truck1
iStock

First Person

Paying Cash in a Credit Card World

Posted January 22, 2009

“Timmy here.” With those words, today’s Guest Whiner introduced himself, via an email addressed to “Grand High Whiner in Charge.” We admit, we were intrigued, even while the note went on to say, “You don’t know me, and honestly, until today, I was unaware of you.”

That was the beginning of our virtual relationship with Tim Centner. He’s a fascinating guy — a born storyteller (you’ll see that in a minute) who lives with his family in rural, southern Alabama. He’s got a background in graphic arts but now works as a full-time marketing writer. He tells us that he’s the creator of over 20 television concepts, three of which are currently under option with a production company in Los Angeles. (Knowing Timmy, as we have begun to do, we’re surprised that the number is only 20.)

Here’s a look at the world from his perspective. Cash only, of course.

By Tim Centner

I drive a 1972 Chevrolet Pickup Truck. It’s green in places, moreover it’s a bit rust colored in the areas where the rust hasn’t eaten a hole in it. It has no hubcaps, no heater (which in south Alabama where I live is less of a concern) and no air conditioning (which, where I live, is a bit more of a concern). It’s almost as old and worn out as I feel sometimes when I look at the state we’ve gotten ourselves in.

On the other hand, it’s paid for and it goes. Plus, living as I mentioned in south Alabama, I kind of blend in here. Whereas I’m sure if I lived say in, Scottsdale, I would be towed immediately.

That Chevy — it’s mine.

Let me get right to the point here. My family and I live on cash. I even feel somewhat proud to say this: I have bad credit. Have had since college. And really honestly have never tried to clean it up. I suppose that makes me kind of Quixotic in the society we live in, or at least the one we’ve been led to believe exists and always will.

Living without credit isn’t a simple task. You’ve all seen the commercials put out by the friendly credit card companies that show beautiful, idyllic people happily buying things with their cards until some terrible, thoughtless person makes the entire scene grind to a halt by whipping out some legal tender that’s not plastic. I feel like that sometimes. It’s worst when I have to tell my children that we can’t buy this, that or the other thing (and Lord knows there’s enough “things” for everyone).

I do have a debit card which ties directly to our bank account, but when you think about it, that’s still cash. If there’s none there — the card stops working.

Living this way does cause some anxiety. The nice people at the power company and utilities department really like it if you pay them on time and are often curious why I don’t just put a credit card on file with them.

They think it’s odd that I don’t have any credit cards at all. But I think that’s a part of the brainwashing that we’ve been being given for the past two or three decades or more. My mom who was born in 1929 remembers a time when there was no “credit” as we consider it today. A retailer, insurance company or anyone who might be interested couldn’t just go online or make a call and get your credit score.

You paid cash or you did without, which more often than not meant that you did indeed go without. Don’t get me wrong, I don’t believe that there’s not enough to go around. But I do believe that you cannot build a lasting society on the idea of eternal exponential growth.

For people who don’t live here, let me give you a better sense of this place. It’s a very rural part of the country. We have one movie theater. We have a Winn-Dixie and a Super Wal Mart that serves most of the county. I recently visited friends in Scottsdale (that’s why it’s on my mind) and noted the nice bike lanes for bikers who were all decked out in their biking regalia. I realized that they bike for fitness. The people you see in Alabama riding bikes — they can’t afford a car, bit of a different perspective.

Here are some Alabama quick facts from the U.S. Census Bureau: median household income here is about 37 grand, compared to $44,000 for the U.S. as a whole. As of the 2004 census, 16.1% of the population was below poverty level, compared to 12.7% nationwide. If you look at one of those charts from the U.S. Census Bureau, we’re 40th in the state rankings for personal income (in what they call constant 2000 dollars).

But enough of those statistics. No matter where you live, I ask you to imagine what someone, a person who lived during the age of the Great Depression, would think about all of us buying a car, or a dishwasher or a refrigerator, not just once, but more than once — and, in many cases, more than twice or even three times. It would have seemed completely insane.

When you think about it, isn’t it kind of insane?

Even here in Alabama I’ve watched in the past several years many families simply buying things for the sake of buying them. Houses with interest-only mortgages, big giant leased SUV’s. Taking vacations financed by borrowing equity in their homes. And now they’re wondering what in the world just happened.

Some of my closest friends heeded my seemingly eccentric advice and worked their way out of credit card debt to live on cash, and they’ve been surprised at the results. It can be done. It is not easy.

But you know what? There’s a fantastic silver lining to all of this chaos. When things get really tough we begin to come out of the haze long enough to figure out that it’s the people, and not the things, that have real value in our lives — and that collectively we’re going to make it out to the other side. Tenacity and a little whining go a long way.

Here in Alabama many people are less than a generation removed from extreme poverty. This happens to be one of the only places that I know where people make their ends meet by hunting for and growing their own food. (I know many avid hunters and I do like venison, but I’ll confess, I don’t hunt. I see no reason to get up at some ugly cow-milking hour and go sit in the cold-ass woods waiting to assault an innocent deer who’s never done anything to me personally. But that’s just me.)

I laugh when I go to the bigger cities and the Whole Foods Market and see things like “organic tomatoes.” The tomatoes I buy come from the “Tomato Lady,” who has a pickup truck kind of like mine that sits right off the town square. (I’m pretty sure hers are more organic than Whole Foods’, and cheaper and tastier to boot.)

I remember early on when I was growing up going with my parents to “Pot Luck” dinners and it dawns on me now that they served a couple of purposes. First they gave everyone an opportunity to get together and socialize over (usually) good food. But all this also played to another premise: since everyone was bringing something — nobody was responsible for providing everything.

We need to reestablish our connections with each other and stop trying to compete to see who has the most stuff at the end of the game. So here’s what I want you to consider for me.

Try to start paying for things with your hard-earned cash. When you see that cash begin to dwindle, stop. I’m not asking you to go hungry or to not provide for your family. Just start experimenting with the idea that what everyone your entire life has been telling you about what you have or what you actually “need” might be wrong.

You will have to do without some things. So will your kids. You will have to tell them why. They will not only begin to understand but also start to see the bigger picture and someday they will thank you for it.

Keep Whining. I hope to have more guest posts to come.

The Whiner wants to know: What do you think about Timmy’s approach to life? Where are you on the cash or credit spectrum?

Reader Comments

  1. Hope

    My son ruined his credit at a young age, and he lives on cash. His lifestyle is interesting to watch, but he’s doing okay. He’s made enough to fix his credit, but got angry at the collection agency that bought his debt and tried to double it in fees and interest, so he continues to ignore them. It can work, but it does have it’s drawbacks.

    When I was first divorced, I lived on credit cards, and the day I paid them all off still stands out in my memory. We use credit, but generally pay it off. Still have a mortgage, though.

    In this economic mess, Tim is likely the wave of the future for a lot of people, even those who HAD credit and are having it cut back drastically by the CC companies. And I commend him for living within his means. We can all take a lesson from him.

  2. FT Piecyk

    I agree with Timmy. Never been in debt, but always was pay as you go. It works, but you won’t be trendy or have tons of material world friends. Thanks my New England Yankee heritage, we’re frugal to say the least. Here’s a hint, always ask if they’ll knock something off for cash on large purchases of say $200 or more. It works for me all the time. Heck you’re gonna pay with cash anyhow, why not ask?

  3. morrison

    I’ve been living on a cash-only basis since 2001. My FICO score is zero. There is no reason in the world to have a good FICO score if you pay cash for every single thing.

    I paid cash for my house (no mortgage), cars, vacations, furniture etc. etc. etc. I have a Visa/Mastercard set up as a debit card and it allows me to purchase big ticket items like airline tickets (went to Italy and Paris), purchase online, pay restaurant bills etc. BUT I have to have the cash to back up the purchase first.

    As your guest writer states, living on a cash only basis is very, very hard. At first. But once you get the hang of it, start saving your money BEFORE you make the purchase, you really get to enjoy your life and not worry.

    When a credit check has to be done on me (insurance, prospective employment) my report comes up: “no consumer history for 8 years” No one in their right mind would deny me anything! I even get to pay for my new car purchases with a personal check.

    Contrary to what Timmy has to say, I go first class with cash. Not the other way around. People should not think their lives will be less glamorous should they switch to cash. What would make your eyes sparkle? A crisp $100 bill or a Discover Card? (please don’t tell me you pay off your credit cards in full at the end of the month because you like the 20-30 days float or the rewards)

    Pay the bill with cash and forget it.

  4. Bill

    Whiner, Timmy, great post. Real good to have windows into what’s going on different places (like that article the site ran a couple of weeks ago about Michigan, written by the college student). Timmy, look forward to whatever you write about next.

  5. Coastman

    Way to go. I am a lawyer, self-employed. My wife is a landman (oil & gas research). We do not have kids. We live in the same house that we bought when we first married. Have lived there for 22 years. It is a 1924 bungalow, about 1400 sq. ft. It is in a major city. Whenever we say “we don’t have enough room”, it means that too much crap has been allowed to creep back into our lives. We clean it out, have a garage sale, and move on. For years, people have been telling us “you need to live in a ________ house in ___________ subdivision” so you look more successful. We tell them to piss off. The house has tripled in value. We know all of its faults. It needs a roof.

    The funny thing is that when people visit, they always comment on what a “cool” house it is, and what neat stuff we have decorated it with. My neighbors are a musician, a handyman & his wife, a bartender, a guy who spends most of his time in jail, oh, and another lawyer up the street. They are real people. They drive older cars, but have realistic expectations.

    I drive a pick up truck. My wife drives a 12 year old Miata. She loves that car. We have a cat and a dog. They both love us very much. Gosh darn, we even have the internet and a flat screen TV. We read books. We cook most of our meals at home. We have a kick-a propane grill. It is eight years old. We take care of our stuff so it lasts.

    We go fishing, we travel, we have some younger friends that are crazy, we have fought through my wife’s cancer, we drink reasonable priced bottles of wine. We do some volunteer work. We take naps. We rake the yard. I know how to wear a tuxedo. My wife knows how to dress beautifully.

    We have some debt, but not a tremendous amount.

    Life is good. The economy will get better. Pay cash; it works.

  6. abo gato

    We are working to reduce debt and to pay cash for everything. Not easy but you need to make that commitment and just save everything you can. Our whole American way of life is based on buy it now. That is going to change whether people like it or not. You may as well start the process now for yourself.

    We are lucky to live in an area where the housing costs are not horrifying. We’ve been in our house for about 16 years. It was built in 1963. We are always in the remodel mode with my husband doing the work himself. Taking out the crappy carpet and putting in hardwood floors, replacing all the windows last year, husband is building door jambs out of oak and putting oak as the trim on the windows and baseboards, gutted and rebuilt the bathrooms. I want the cool kitchen with one of the huge mama jama ranges. One of these days we’ll be done. We also have an acre of land and a lot of oak trees. (I have room for those chickens I pine for and room to grow vegetables when the need comes)

    It’s slow, but things are always getting better.

    A woman who works for the company I work for lives in Plano. Two years ago she was telling me that they use the HELOC money to buy things. She was all excited that her husband was going to buy her a $20,000 diamond ring for her anniversary. I looked at her and asked if she was insane. I don’t think she could comprehend how repulsed I was by what she was doing.

    I haven’t seen her in a few months. I wonder how things are going for them and what their house is worth now.

  7. chris

    Wonderful post today! Our cars are old – 15 & 16 years old and they are just fine for us. I have a special ing account where I am saving up for the day when we do need another car – and it won’t be a brand new one. We each have one credit card but those are paid off in full each month and we mostly operate on cash/debit. We have a budget and kids who want stuff, but we talk about money and that things cost a lot and we have to work. Lately they have found more fun in watching their savings accounts grow. Funny how some people returning to sensibility is ruining our economy – it functioned for so long on false-promise and over-extention. Again – what a great read today!

  8. Suze

    Tim, thanks for your post. I love it, especially your observation about the bicycles.

    I too am a cash-only operation. I did have credit cards for a short while, but I found myself buying things I didn’t need, and then I started thinking differently about my cash. Money became an increment of something else, and somehow less important. Well, that was the end of that. Too fraught with danger.
    I have so far, no problem living within my means. And I am so much happier living with cash rather than credit.

  9. paprikapink

    I don’t think my parents have heard me thanking them for the privilege of growing up poor. There is a lot to be said for not having too much junk and not spending money you don’t have. But I have lived both ways and I like being able to fill up my tank so I can still get to work or the pharmacy even if I won’t be paid for three more days. I don’t have the spirit of adventure that makes it thrilling to not know what you’ll do if your roof springs a leak or you break a tooth. And as a kid growing up, it does not feel great that your growing and needing a winter coat is costing your family money that would have otherwise gone to food, or maybe even something fun. I think it’s great that Timmy lives this way and I agree that the world would be a better place if more people did, but I don’t consider it charming, romantic, or good for the kids.

  10. Karenza

    The thing I like best about The Great Recession is that those of us who have been frugal for years are now cool–”frugal is in,” people are coming around to our way of thinking. I have been getting great deals on sweet designer clothing, e.g. custom shirts from Thomas Pink of London, at a local consignment shop for years. I buy these shirts for like $5 and am ecstatic. Friends who have been skeptical of my consignment bargains are now asking what day the place is open, etc. One day I hope our daughters come around and thank me for buying them lovely boutique coats, etc. for a song on eBay. For my 40th birthday last year I bought a 2001 VW Jetta, black with tan leather interior–what I always wanted. I love that car and will drive it for as long as it will move!

  11. The Doctor

    Getting back to the basics has something to recommend it. We flirt with danger whenever we separate ourselves too far from the food we eat or the people we wage war against. We have become too dependent on sprawling supply lines and remote policy making. In the near future living and shopping locally will become more a necessity than a choice. I wonder what Tim’s area will do when the mega-mart leaves? Are there any local stores left?

    Eschewing credit isn’t the real answer, of course. Credit has been around since at least the days we started agriculture. Money itself is just a type of credit in its most basic form. Nothing intrinsically wrong with credit and it sure makes life easier–if only we could borrow time! It’s all in how we use it. Our recent woes are in part because of the industrialization of credit and the greed of virtual wealth. We will not run out of real wealth but we can easily run out of brains.

    I’m reminded of a quote from futurist Arthur C. Clark: “One day our age of roaring factories and bulging warehouses will pass away, as the home loom and the butter churn passed before them. And then our descendants, no longer cluttered up with possessions, will remember what many of us have forgotten–that the only things in this world that really matter are such imponderables as beauty and wisdom, laughter and love.”

  12. Keith

    It is really nice to see someone else who feels as I do… I have been living on a cash / barter / trade / free basis for quite some time and have finally gotten to the point where I have paid off nearly all that bad debt that accumulated over the past five years.

    I rarely buy anything that is new and most things get bought used / second hand.

    I live a car free life and choose to ride a bicyle or if I can’t ride, I use transit… that has saved me in excess of $8000.00 a year

    We also have a tv free home which people seem to find stranger than the fact I ride a bike everywhere… my daughters don’t seem to miss tv at all.

    It is a pretty simple life that is based on needs and not so much wants and we certainly do live within our means and want for nothing.

    My young daughters really seem to like living this life which stands in stark contrast to how they live when they are with their mom. She is still stuck in that buy everything mode, drives a monstrous suv, and home cooked meals area a rare thing.

  13. Timmy Here

    Howdy all,

    I really appreciate all your comments! Keep them coming. A couple things stand out to me. I do want to emphasize that I don’t think that *all* credit is bad, in my case I avoid it, but that is certainly a personal choice. I do feel on the other hand, that we’ve been sold a bill of goods about how and where to use credit. Kudos to all of you who choose to live on cash as well.

    Also a couple of direct responses.

    First, Morrison: Good on ya my friend. I’m pleased to see someone not only living on an *all cash* basis, but doing so with style and in a first class manner, which in my family we also do, but it sometimes means that we have to delay our gratification for a bit while we save.

    Coastman: You make me laugh. Just over a year ago we sold a house that we had lived in for 8 years…and the sheer amount of…uh…*stuff* we had the opportunity to purge ourselves from was pretty gratifying, we donated what we no longer needed to our local Christian Service
    Center…by the truckload. Times are tighter than they were, but we too have a flatscreen and obviously…the internet.

    Paprikapink: I appreciate your comment as well. I hate to hear that you grew up in a situation as you described. I do want to say, we definately are not what I would consider *poor*. My kids are well fed, have more clothes than any 2 children could possibly wear. And far far far too many toys.

    The lessons that I want my kids to take away is not one of scarcity. There’s enough to go around for everyone, I truly believe that. But there’s a myth that’s been perpetrated on us, the idea that we need…more more more when in many cases what we actually *have* is completely sufficient. I absolutely agree with you when you say, that living in poverty is not charming or romantic, I would never suggest that the case was otherwise and hate that anyone would have to experience true poverty in a country such as ours.

    Thanks again for all of your comments! It’s wonderful to see the diversity, not to mention the fact that there are other people out there who live within their means.

    Peace and Love!

  14. Ed M

    I have been living on a cash basis since Labor Day, 2000.
    Having been brought into destitution by a the deadly combination of business partner and cheating spouse, I went off the credit wagon by necessity.
    I worked my way out of a deep hole, with 27 cents in my pocket, a paid for 12 year old truck, and access to plenty of partially full gas tanks in the junk yard.
    My income increased dramatically over the years, but I still refuse to get one of those little plastic demons.

    Keep the faith in only buying what you have the cash for, and keep it simple. Your life will improve so much.

  15. Crayon

    We had a 15 year old Camry Wagon all paid off, low car insurance rates, a reliable mechanic on first name basis and LOVED the money it saved us. Unfortunately, we didn’t save up for the possibility that the wagon might not hold up forever. It got totaled in an accident with a Mercedes SUV. The wagon spun around 360 because it had a lower center of gravity (tires shredded to nothing) and the SUV turned over. Fortunately, no one was hurt! The insurance payment was only enough to put a down payment on another used Toyota. But we picked out a 7 year old car that might be on the road another 10 years barring another accident and we get to keep our mechanic! Hubby and I share the car, he rents one for long commute gigs and expenses it on Schedule C.

    (Hubby totaled the car. I wasn’t in the accident and he wouldn’t let me say goodbye to it at the junkyard when he went to retrieve what he could, it looked too bad.)

    BTW Timmy, you don’t consider roadkill as lazy man’s hunting? Just kidding!

  16. Mimi Forsyth

    A woman interviewed on NPR the other day had vowed last year to buy nothing new-except food-…and had stuck to it. She said she learned a lot about what was important & what was not…and was happy to be free of “stuff”…and happy to find how much money stayed in her wallet. She shopped thrift stores or garage sales & accepted gift items (like the sofa the upstairs neighbors didn’t want anymore).
    She’s made me think I can do this too…and actually enjoy it.

  17. amy

    Well, having credit, and lots of it, has made it possible for me & my daughter to stay in our house post-divorce. Not because I ran up the cards, but because my debt:credit ratio was so low that I had a lovely FICO, and that plus no car/student/HELOC/personal-loan debt meant it didn’t matter that I had a piddly income. I’m in the midst of refinancing now, at a very nifty rate.

    I don’t think I’ve been in trouble with credit cards since the first year I had one, in ‘89. Ran up an $800 (yes, hundred) debt and got gorillas on the phone (I’ll never forget the one who insulted my newspaper for not paying better). That learned me good.

    Incidentally, while we’re talking about plastic, we ought to talk about the debit-card programs that are currently pickpocketing poor single parents and the disabled. Banks run the programs; they sell them as a cost savings to the state (no checks to mail and administer) and a convenience & savings to the recipients (no checks to lose, no rapacious check-cash fees to pay). But it comes with a few problems:

    1. You get fined if you go overlimit, and since I’m guessing that people who haven’t got it together enough to have a checking account are not writing down a careful register of purchases; it’s possible to eat most of the next month’s payment in various fees.

    2. You get charged if you lose the card, and have no access to the money until you receive the new one.

    3. You can take cash out twice for free, and then you have a charge.

    4. If you don’t use the money within a certain timeframe, you lose it, as if the cards are store gift cards.

    So. Convenient? Maybe. Good idea? No, not unless the banks stop acting like banks and issue the cards without the idea of making money off fines/fees charged to the poor.

  18. Andrew

    I definitely agree with you–without credit, you might go hungry once in a while but you’ll never have you life savings destroyed overnight. You always know where you stand.

    The trouble is, as we saw with the subprime mortgage collapse, other peoples’ bad debt can hurt us too. My guess is that when the credit card debt bubble bursts, it’ll make a VERY big splash.

  19. Jennifer Rabuchin

    Great article!
    Haven’t had a full time job for 2 years.
    I’m grateful for lessons passed on by relatives who lived through the Great Depression (this is Great Depression 2 by the way) Use things until they fall apart or try to fix them, when you have to get water by pumping it you never just let it run down the drain.
    My aunts and Grandma always had a huge garden and canned food.
    Last year we planted a garden (always hated it when the weeds grew up back there every Spring, but if it’s good for the weeds…)and got 5 lbs of vegetables from it every day.
    We might even get some chickens. It’s legal here, not sure how the neighbors will feel.
    Trying to use cash for everything. Credit is a hard habit to break.

  20. prence

    Heh That’s a pretty interesting article. If he wants to look at it the way of ‘I have a debit card but that’s tied to my bank account so when there is no cash, the card stops working,’ well I only spend on my CC what I’ve got in my bank account. So if there is no cash, the card stops working .. because I stop using it.

    How about just don’t spend money that you don’t have? Problem solved.

  21. prence

    Also I feel like I should stop reading a website where people say “That learned me good.”

    Are you for real?

  22. camerabanger

    For years I lived much like you do now. I was young and I had only myself and, after a while, my wife to account for. Then it seemed simple. Work. Get paid. Spend what you need to. Put the rest away (if there was any) for the future. For a long time that worked well. Then, sometime in the late 70’s, I, along with what seemed like everyone else in the universe, slid quietly into a credit-world. My family controlled itself pretty well. We never got into great debt. There was always something that nagged at me when I saw finances sagging towards the negative side of the border.
    The last two years have seen us fall back on our seriously credit-free experience. I go in and put long green down on the counter for my gasoline again-no ’swipping’ at the pump. We work for a combination of check and cash and we try very hard to see the end of the month with the checks cashed and bills paid and a tiny little bit under the mattress. It is not-as you have said-easy but worth it in the long run. I feel much more in touch with the real world in that I see value in my beat up car and my self-built home and maintaining all my systems for maximum effectiveness.
    The current atmosphere humbles. Heading into the holidays I thank whomsoever it is who gives me life and the sustenance to continue on. It is sustained-in my opinion-not a whit by plastic.