Paper vs. Plastic: Money Talk

Americans like stuff. Americans like to spend money. Americans strive for the “American Dream” via having a lot of stuff and, sometimes, determine success by how much stuff they have. They tend to care more about stuff rather than their money. And this is why America is the KING of marketing and advertising compared to all other countries in the world… and not to mention, in jaw-dropping consumer debt.

And when I say “Americans,” I’m talking about the majority of the population (which more than likely, includes both you and me).

According to multiple studies, Americans are exposed to an average of 4,000 ads per day, even if we don’t consciously notice it. It’s everywhere we look. It’s on everything we buy. It’s a part of everything we do. And it’s why marketing and advertising industries seem to shape the way our society views money, lifestyles, material items, beauty, comfort, enjoyment, the American Dream, things we think we “need,” and almost everything in between. (Phew! Say that in one breath….) In a nutshell, marketing and advertising play a huge part in our daily lives.

Disclaimer: I am not writing this article to start a protest or outrage in the American people against advertising. Advertising itself isn’t evil; it’s a part of our culture and the essence of how most businesses grow in profit. Not to mention, it provides people with jobs to put food on their table. In fact, I currently work in the marketing/advertising industry myself. This is not the point I am making in this article. Instead, I merely want to give you a “buyers beware” to common marketing schemes and help you distinguish your spending habits.

Because our society consistently craves and strives for “quicker,” “more convenient,” and “easier,” it has caused the majority of Americans to use plastic – credit/debit cards – to pay for their items instead of paper – hard cash.

Recent studies show that Americans are willing to spend MORE on something if it is convenient, easy, or fast. 

A.k.a. “time is money.” I think we can all agree that we’ve done this at least once in our lives. I know I have…. I’ve gone to the more expensive gas station because it was conveniently right off the highway. I’ve gone to McDonald’s (which I typically associate with disgust) because they’re everywhere and available when I needed a quick place to get a coffee / breakfast sandwich before work. I still find myself going to Wal-Mart for most things (which I don’t like, either) because, again, they’re everywhere and I can conveniently go to one store to meet all my shopping needs. Convenient. Easy. Fast.

When it comes to paying with paper or plastic (cash or credit cards), which one should we use? Does it really make a difference?

The answer: cash….and YES!

Cash is one of the MOST POWERFUL negotiating and bargaining methods you can use… and one of the BEST money management tools.

Why? You will have a more “emotional attachment” to hard cash, rather than credit or debit cards. You FEEL the cash leaving your hands, but with plastic cards, you are not affected by it. All you do is swipe and then you put it back into your wallet. This provides the mentality that you’re not really “giving” anything away. 

It’s importantto feel your money, because when you don’t, it’s easy to overspend and buy more than you can afford. The exclusive use of credit cards, which doesn’t come with any emotional attachment to your purchases, is dangerous and why so many Americans are in consumer debt!

Why is using hard cash such a great money management and negotiating tool?

Cash is:

• visible/physical money 
• provides an emotional attachment for the giver
• provides an emotional excitement for the receiver 
• instant (no bounced checks, bad credit scores, late payments, etc. that neither the giver or receiver has to worry about)

Because cash is visible, instant, and provides anemotional excitement for the receiver, you have a MUCH better chance of getting a good deal, especially if a sales consultant is the one trying to sell you the item. That hard cash serves as a bone for a dog, and they don't want you to leave without it in their hands.

Because there is an emotional attachment to hard cash, you will be less inclined to give it away, more likely to negotiate for a good deal, and more likely to feel 'buyer's remorse' after you purchase something. No, the purpose of 'buyer's remorse' isn’t to make you feel bad for spending your money, but to get you to see the VALUE of the dollar and spend your money wisely.

Now, let's talk about credit cards.....

Although Dave Ramsey might be opposed to credit cards (period), I think that is a judgment call you will have to make for yourself. But let me help make that call for you:

• If you are in credit card debt and can't seem to stop swiping, you need to do what Dave suggests -- cut it in half with scissors. Do anything you possibly can to get $1,000 in the bank, whether that's selling things, working extra hours, or living on beans-and-rice for a little while.
• If you're like me and pay off your credit card every month, on time (sometimes right after purchasing something), and treat it as a debit card -- where you only swipe it if you have that money in the bank, as if it would be taking the money out instantly -- then it may not be a bad idea to keep your credit card.

BUT... you need to do your homework.

I agree with Dave that you should SAVE UP and pay for things in hard cash, in order to get a better deal and/or keep yourself from going into debt. But this is homework you will need to do yourself (just as I will be doing): check the specific fees, annual interest, and other charges you get on your credit card. 

The reason you need to check these charges is because essentially, CREDIT CARDS ARE MONEY PITS. Even I agree with that. Going back to the art of convenience, easy, and fast, credit cards have it all in that one plastic device -- hence, making you want to spend more. The "points" and "miles" rewards? Yeah, that's just to get you to spend even more...because you "benefit" from your spending habits. It may seem to be beneficial to get a free gift card or a trip to Colorado, but here's the catch..

Wait, there's a catch?

Yes. Even if your credit card offers points, cash back, or miles, most of the time (according to Dave and other financial teachers) the credit card company will "make up for it" somewhere else to ensure they make profit -- since, you know, they're a money pit. Their interest rates are much higher than those credit cards who don't offer such rewards...

CNN Money and Consumer Reports agree: "While cash back, gas and grocery rewards credit cards can offer some relief for costly essential items, they often carry higher annual percentage rates than traditional credit cards, Consumer Reports said. Looking at some of the more generous credit card rewards programs, the study found that rates varied from 9.74% to as much as 19.99%."

You need to do your homework and see how much interest and fees are being charged to you for using your credit card. Interest and fees are typically how credit card companies make their money -- and they're a booming business for a reason. 


Americans like their plastic. But only you can make the call to start spending your money WISELY, see the VALUE in every dollar, and start to FEEL your money instead of the emotionless swipe of a plastic card. 

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Sources for additional info:

One of the best ways to organize your cash and follow this money management method is to use Dave Ramsey’s “Envelope System.” Click here to find out more details.

Learn how to negotiate and bargain with hard cash, go to Dave Ramsey’s negotiating tips, or listen to the podcast “That’s Not Good Enough” from his seminar.

1000+ tips on saving money, living frugally, and budgeting wisely: http://www.themoneysavinggarden.com