Lori and Marek Fuchs have never fought in their 16 years of marriage—except over money. In this column, Mr. and Mrs. Fuchs, a real-life married couple with three kids (ages 11, 7 and 5), will articulate their very different approaches to personal finance. Last round, they clashed on life insurance policies.
This round: The Fuchs rethink their decision to switch to a cash-only existence.
Mr. Fuchs says: What’s the best way to say you're sorry?
Mrs. Fuchs says: Uh-oh. What did you do now?
Mr. Fuchs says: It wasn’t what I did. It’s what I didn’t do, or haven’t been doing.
Mrs. Fuchs says: That hardly limits it. What are you talking about?
Mr. Fuchs says: Well, it’s been almost six weeks since we promised each other that we’d use wads of cash instead of credit cards to pay for all our daily expenses.
Mrs. Fuchs says: Oh…yeah….I’ve been meaning to talk to you about that.
Mr. Fuchs says: That’s a comfort. I always think of you as perfect.
Mrs. Fuchs says: Aw, flattery will get you everywhere. But, seriously, I didn’t exactly forget. As good as the plan sounded in terms of forcing us to adhere to a budget and limiting interest charges and other draconian fees, it is a little cumbersome. I was all set on it after financial planners like Bill Driscoll in Plymouth, Mass., explained how people (like me) 10- and 20-buck themselves to death with careless little credit card purchases. Spending cash hurts more—it’s more visceral—so he suggested the plan: Take out a set amount of cash a week and spend only that, peeling off every last dollar and slapping it on the counter. We were only going to make big purchases, like televisions, with credit cards, so we could return them if need be. Or airline tickets, so we wouldn’t be hounded by Homeland Security.
Mr. Fuchs says: It sounded like a good plan at the time. Old habits die hard, but old habits that involve using credit cards with interest rates steeper than those offered by the Gambinos should die hard.
Mrs. Fuchs says: Yes, but this was too hard. First of all, we have three kids and we both work. I never seem to be able to get to the bank, so half the time I didn’t even have my wad of cash. If I couldn’t amble to the bank until Wednesday, it’s hard to buy food on Tuesday. Also, what about smart impulse buying? The other day I actually had a few bucks in my wallet, but not enough for the cute pair of shorts I saw. I was forced to use a credit card because they only had one pair in my size and they were on sale. What were the odds of them being there by the time I got to the bank? Full retail is the real budget buster. There has got to be a better way!
Mr. Fuchs says: You saw the light because of a cute pair of shorts?
Mrs. Fuchs says: Precisely. After that traumatic experience at the sale rack, I was talking to my friend, who told me that she and her husband, both lawyers, don’t use credit cards. They have four kids, which means it's one kid harder for them to get to the bank than us.
Mr. Fuchs says: So cash is out?
Mrs. Fuchs says: Right. But so are credit cards. They are trial lawyers, who are only paid their 30% when they resolve a case. As a result, their income lurches and credit cards can lay siege to their lives. If they go into debt, who knows when they can pay it off?
Mr. Fuchs says: So, uh, they can’t use cash. Or credit cards. What do they do, barter violin lessons for frivolous lawsuits?
Mrs. Fuchs says: Don’t be silly. No, they take a middle ground—they use debit cards. They don’t have to plan bank runs and carry large amounts of cash, but they also can’t spend more than they make.
Mr. Fuchs says: But you don’t feel that same pain of paying cash.
Mrs. Fuchs says: True. In an ideal world, we would use all cash. But if you have three or four kids—or a life complicated in some other way—you don’t live in an ideal world. And this route might be easier to maintain. Plus, my friend and her husband monitor their bank balance online every day. Watching it drain? Lots of visceral pain to be had there. It holds their spending in check, she said. If we do the same, I think it may work where the all cash plan failed.
Mr. Fuchs says: Well, alright then. Let’s give this new one a go. After all, like many successful plans, this one starts off with an essential thought.
Mrs. Fuchs says: What’s that?
Mr. Fuchs says: It can’t go any worse than the last plan.