Join Jomel and Me for a 1 month Dave Ramsey Cash vs Credit Card Experiment!!!!
It starts today October 20, 2020 and will end on November 20, 2020.
This experiment is based on a video I saw of Dave Ramsey answering a question that I would have as well:
Why can’t you use a credit card if you pay it off every month and accumulate miles for free vacations?
As you may or may not know, I used to overspend on credit cards back in 2008 and 2009.
I had over $40,000 of consumer debt in 2011.
I paid it off by April of 2016, improved our family’s Net Worth by about $500,000, was making almost $500/month in passive income and I quit my job. December 23, 2016 was my last day.
I then started coaching clients to do what I did (click here for my Finance Freedom Mastermind program).
So I understand the pain that credit cards can cause with over spending.
However, since 2016, my husband and I started using credit cards again, but now we always pay off our bill and we accumulate cash back as well.
I had never really listened to Dave Ramsey, but yesterday for some reason I started watching some of his videos.
And this video really made me think.
The Psychology of Overspending With Credit Cards
Apparently, there have been brain studies of people spending with cash and spending with credit.
When we spend with cash, we get pain receptors firing in our brain.
It’s because we see our cash being given away for the transaction and we know it’s not coming back.
Dave says you put down a Benjamin ($100 bill) and you know you are not getting your Benjamin back.
However, when we buy with credit cards, those pain receptors don’t fire.
We buy an item, and we get our credit card back!
It’s really interesting.
Dave then talked about how McDonald’s decided to allow credit card transactions because it knew people would buy more with credit cards than with cash.
The Cash vs. Credit Card Experiment Begins Today October 20, 2020
Why not do an experiment with cash vs credit cards?
We know how much we spend on the credit card, so it will be easy to compare with cash.
Jomel and I are doing it.
We are only using cash from today forward for a month and then we are going to analyze the results.
I’m excited to test the theory.
Let us know if you are going to join us in the comments below!