I received an email from a reader, asking if I planned to to pay for our condo rental with cash (or check).  Of course!

Here’s how I did it.  First, I found the condominium that I wanted to rent.  I emailed the property management company and asked if I could pay with a check.  They assured me that I could, but that I would need to reserve the room with a credit card - just in case there were any damages.  So, I reserved the room with a credit card, e-signed my contract, and dropped a check in the mail.

(As a side note, I did not cancel my credit cards for situations exactly like this one.  As an alternative to my credit card, I could have reserved the room with my debit card.)

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Monday, I’ll deposit my first paycheck of 2008.  One of my goals for 2008 is to track every dollar that I spend.   I haven’t used my checking account for two weeks, allowing for all checks that were written in 2007 to clear.  After I deposit my paycheck, I can begin to track my spending, and I’ll know exactly how much I spend in a fiscal year.

I am reminded of the frustration I felt when I first started using a budget.  I would sit down, write out my budget, but then, if I wanted to see my actual current checking account balance,  I would have to wait until checks written in the previous month cleared the bank.  Sure, the check amounts were already written in my checkbook register, but I wanted the actual checking account balance, in my account, to match, exactly, the balance in my checkbook register.

Eventually, I settled on letting the checking account sit, dormant, for a couple of weeks.  During that time, all outstanding checks could be cashed, and my account balance would align itself with my checkbook register.  For this two week period, we live ‘cash only’ - using the envelope system for cash management.  (Click here to see a video I created, with step-by-step instructions for using the envelope system.)

My gym fees are auto-drafted from my checking account, and the auto-draft was scheduled for the two-week window.  Just to simplify things a bit, I went ahead and paid my gym fees, a few weeks early, to avoid the auto-draft for that month.

Once my checkbook register and the checking account balance were the same, I began to make every effort to move away from paper checks.  I now use online bill-pay, debit cards, and auto-drafts to pay 99% of our bills.  We still write about 5 checks per month - and I’m looking for a way to make that number “0″.

Even if I move to “0″ checks, there are times when my online bill-pay service will write a paper check in order to send a payment to a small company or individual.  I have to wait until these checks clear before my checking account balance and checkbook register balance are equal.  (There are some online bill-pay services that deduct check amounts when the check are written, but my online bill-pay service deducts the amounts when the checks are deposited/cashed.)  These are the checks, the ones written by my online bill-pay service, that need to clear before I can begin my 2008 spending and tracking.

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I made a decision two years ago to stop using my credit card. Here’s how I prepared for life without a credit card.

I established a $1000 emergency fund. Instead of using my credit card to pay for unexpected expenses, I use my emergency fund funds. I needed to remove the “need” to use credit card. If I have an emergency fund, I have removed a ready “excuse” for using my credit card.

I opened a secondary checking account, funded it with about $500 dollars, and I use the debit card associated with this account to make online purchases. The secondary checking account does not allow for over-drafts. I realize that debit cards do NOT have the same built-in protections as credit cards have, so this is my self-designed debit card protection method. If some gains access to my debit card information, the most (hopefully) that they can take me for is about $500. I hope that, in the future, all debit cards will be afforded the same protection as credit cards already have.

I designed a personalized envelope system. In the beginning, I used PHYSICAL envelopes, allocating cash amounts to the various envelopes, and carrying those envelopes with me where ever I went. Now, I have my budget memorized, so I simply carry a week’s worth of cash with me, wherever I go. Again, this means that I keep about $200 to $400 “on me” at all times. Worried about “safety”? I’d simply carry a day’s worth of cash.

I had to learn how to PLAN for the week, and not just stumble blindly from expense to expense. Personally, I use YNAB Personal Budget to manage my personal finances. (Site Sponsor) Basically, unless you are thinking about your expenses, you WILL find yourself in a situation where you will “need” a credit card. Running low on gas? Charge it! Out of milk? Charge it! Hungry? Hit the drive thru… No cash? Charge it! I not only create a MONTHLY budget, I create a WEEKLY spending plan.

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I have 3 “mini-posts” that I’ve decided to consolidate into one “bigger-post”.

I mentioned some time ago that I was ready to file my taxes.  Do to the fact that I’ve been very, very busy, I am just now getting around to actually filing.  For more information about the free service that I’ll be using to file my taxes online, read this post that I wrote in February.

Roth IRA updates.  I received my account verification documentation from Tradeking.com.  My wife and I now have Roth IRAs.  I am super-excited!  Now I have to make a decision.  What happens if the calendar creeps towards April 15th and I have not managed to fully fund both Roths for 2006?  Should I dip into my emergency fund?  I don’t know what would bother me more: missing a year of fully funding my Roths OR using my emergency fund for a “non-emergency”.  Here’s to hoping that I don’t have to make this difficult choice!

Fees.  For the first time in 2 years, I paid a bank fee.  My bank charges $2 if I make a withdrawal from another bank’s ATM.  In a moment of anti-NCN behavior, I left home without my cash envelopes.  I had to make a quick trip to another town about 45 minutes from where I live, and when I arrived, alas, I had no cash.  Thus, I was forced to use a competitor’s ATM.  So, I’m out $3.50.  Dork!

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It has been a few months since I listed anything on eBay.  While getting out of debt, I made over $1000 selling baby clothes and books on eBay.  Now that my kids are older, I really don’t have any baby clothes to sell, and I’ve already sold most of my books!  So, I will be selling some of my daughter’s dresses and my son’s shirts and pants.  I like to sell clothes because they are lightweight, easy-to-ship, and easy-to-describe.  Here’s what I try to do when I sell something on eBay:

1.  I always take a good picture, and I always use a free “picture hosting” service if I need to have more than one picture of the item.  I like imageshack.us.

2.  I make the starting bid equal to the minimum amount that I will take for an item.  I then multiply that number by 1.75 and use that result as my Buy It Now price.  For instance, a dress that I would sell for $9.99, I list at $9.99 and then have Buy It Now price as $17.49.  Alternatively, if I simply want to “get rid” of an item, I’ll start it out at $.99.

3.  I try to create a good description and I ALWAYS tell the truth about an items condition.  If the shirt is a “B-”, I don’t list it as a “B”.

4.  I leave feedback after every transaction.

5.  I ship items as SOON as I RECEIVE payment.  I only use Paypal.

6.  I use Priority Shipping for every item.  I believe in fast shipping.

I know that some folks have had issues with eBay, but I find that if I create a quality listing, answer emails promptly, and ship products qucikly, I have few (if any) problems.  If you are thinking about getting out of debt, I STRONGLY recommend selling some of your “stuff”.  If you don’t like the idea of using eBay, have a yard sale or use your local classifieds.  I like selling “stuff” for two reasons:  It frees up room in my house, and it brings in “extra” money!  I would almost guarantee that 99% of the people who read this blog have $100 worth of stuff just sitting in a closet.  (If you had a $100 bill sitting at the bottom of your closet, would you go get it and deposit it in your bank account?  YES!  The same thing is true about $100 worth of unused “stuff”!)  Selling “stuff” rocks!

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Here’s my system for getting through life without using credit cards.

Cash

–I always have $200 cash on me.  I carry my cash in a money-clip.

Debit Card

–I always have a Debit Card on me.  I carry my Debit Card in my money-clip.  I wrap my cash around my Debit Card.

Checkbook

–I have a checkbook which I keep in my wallet.  I only write about 5 checks per month.  My checkbook usually stays in my glove-box.  If I have to write a check, I will tear a check from the book, fold the check, and put it in my money-clip.

Wallet

–I have a wallet.  I hate to keep it in my pocket, so it usually stays locked in my glove-box.

Credit Card

–I have a credit card that I never use.  It stays in the back slot of my wallet.

In the past 2 years, I’ve only made two purchases which required more than $200 in cash.  On those occasions, I withdrew the cash from the ATM, put the cash in my pocket, made my purchase, and went about my way.

Renting A Car or Reserving A Hotel

–I have rented a car AND reserved a hotel using my debit card.  (I know that some companies require reserving a car with a credit card.  So, if pressed, I could RESERVE the car with my credit card, but PAY the bill with cash.  So far, I have not had to deal with this situation.)  When I checkout or return the car, I pay my bill in cash or use my debit card.

Plane Ticket

–I’ve never flown, so I have no idea how this would work.

On-line Purchase

–I have a secondary checking account with a fixed amount of money.  This account has a debit card.  The account does not allow “over-drafts”.  I use this debit card associated with this account to make on-line purchases.  I’ve never had a problem using a debit card or getting a refund.  I’ve used a debit card to pay for items from Amazon, pay my hosting fees, and manage my satellite radio bill.

Bills

–I use free on-line bill-pay to pay all of my bills.  I’ve never had a problem.  In fact, my local doctor was impressed with the fact that I could use on-line bill-pay to pay my doctor bill.  I actually showed him how to setup an account with his bank!

As you can see, living without a credit card is pretty easy.  I’ve yet to find myself in a situation where I “had” to use a credit card.  I make sure that I keep enough cash “on hand” to meet most situations, but not so much that I’m overly concerned about losing it or having it stolen.  IF someone where to steal my wallet, they’d get a single credit card, my license, and about 10 checks.  If they were to rob me, they’d get about $200 and a debit card.  There are risks associated with every method of carrying money, but I feel pretty secure with the the technique that I use.  If I am travelling, I will, of course, take my wallet out of my glove-box and put it in my back-pocket.  (Wallets are SO 1985!)

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