Thoughts on Budget Leakage and Paying Cash

Posted on February 12, 2008
Filed Under Spending, budget, plan | Leave a Comment

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When I reviewed my budget yesterday, I was looking for leakage. What is leakage? It’s little amounts that I might not have planned on spending that somehow slipped out. I found it and not just a little of it either.

As tight as my spending plan is, every penny that comes in has a job that it’s been designated to do. Once upon a time, I used to keep enough in my bank account to cover a little unplanned spending. I don’t have that luxury anymore.

In my particular case, my leakage problem isn’t so much what I am spending on, it’s the method I use to spend. My debit card causes more havoc with my budget than any other single thing. I am going to call today and cancel it.

If I have cash in my pocket, I am very aware of what I am spending it on. I know how much I have and exactly how much I can spend and I stay within those limits. For some reason, if I am using the debit card, all of those limits and considerations go right out the window.

Now I know that the money comes out of my bank account and I know that I have to stay on my budget, but for some reason that little piece of plastic just doesn’t connect to the same nerve endings in my brain.

You can call it emotional spending, I suppose but it isn’t driven by emotion, it’s more careless spending. I have identified this problem before and tried to reduce the times that I use the card by carrying cash with me. That works for awhile but then cash gets low and I find myself using the card again.

I have tried only using the check card for emergencies but apparently in my mind, emergencies are any time that I don’t have cash. After all, how do you get to work or the bank if you don’t have cash to pay for gas?

Now I will admit that all of this could be remedied by better bookkeeping and writing it down, subtracting it out of my register, etc. That is a whole other issue and I have finally accepted that I am really bad at it. I have gotten better and now my issue seems to be that I have small automatic payments coming out of my account that ALWAYS come on the wrong day.

I will check my balance and my register and think that I have enough to put gas in the car and as soon as I do, an automatic payment will be lurking in the bank’s system somewhere that will cause an overdraft. I will get charged an overdraft fee and suddenly I am $3 overdrawn plus the $35 bank charge. It is VERY frustrating.

I asked the bank manager why they didn’t post these electronic withdrawals immediately. She told me it was to give the people time to go to the bank or something. They hold them against the account for up to 3 days without posting. Normally, this would not be a problem and might even be a benefit but right now, it creates havoc.

For now my solution is going to be to cancel the check card. I can’t afford the budget leakage that it seems to encourage me to do and I will just have to plan ahead for gas and any incidentals that I have to purchase. Do you tend to use your check card impulsively? How do you break that habit?

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