’m not at all comfortable with.
June 5th, 2008 at 11:55 pm
That sounds like a great rewards card. I’ve been searching for a replacement to my lame Mastercard. The best I found was for Costco members – the FedEx card. The next best I found was Blue Cash again from Amex:
»Earn up to 5% rewards on gas, groceries, and drugstore purchases
» Earn up to 1.5% rewards on all other purchases
I’m procrastinating. Can anyone apply for the card you have?
June 7th, 2008 at 8:04 am
Dax: you do need a military affiliation to join PenFed. However, they are kind enough to offer a loophole of sorts, just in case you don’t have that military hookup. According to their how to join page, you can simply become a member of National Military Family Association for a one-time $20 fee, and then you’re elegible to be a PenFed member. You don’t have to retain your NMFA membership, either.
August 23rd, 2008 at 12:48 pm
We have been using the envelope method of budgeting since January and it works quite well. I like it because there is nothing to keep track of so it is very easy.
I do still use a reward card for some purchases. If I do use the card, the next day I take cash out of an envelope and deposit it in the bank. Then I schedule through Online Bill Pay to pay off the card immediately. The bank is one block away from work so it is not a big deal.
August 25th, 2008 at 10:00 am
I finally managed to put away both my wife’s Visa and my own earlier this month. It took quite a bit longer than I expected… but so far so good. No mistakes – we’ve been cash only since the 10th of August. That doesn’t sound like very long, but to us it’s huge.
Next month will be our first full month, and the real test. The key, I’ve found, is removing all cards from your wallet, at least until you’re able to resist. Sounds like you’ve made it to that point – and have the discipline to deposit the cash right away. Congrats on making it that far. Hopefully I won’t be too far behind.