Cash, Credit or Debit

Wisebread had an open thread on the cash, credit, debit debate recently. I've been struggling with those issues myself.

In the past three years or so, I've been abandoning the checkbook in favour of using the debit card. The debit card is just so darn quick. I am acutely aware of holding people up when I'm writing a check at the grocery store. That probably goes back to seventh grade when I had a social studies teacher, Mr. Manus I believe, who would write notes on the board and then erase along behind himself. He also gave timed essay tests. My handwriting has always been slow. Maybe it's because I taught myself to write before elementary school, and I don't follow the standard way of handwriting letters. Or maybe I'm just slow. Whatever. I just know I never was able to complete timed essay tests, and I made bad grades, in spite of the fact that I'm a fair writer, and I knew the material. At any rate, whenever I'm standing there at the checkout counter writing a check, I feel like I'm trying to finish a timed essay test rather than merely purchasing groceries. I hate it.

So I've been using the debit card for almost everything. The argument for the debit card is you're less likely to buy that $75 bottle of wine because, what the hell, you won't be paying for it until next month, and who knows, maybe a television deal based on the blog will come through by then.

I'm hyper-paranoid about money. As far as I can remember, I've never bounced a check or missed a bill. I don't know what put that particular fear-of-God into me, but it's there.

The problem with the debit card, of course, is that the money is siphoned straight out of your checking account, and this siphoning happens almost immediately. If someone were able to use your debit card number, then the money would be gone from your account, and the onus would be on your to cover your expenses until you proved it was a case of fraud and the bank put the money back in your account. Is this likely to happen? After all, you generally have to use your PIN with your debit card. The answer to that, for me, is "I don't know."

This spring, some fraudulent charges appeared on one of our credit cards. The fraud alert system caught it. The situation was a little bizarre. One of the items fraudulently charged, a Nokia communications device, showed up at the house. What's even more bizarre is that I looked into the Nokia stuff many months ago because of a post on Kent Peterson's blog. There was also a charge from Skype, and a charge from some freight company. Could it have been some crazy internet error rather than out and out fraud? Who knows? But my account was charged over a thousand dollars that I had not, personally, charged. If it had been my debit card number, that would have been money out of our account. If you've been imagining me with tens of thousands of dollars in my checking account, god bless you, but you're wrong. That would have been a debit card disaster.

So, I've been using the credit card a little bit more. I do feel more protected with the credit card. Are credit cards an evil plot to get people to spend more money than they make. Yes. Have I spent more money than I make in the past? Maybe a little bit, but I've never been too bad with my credit cards. Currently, we haven't carried a balance for several years. But I'm paranoid about credit. I'm not perfect. I like to eat out. I want a new laptop. It's been a while since I've been to Key West, and the winters here are so cold. We could homeschool in the Florida Keys during the winter thanks to the fact our credit equals or exceeds our annual income, and then I could write a book about it and pay it all back before paying too much interest! Oh the rationalizations I can create!

But I don't do those things because I'm paranoid about debt. Still, I don't like paying credit card bills, even when they are for things I would normally buy, because it feels like I'm paying for stuff twice.

So, I'm swinging back toward cash. I've long claimed that cash just flows through my fingers like water, but I think I might actually be more responsible with cash now that I'm 43 and not 16. Many people claim that using cash cuts down on the amount you spend. I honestly don't know if that applies to me. If I have a pocketful of cash, I feel like I'm ready to head downtown for breakfast and maybe a spin through the thrift stores. But I track my expenses more closely than I ever have, so maybe cash is the way to go. At any rate, the Farmer's Market is up and running on my end of town, and my honey sales pull us into the cash economy. Last week I sold eleven pounds of honey -- all I had -- and I should have about the same amount this week, or a little more. A few of the hives are set to produce a lot of honey soon. Other bee colonies are still focussing on raising babies. That's a little bit of a problem. I'm going to have to split them and sell the splits. While I have honey flowing through the Farmer's Market, I have cash flowing through our personal finance picture, so we buy most of our groceries with the honey cash and build up our checking and savings from Laura's salary.

How do other people keep their spending on track? Do you use your debit cards without worry? Do you use credit cards responsibly? Does cash keep you on the straight and narrow? Money and economics are such strange issues.