Should You Always Pay Cash, or Is There a Better Way?

Ralph
00:00:00

Are you struggling to decide between cash or credit? Are you tired of the constant debate every time you make a purchase? Today, we're diving into the world of cash versus credit from a Christian perspective. So stick around to find out if you should always pay cash, or if there's a better way. Plus, we'll reveal some things you should never pay cash for.

Podcast Announcer
00:00:21

In a world where crushing debt keeps you trapped, where living paycheck to paycheck has become your new normal, and where the dream of retirement seems impossibly out of reach, there's hope. Join financial evangelist Ralph Estep Jr. A man who's walked through the fire of financial failure and emerged stronger on the other side.

Welcome to Ask Ralph, the show where real world experience meets biblical truth to break the bondage of financial despair.

Get ready to take control of your money, break free from the financial stress and align your resources with God's purpose for your life. This is Ask Ralph with Ralph Estep Jr.

Ralph
00:00:58

Well, thanks for joining me today on the show. I am so happy you've decided to give me some of your time and I am going to make it profitable for you today. Well, if you missed yesterday's show, we discussed what if achieving financial fitness was as easy as your daily workout. We got into it.
We did a financial workout yesterday. So I'm going to encourage you to check it out. If you missed it, you can see all of our episodes and listen to all of our episodes at askralph.com.

Well, let's get right to our question today and we've got a fantastic question. This one comes to us from Brenda in Michigan, and this is what Brenda writes.
She writes this. "Dear Ralph, I'm constantly struggling with whether I should pay cash or credit for my purchases. I've heard that cash is king, but I also see the benefits of using credit cards. Plus, I'm never sure when it's safe to use cash or when it's better to use a card. Can you provide some guidance on this?

This uncertainty is causing me a lot of stress and I need some clarity. Thanks, Ralph!"
Well Brenda, thank you for your question. I'm so happy you reached out. And this is one of the things I see all the time in Facebook groups. I see this mentioned in the social media, but I'm going to today put your mind at ease, Brenda.

I'm going to talk to you about what's the best decision to make. And I know Brenda, it can be confusing, trying to decide between paying cash or using credit and it's constant back and forth that the decision matrix all the time can really cause anxiety, but listen, don't worry. There is hope. By the end of this episode, I'm going to give you a clear understanding of when to use cash and when to use credit.

I'm going to give you some options and some ideas of how to avoid getting yourself in trouble with credit card. Plus, I'm going to share some personal experiences and actionable steps to help you overcome this financial hurdle.

Now, remember if you've got a question like Brenda, I'm going to encourage you.
I'm going to strongly encourage you to go out to justaskralph.com and send me your question. I would love to focus on your content and your question in one of the shows. And if you want to come and join me live, you can join me every Tuesday at 1 PM Eastern time, or we do a live show. You can come in there.

You can join the chat. You can get involved in the community. You can actually ask your questions right there. So again, you get to that by going to askralphpodcast.com/live. It's every Tuesday at 1 PM. I said to somebody yesterday, Hey, you can pick my brain for free. Again that's at askralphpodcast.com/live.

Well Brenda, I really wanted to dig in deep and get a Bible verse and connect it with what you're talking about. And I found a great one. This is one we use on the show all the time. And it comes to us from the book of Proverbs chapter 22, verse 7. And it is a very, very distinct warning. Says this, "The rich rule over the poor, and the borrower is slave to the lender."

So Brenda, you might be saying, ouch, that one hurts. Yes. But that's exactly what we're talking about today because today's episode is going to be a reminder about debt. And this verse serves as a reminder of the power of debt and how it can weigh you down and it creates this bondage. So I'm really going to talk today about making wise financial decisions.

Well, before I get going, I just want to mention that today I am grateful for the wisdom that's found in the Bible. Just when we think that it doesn't connect with finances, we find a beauty like today's verse and how that biblical foundation, that character helps guide us in all aspects of our lives, including our finances. And that's really the reason I do the show. So Brenda, let's get right to it.

All right, Brenda. Well, let's get to your question. You asked a very simple question. That was Ralph, should you always pay cash or is there a better way? So let me break this down for you today.

Let me tell you about my friend, Jake. Now Jake was one of these guys that he preferred to use cash. He said, you know, Ralph, I can hold that cash in my hand. I could control it. Credit cards can get me out of control. He had gotten in trouble with credit cards before, but then one day Jake decided, you know, this old TV I've got here in my room, it's time to upgrade.

You know, he was looking at the sales circulars. He was going online and he found this great, you know, high definition television. It would give him better picture, more features and all that kind of stuff. So he decided he was going to buy a new TV. Now, Jake was one of these guys that didn't get himself into credit card debt cause he had gone down that road. He had made those mistakes. So Jake had saved up this money. He had this, I think it was $900. He was ready to go to the store and buy this new television. But he was torn because when he got to the store, he picked out the TV he wanted, he got all the accessories he wanted.

He arranged for somebody to come out and mount the TV to the wall. I mean, he was ready to go. But then the store clerk said, Hey, I've got a great deal for you. I can take 10 percent off your purchase today if you'll use our store credit card. Now remember, Jake was one of these guys that he was all about cash.

He had got himself into trouble before, and he was really concerned about this, but now Jake was in a different place in his life at this point. Jake had really learned that regimen of paying his bills. We're going to talk a lot about that today. He understood that debt that can become that slave to the lender. So Jake decided, Hey, you know what?
For 10 percent off, I'm going to do it. So he went ahead and applied for that credit card. They approved him right away and he made that purchase. Now the thing about Jake, you need to understand is Jake is a disciplined guy and that's one of the things I'm going to say. I'm gonna start with a caveat to this.

If you're going to make that decision between using cash or credit and you choose to do credit, you've got to be disciplined. You got to make sure. And we'll talk about some of the buy now, pay later type things later in the show, but you've got to be disciplined. But over the next few months, Jake made sure to pay off that credit card.

He said, I'm not going to carry a balance. They gave him something like, don't hold me to this, I want to say like 90 days, same as cash. So he knew, Hey, I can use this credit. Won't cost me a dime. I'm gonna save 10% at the front end. Hey, that's a great deal. Well, you might be saying to me, Ralph, well, then why do credit card companies or why do stores offer that?

Because here's the truth. Most people aren't disciplined enough to pay it off after 90 days. And I've done shows on that, but that's when they whale you with all that interest from day one. But the other thing this did for Jake is Jake started to use that credit card or other credit cards to make other purchases because he finally said, you know what, Ralph, I remember him saying to me afterwards, he says, Ralph, I used to be so worried about using credit because I was so afraid I was going to build up those balances.

But he started to lock into these credit card rewards. He started taking advantage of these perks. But now even along that journey, Jake did realize there were certain times where he used cash. If he was in a position where he wanted to stick to a strict budget, maybe it was for groceries. He didn't want to go into the grocery store and have that credit card.
He could use it and grab all those wants. And we're going to talk a lot about needs and wants later in the show, but he used cash for that because he knew that would help him be disciplined. But the transformation in Jake was massive because he came to the realization of this. He said, Ralph, before I started this, and it was something as simple as a TV that gets hung on the wall in his rec room.

He said, before this, I had this mindset that I had to always use cash cause if I didn't use cash, I was gonna get myself in trouble. And, hey, listen, I've been there. There have been times in my life, maybe in yours as well, Brenda, where you're thinking, you know what, it's so easy to just throw that plastic or swipe that card.

Now, I mean, you don't even have to take the card out of your pocket. You can use your watch or your phone or hold your wallet up next to it. But Jake realized that there were times when cash was okay. And there was also times when credit was okay. It was all about finding that balance. And that's what we're going to talk about on today's show.
Brenda, we're going to talk about how do you find that balance?


So Brenda, let's talk about what I call the Case For Cash. This is the advantages of using cash because there are some distinct advantages to using cash. The biggest one. And I think this one is crucial is it makes you be mindful about your spending because paying with cash has a psychological impact.

I remember when I was a kid, mom or dad or somebody, grandpa, grandma, would give me some money. And that money, you know, they used to say burn a hole in your pocket, right. But you knew if you took that $5 bill out or that $1 bill out and you put it across the counter, I mean, you were physically losing something.
It makes you aware. Whereas with that credit card, you just swipe it. Nothing really happens, you know, somewhere out in cyberspace, your account gets adjusted, your account gets increased, but that is not so immediate. There's that psychological impact. So using cash I believe, truly believe this is a way to be more mindful in your spending, but it's a trade off.

Well, let's talk about budgeting because I think that's a big part of cash as well. That's why a lot of people use that envelope system. I remember my grandparents on my mother's side, that's the way they managed their money. When they got paid, they had envelopes. They had their grocery envelope, their gas envelope.

They had their utilities envelope. They had what they called their fun money envelope. But if you use cash, it can really make your budget a lot simpler because it's visual. Like when my grandma would say to me, you know, our have fun money envelope is empty. Well, guess what?

There's no more having fun on that dime because it's gone. So budgeting using cash can be a very powerful tool because it's visual. You can see it. That credit card, you don't see it. That's like your credit. Here's a funny idea. I was thinking about as I record this, you know, maybe we should have a credit card that has a little ticker on it that shows how much you owe. Then you might make a second decision.

Maybe I'm going to patent that. Maybe I need to be on shark tank for that one, but that's a big one. Budgeting made easy. Another great benefit to using cash is you avoid debt altogether because if you use cash, you're not going to create debt. There's no interest charges for cash. There's no late fees for cash.

There's no risk of building up a balance with cash because you can't afford to pay off that credit card. If it's cash, cash is not going to increase your interest. It's not going to give you late fees. You're not going to collect a balance. Now you're going to, you're going to have the opposite effect.

You're not going to have any cash. But it really does help you avoid debt. Another thing is financial inclusion. Cash promotes financial inclusion, especially in areas with limited access to banking service. And you see this in a lot of inner cities or in underprivileged places. Cash is king there. So it really does give us that financial inclusion.

There's also no minimum purchase amounts. See, some small businesses have gotten cool to this and they say, you know what, we're going to set a minimum amount for credit card transactions. I think I was at the farmer's market a couple of weeks ago, and they said no credit card under $10 or under $20. And the problem with that is so many people in our society don't even carry cash.

Now, I don't know what the statistics are. I probably should have looked them up for today's show, but a lot of people don't because you know, it's a nickel and dime here. You know, nothing's a nickel or dime anymore, but a dollar here, $4 or $5 there. Well, that cash is king in that case, because you don't have that minimum purchase amount.

And the other thing is it's a non hassle thing. Like I have a lot of clients and friends who say to me, yeah, I'll go out to eat, but I always bring cash for that. I want to pay cash for it. I want to make sure that the server gets a cash tip. The other thing about cash that's a positive is there's a negative interest rate. In some economic situations, the bank may impose negative interest rates on savings accounts. So holding cash can be more advantageous. Now that's sort of an unusual thing. That's sort of a time of deflation when you usually see that where they're actually, the banks are not paying you enough in the savings account because there's a lot of market situations for like that.

So that's one thing you could consider and the biggest one of all. And I think this is one that a lot of people key into and that's privacy. Cash transactions offer greater privacy than any other payment, because listen, they're not traceable. No one is looking up that serial number on that $10 bill or that $20 bill or that hundred dollar bill. And it's one of the things the IRS is keenly aware of. That's why they're always trying to crack down on what they call the underground economy or that cash economy. So if you're really privacy driven, one of the best ways to maintain your privacy is to use cash. Now, Brenda, of course, there are disadvantages of using cash as well.
And I want to get into those right now.

See, because really the truth is cash isn't always the most practical or the most advantageous option. There really are some negatives to using cash. Let's jump right into those. The first one is inconvenience. And I would say safety maybe goes along with this. Carrying large amounts of cash can be inconvenient.

It can be cumbersome. And it can actually threaten your personal safety. If you're carrying a water, my grandmother used to do that. She used to carry her pocketbook and she had this roll of cash. And I always thought to myself, man, if somebody knew she was, and she was one of these people that she would go to garage sale, she called it garage hopping.

And she would go to this garage sale and this garage sale and it cracked me. And we'll tell a funny story right now while I'm thinking about it. So my grandmother would go and she always dressed kind of sloppy. Like she didn't have much. And she'd be looking over the tables at the garage sale with a flea market.

And she'd see like a little glass vase or something that she wanted. And she would say to the lady and she called everybody, honey. So she said, honey, I see you've got this mark for $5, but would you take a dollar for it? And you know, she'd hem and haw back and forth and the seller would say, well, you know what?

Nah, I really can't take, I can't take a dollar, but I'll take $2. Now whole time they're thinking my grandmother doesn't have much. She's got this. So then the next thing, you know, she goes, okay, honey, I'll pay you $2. She whips out this roll of cash and you know, the money goes flaming out and they're like, Hey, this lady's got all kinds of cash.
And she pulls off $2 bills, but that's the problem. Cash can be inconvenient. It can be a security issue. It can be cumbersome. And you've always got to be going to the ATM machine or go into the bank to make withdrawals. And those things can get expensive. I know a lot of banks are now actually charging

if you go into the bank and do a teller transaction. Yes, you heard me right. I heard this from a client the other day, banks are actually charging for you to go talk to a teller. Now, maybe you can go to the ATM machine, but you got to be careful of those too. Another big one. And I kind of mentioned this one already.

Second big disadvantage to cash is a lack of security. I remember when I was a kid, you know, you had to be so careful. I remember many times I'd lose a dollar here, lose $2 there because here's the truth. Cash can be lost. Cash can be stolen. And once it's gone, it's gone for good. You know, you're not, it's like, you can call the cash company and say, Hey, I just lost some cash.

You can't do that. With your credit card, you can call them and have a credit card replaced. And if there's any transactions that weren't by your approval, you can get them wiped off. See, cash doesn't come with fraud protection. Cash doesn't come with the ability to dispute charges. So that lack of, and physical security, I want to overstate that because if you're carrying a lot of cash, people are watching, they're looking around like, Oh, that guy's got cash, man.

Thump them over the head when they're not looking. Another big thing about cash. Now, this is even more of an opposite issue than we talked about earlier. Limited acceptance. Not all businesses accept cash. I am actually floored now when I go out and get involved in different stores and all that kind of stuff.

How many places are now saying that they don't even take cash. Now, of course, that's a big thing for online retailers, because if you're sitting at your computer screen, I don't know of anybody with their computer that has a little cash store where they can feed cash into it, like an ATM machine. So obviously if you're online, you're not going to be paying cash, but that makes it difficult to pay cash for certain purchases.

Now, the other big disadvantage of this is missed opportunities. And Jake learned this because when he went to the Hi-Fi store to buy that TV, I think was Best Buy or one of those, you know, those big box stores, he wouldn't have gotten that opportunity to get that 10 percent benefit, that 10 percent discount with that credit card perk, because with cash, you don't get that.

And here's the thing. Here's one of the key takeaways. Credit cards when used responsibly can be a valuable financial tool. Remember, I always say on the show, money is a tool. Well, a credit card can be a valuable tool. It's like a hammer for a carpenter. It's a valuable tool if you use it right. That's the key to the thing.

Now Brenda, there is a certain role of credit. So let's talk about credit. Let's talk about credit cards when used responsibly and how they can be a valuable financial tool. Now, a lot of people disagree with me on this. There's Dave Ramsey, for example, talks about this on his show all the time. You know, don't ever use credit cards.

I totally disagree with that. I think there is a place for credit cards. So let me get into talking about where those places are. The first thing I love about credit cards is their convenience. Credit cards are now widely accepted, even at the flea markets. Now I see people that have the little square terminals or whatever those different things they can, you can swipe with your card and they have their phone or they've got a little device to do it.

And it makes it easy to make purchases, especially when you're doing online purchases or purchases over the phone. And especially also purchases in person cause you don't have to carry that, like my grandmother pictured her this, this 80 year old woman or 75 year old woman with this big, you know, satchel underneath of her arm and she's rolling out this wad of cash.

So she wouldn't have to carry that now. So there's such convenience to credit cards. Another one and Jake learned this. Rewards and perks. I use credit all the time because of the rewards and the perks. Many credit cards and it's all about selecting the right one that fits for you. We'll talk about that a little bit later in the show, but many credit cards offer cashback bonuses.

They offer travel points. They offer discounts like my American Express card. And I don't mean to be sounding like I'm affluent about it, but there is a ton of perks to that. My oldest son has one too. And he's always saying, dad, did you take advantage of this? Did you take advantage of this? Well, those Rewards can save you money and they can provide valuable benefits.

You just have to look at what is the annual cost to that and make sure you're not running up that balance because I've talked about in other shows about you could run up that balance to start incurring interest charges and that completely wipes out those benefits. Another huge benefit to credit cards

unlike cash, we got fraud protection. Almost every credit card that I know of has very strong fraud protection. They limit your liability for any unauthorized charges. How many times have we had a situation where you get your credit card statement, or maybe you've taken my advice and you set up alerts and you see, wait a second, that's not my charge.
All you've got to do is contact the credit card company and they remove that. They put on a fraud investigation. They get rid of it. You're not going to have that with cash. Once that cash is gone, if it fell out of your pocket, or let's say that you got swindled or something along those lines, there's a lot of bad actors out there, but cash won't give you that fraud protection that credit cards will.

I also believe that credit cards serve a purpose as an emergency backup. Now I want to be very careful what I'm getting ready to say here. A credit card can be a safety net in an unexpected situation. You're not hearing me say, don't do your emergency savings fund. I'm not saying that at all, but as you're building that emergency savings account, or you're working towards getting to that three to six months worth of income for that emergency savings account, a credit card can be a great standby.

And that can be that access to those funds you need the most. If you've got that car repair you weren't expecting, or you've got that repair to your home, you know, you've got to call the plumber in or the electrician in or the HVAC person, most of the time, you're not going to sit with a wad of cash at home.

You have that credit card as an emergency backup. Now I want to be careful. Don't make that become this thing. Oh, I'm always just throwing on the credit card. Then you get to the end of the month, which we'll talk about in a few minutes, and you can't pay that. Another huge advantage to credit cards is building credit, not building credit cards but building credit, because when you use a credit card responsibly and you're paying your bills on time, that can really help establish a positive credit history.

Once you have that positive credit profile, it will open up other doors. It will give you better rates on your insurance. It may give you some perks for getting even better credit cards. So there really are some advantages to credit. Use responsibly. Again, like I said, there are a lot of people online on TikTok and on these social media say, don't you ever use credit cards. Who they're speaking to there are people who can't manage those.

It's like, I'll use the example I talked about as credit card being a tool with a carpenter. Well, if you don't know how to hold a hammer correctly, you've got the metal end of the hammer and you're trying to hit the wood end of it with a nail, it's not going to be very effective. Well, that's the same thing if you're not using your credit card effectively.

Now Brenda, of course, there are some disadvantages of credit. I don't want to overlook those. Credit cards come with significant risk if they're not managed carefully. Hear me on this. And this is where Dave Ramsey has it right. If you're not going to be, if you're one of these people that can't manage your credit cards, if you can't manage debt, then by all means live on the cash or live it on a debit cards, maybe even a better idea, but live on cash.

But if you can, if you can't manage credit cards, if you've had situations like Jake, you know, he had got himself in his early 20s. He got himself in over his head because his wants became so graphic that he was just buying everything he could, but then he got that credit card bill and couldn't afford to pay it.

So let's talk about some of the disadvantages of using credit cards. The first one is this one and listen, Brenda, if you're like me, you've been here. There's a huge temptation to overspend because all you've got to do is swipe that little piece of plastic. And it's so easy to lose track of your spending.

And then at the end of the month, you've accumulated a bunch of debt because it's you know, $20 here and $50 there. You don't see it. If you've got the cash, you see your cash reserve dwindling. You look in your pocket and you don't have the cash you had. But that credit card, it can really grow and it can lead to overspending because it's so easy.

And you might say to yourself, yeah, you know, I could really use this today. You don't really have the money to pay it now, but you know what? I'll tell you what, in three weeks I'm going to have that money and then I'll just pay off that statement. And that's what gets people in trouble, which leads to the second disadvantage of credit.

And that's high interest rates because normally credit cards come with a high rate. They're what we'll call exorbitant rates. And that can turn that little purchase into a costly burden. If you don't pay off your balance in full each month, let's talk about Jake. So Jake goes and buys his TV and the interest rate on that credit card was 30%, 29.99%. Now, so one of the things that Jake is thinking, he's saying, Ralph, he's thinking to himself, Hey, you know what? This is great. They're going to give me a 10 percent discount. So in his particular case, I think his total bill was $900. So he was saving $90 right at the front end. But here's the thing. They gave him 90 days, same as cash.

So he had to make sure over those three months, over those 90 days, that thing was paid off in full, because here's what happens if he didn't do that. Now, this isn't what Jake did, but this I've seen this time and time again. People don't make those payments in time. And then what happens is it goes back to day one and they charge you interest from day one.
So now that $90 perk, if you keep this thing for a year, could be a $270 interest charge. Simple math, $900 x 30 percent interest, $270 if you don't honor your credit. So that $900 TV now is a $1,270 TV plus who knows how long do you keep that balance because you don't have the money to pay it off, which leads to another problem with credit.

And that's that debt cycle. See, once you start down that path of debt, overspending, high interest rates, it leads you to this cycle of debt that you can't break free. I call it the financial bondage of credit. It's so easy to do that because once you have month one and you can't afford to make that payment, then you roll into month two.

Well, if you can't afford to make the payment, that means you don't have the cash. You don't have the money in your checking account. So then you're putting more stuff on the credit report. And next thing, you know, we talk about the avalanche method and the snowball method of paying off debt. Well, think about the avalanche of debt that comes if you keep putting more and more on the credit and you're only making those minimum payments. That's a sure foul way to get yourself in trouble, which leads me to the next thing, and that's compounded interest.

What do I mean by compounded interest? Meaning is that you pay interest on interest and most credit cards work that way. So if you don't pay that credit card off every month, and let's just say simple example, you have a thousand dollar credit card balance, and at the end of the month, they add $30 in interest.

So now your balance is $1,030. Well guess what? The interest for the next month is based on, it's based on the full balance. So guess what? You're paying interest on interest. See, that's great. When you're in a savings account and you're earning the interest on interest, but in a credit card, you're paying interest on interest.

That's what we call it compound interest. And that just makes that debt cycle even stronger. It's like you're getting buried in quicksand and you're just sinking faster and faster and faster. And the final big problem with credit, not just credit cards, but credit in general is it can lead to debt collection.

If you fall behind on those credit card payments, you might face debt collection. You might have people coming after you, attaching your wages, garnishing your bank account. And trust me, you think trying to decide between cash and credit is stressful. Try being in that situation because that can be stressful and it will kill your credit score.

So Brenda and everyone else, listen, I hope you hear me. I'm not saying don't use credit, but be very wise about those disadvantages of using credit. So let's talk for a couple minutes of what else you could use to pay for things because we live in a time where there's a lot of new options. I just want to take a few minutes and discuss some of those because beyond cash and credit, there's a growing world of alternative payment methods.
Debit cards are one of these. Now I am not a huge fan of debit cards. If you've listened to my show before, I've done shows on this, they do offer convenience, but I don't like the fact that they're tied directly to your checking balance because I like the credit card for the fraud protection, because listen, you don't have to pay that credit card bill until it's due.

Whereas that debit card, that money comes out of your account right away. But for sake of our discussion today, debit cards could be an option. They have the convenience of a credit card and they're drawing the money right out of your checking account, which is what I'm gonna talk about in a little bit.

And this helps you avoid debt because listen, you can't go into debt on a debit card because you're going, you're taking your own money. It's only going to allow you to spend the funds you have available. Let me break it down for you. So here's my opinion on this. If cash isn't the right choice, we'll start there.

Maybe cash is the right choice, but let's just say cash isn't the right choice. And you're one of these people that really can't manage credit cards. It's just one of those things. I can't do it. Listen, I've been there. When I was younger, I was constantly running up credit cards. It took me till my mid forties to finally say, Ralph, what are you doing to yourself?

I mean, this is what I do for a living. I understand the cost of it. And even somebody like me was so tempted by those credits. It was so easy to just buy that online and put that credit card down or go out to eat, put that credit card down, go to the big box retailer, put that credit card down. What I did to finally take control of that, partially because my credit cards had all gotten maxed out was I started using that debit card.

So if you're a person that doesn't have the resilience or the character or character is a harsh word to use, but doesn't have that ability to manage credit, then a debit card could be a great option. Another thing that I really like that we're seeing more of are mobile payments that services like Apple pay or Google pay.

You got that contactless payment using your smartphone. You can use your smartwatch. There's encryption on this, there's what they call tokenization to protect your payment information. So that is a really good option if you're not gonna use cash or credit. Now there are also closer cryptocurrencies.

What we're seeing a lot more of that Bitcoin decentralized, secured transactions. But you need to understand something about cryptocurrency. And I did a whole show on that about a week or two ago. Really understand the tax impact on that. 'Cause it's not as simple as a checking account or a credit card. There are certain situations when you're using cryptocurrency could trigger tax issues. Now here's one another option, but man, I'm gonna tell you right now. Be extremely careful about this. I did a show about this probably been three or four months ago, and that's these buy now pay later. Jake had this at the checkout at the big box store when he was buying that TV.

This is what they do. They're marketing geniuses. Jake is standing there at the checkout and the sales clerk says, Hey, Jake, guess what? You want to save 10 percent on your purchase today? And Jake's thinking, I got a pocket full of cash here. I saved up the money for this, but wait a minute, 10%. Oh, well, that's a really good plan.

Yes, it is a really good plan. There's services like afterpay, there's a firm. There's a bunch of these. They'll allow you to split that payment into installments sometimes without interest, but be very, very, very cautious. Some of these do have interest that by now pay later could wallop you.

I know one of the things that my wife and I, we bought one of these sleep number beds. And this one was kind of amazing to me. Like we have like a three year deal. As long as that credit, they basically open up a credit card for it. As long as that is paid off within three years, there is zero interest back to day one.

But if you read the fine print and you listen, read the fine print, just like Jake's situation, this sleep number credit card that I have is like at 29.99%. And what it says is if there is any remaining balance at the end of that three years or that 36 months, you're going to get wallop whammo back to day one, all the interest you should have paid from day one.

And I see people struggle with that. So if you're going to use one of these, it's a great way to manage large purchases, 12 months, no interest. Fantastic. But just be disciplined. Make sure you're making that payment, pay it ahead of time, put it on your calendar, put it on your notes, make sure you're giving yourself, Hey, guess what?

Don't forget Ralph. You got to make sure you understand that so that you understand the terms and you avoid overextending yourself. So Brenda, those are just some other options. They come with their pros and cons. I don't have time to really break those down today, but Brenda, let's talk about some of the wisdom we can get from our Christian faith on managing money and navigating debt, because I think that's where we've arrived, right? We've really come to a decision point about, okay, I hear what you're saying, Ralph. Sometimes it's good to use cash. Sometimes it's okay to use credit, sometimes a debit card, sometimes buy now pay later.

But what is the big issue that we're talking about? And it's really Christian financial principles. The first one of that is stewardship. We're called to be good stewards of the resources God has entrusted to us. If you listen to me, you know, I say this all the time. What you have is not yours. And some people are floored when I say that, but it's not. You've been entrusted to this.

So you've got to make wise decisions and you've got to learn to avoid waste. Now, what is waste? When we're talking about this waste is paying interest. Waste is paying late fees. Waste is doing all of those things. Waste could also be not getting those perks, not getting those incentives, not getting that 10 percent savings that Jake had.

That's the first thing. Second big biblical principle is generosity. You might say, Ralph, what does that have to do with the decision today? I think it's crucial. We're encouraged to be generous with our finances. Well, if we're making good financial decisions. If we're making wise financial decisions, if we're not paying a lot of interest, we're not paying fees and we're actually earning interest, we're earning perks that gives you the ability to support more charity.

You can support God's work and I think we're all called to do that. Another big concern here is contentment. Really what we're talking about when we really break it down is contentment. We need to learn to find contentment in what we have rather than constantly striving for more. I'm going to be honest with you.

I look back at those credit card purchases that over when I was a younger person got me in trouble. It was all about striving for more. I wanted more stuff. You know, he that has more stuff is in a better place or whatever that looks like. But what I finally came to realize is I needed to find contentment with what I have.

I needed to stop constantly striving for more and finding that contentment, it is essential for financial and for spiritual wellbeing. And one of my big tenets, I'm going to talk about this right now, while we're here is debt avoidance. Really what we're talking about today, that decision of cash versus credit or other methods is avoiding debt.

We started off with that Bible verse, you know, a borrower is a lender to the slave. And the Bible is chock-full of cautions about debt. It emphasizes that burden that it places on you. It places a burden on us. It breaks down our relationship with our loved ones. It breaks down our relationship with God because we're so focused on worrying about that debt.
Think about it, Brenda. How many times have you found yourself in debt? And you're like, man, I can't even breathe. Like it's so problematic.


Now, I know we've covered a quite a bit today, but I just want to remind you while I'm talking now that I do write a blog post every single day. When I do an episode, there's a blog post where you can get a little deeper. You can go look at the references I used. You can double check me on the things I talk about and you can find that at askralphpodcast.com/blog. We get a little deeper. I'll talk about some of the cash versus credit.

I'm going to share some great research. So again, just go to askralphpodcast.com/blog. Well, let's get back to Brenda. Brenda, so you've asked a simple question. I've kind of gone back and forth. I've told you about the options, the pros and cons of cash, the pros and cons of credit, some other options.

So now I'm going to answer your question. Should you always pay cash? And Brenda, you're going to be ready for this. The answer is kind of nuanced as I've gone through this today, I hope you understand there is no cookie cutter. There is no boiler plate approach. Cash can be a powerful tool for mindful spending and avoiding debt.

It will help you be mindful in your spending and it will most certainly keep you from getting into debt. But as I've discussed today, it's not always the most practical and it's not always the most advantageous option. Which leads us to credit cards and credit cards when used responsibly can offer very huge benefits.

But again, if you heard me today, they do offer significant risks. So Brenda, what's the key takeaway? Ultimately, the best approach is to find a balance that aligns with your financial goals and your Christian values. So here's what I'm going to challenge you to do, Brenda and everyone else listening. Ask yourself these questions when you're thinking about that decision of cash versus credit.

First question. Can I afford to pay for this in cash? Real simple. Can I afford to pay for this in cash? If you can, sometimes the wisest decision is to do that. Go ahead and pay for that in cash. Now, again, that doesn't mean that you lose those benefits, those perks, because maybe you say, you know what, Ralph, I got the cash in my account.

Look at Jake. He had the cash in his account. Somebody is offering him 10%. Hey, I'll take the 10%. I'll pay it off next week. So that's the first thing. Which leads me to the second question you got to ask yourself. If I use credit, can I pay off the balance in full and on time? What I'm really saying there is, are you able to avoid accumulating that debt?
Are you able to avoid incurring that high interest? Or Jake asked himself that question. He said. Okay. I got the money in my pocket right now. I can put that back in the bank. I can save 10%. That money in the bank will grow some interest. And in 90 days, I'll pay this thing off. But he had to ask that question.

If I use credit, can I pay off the balance in full or on time? The next question. And I think when we think about this, Brenda, you and I've been here. Am I using credit to fulfill a need or a want? And I think we should use this for every dollar we spend. I did my live show yesterday and we talked about this on the live show, trying to figure out how do I differentiate between needs and wants?

Well, the first thing to do is be mindful of your spending motivations. When you're pulling out that credit card, ask yourself a very simple question. Is this a need or is this a want? You've got to ask that question and have an answer to that question first, because I think what you're going to find is a lot of times, it's a want, and maybe you pause that.
Maybe you wait 24 hours. I know this is a great idea for online. My buddy Craig, he was on a live show yesterday. My guest host, he said, Hey, Ralph, here's one of the things that we started doing is we put stuff in our online carts and we come back a day or two later and say, Do I still need this? So ask yourself that question, Brenda, am I using credit to fulfill a need or is it a want?

And finally, and this one, maybe I should have put this one first, but this one is enormous. Does using credit cards or credit align with my values and my commitment to stewardship? On every single purchase you decide to make, put it through that lens of whether it's a situation, when you're buying aligns with your Christian values.

That is so critical. So Brenda, let me give you some takeaways here, because there are some times when I think you should never pay with cash. Like I said, cash is a valuable tool, but there are certain circumstances, certain situations where I say using a credit card or another payment method is absolutely the best decision.

It's generally advisable. The first one is this. Online purchases. Again, most people don't have a little slot in their computer where they can feed cash into it. That's one thing. That's an obvious thing, but credit cards offer greater security and protection for online purchases. If someone's sniffing that and they get your credit card information, some online retailer is not safe.

Credit cards are perfect for that because as soon as you see that hit your credit card statement, and again, set up those alerts so that you're getting those transactions sent to you. As soon as you see that you make one phone call or go online to the credit card issuers place and do a fraud alert and get that taken off.

So that's one of the things that I say, most definitely do not use cash for online purchase. I also don't think you should use debit cards for online purchases. Cause to me, that's just like using cash. Second thing. Travel expenses. If you're going to be traveling, credit cards are perfect for travel because they provide benefits like travel insurance, rental car insurance, and even better exchange rates.

I know when my wife and I, my oldest son took a trip to Germany, one of the things that I was concerned about is how was that going to play out with the exchange rates? Because, you know, we were spending US dollars, but they were, you know, a German currency. I can't remember what it was called, but anyway.

Whatever it was by using my credit card, I was getting the best exchange rate at the time. I also got travel insurance. If there was an issue with the rental car my son rented, we would have coverage for that. So that's where it really is a great thing to do. That's that travel expenses. Another one is large purchases.

And I think that Jake learned this. Using a credit card for large purchases can offer purchase protection and some extended warranties. A lot of people don't know that before you make that large purchases or that large purchase, reach out to your credit card company and say, Hey, guess what? I heard on Ralph show.

Yeah. Ralph does this Ask Ralph podcast. You should check it out. But anyway, that's an aside, but say Ralph said something about there's purchase protection. A lot of credit card companies offer purchase protection. If there's something wrong with the purchase, they can give you some benefits. They also, some offer extended warranties, but you've got to find out what those things are.

And the last thing I'm saying, don't use cash for is anything that's a recurring bill. Those are things I think you should set up with a credit card for those recurring bills, because that way, number one thing you're going to avoid late fees. So you're not going to pay late fees with the vendor that you're paying.

And it could potentially earn you some rewards. So if you're kind of, and this one of the things I did about, I'm going to say about two years ago, I'm using my credit card to pay all those recurring bills. And it's amazing how much I'm seeing in perks that are coming from now, again, I have the discipline.

I'm making that payment every month. I think that is so crucial. So those are really the things that I say, Brenda, where you should not use cash. Online purchases, travel expenses, large purchases, and recurring bills. Now before I get to today's action steps, I want to share with you how you can support the show.

If you found value in today's episode, if you found value in what I'm bringing forward every day, whether you're watching it or you're listening to it, I would like to really encourage you to help support the show. It's a real simple thing you can do. You can buy us a virtual cup of coffee.

I've said it many times. No one shows up in my office with a tray of coffee. I don't drink coffee, but it's a way to virtually support the program and the mission we have here. It's real simple to do. You just go to askralphpodcast.com/support. You might be saying, Ralph, what am I supporting? Well, what you're supporting is me being able to reach more people, to go on more platforms, to generate more content that can help people with our Christian finance message, our message of hope, our message of staying out of debt.

And you can be a part of that. You can be part of this community where we're trying to help people. You break the cycle of debt. Break out of that living paycheck to paycheck. And your support, whether it be a one time support or recurring support helps me get to that point.

So please, I encourage you to consider that today. You go to askralphpodcast.com/support. Now Brenda, let's get into those action steps because I want you to put into action what we talked about today. You had that uncertainty. Your letter was very clear. You said, I'm not sure what I should do.

So here is the way to gain that certainty. Number one, assess your financial situation. You got to understand your income, your expenses, and your savings and say to yourself, should I really be using a credit card? Like Jake said, when he had those lean times and grocery budget was tight, he used cash.

You've got to ask yourself that same question. Number two, set a budget. If you don't have a budget before you make this cash and credit decision, put together a budget. Why? Because it's going to help you lay out those needs versus wants. Just did a show about that yesterday or the last few days, check that out.

Let's talk about that. And then once you decide, Hey, Ralph, you know what? I think I have the ability to use a credit card, find the right one, go online, do some research, find the one that best suits your needs. If you're somebody that travels all the time, maybe you want a credit card that has a lot of travel perks.

If you don't travel all the time, maybe you want something that has low fees or any of the things that are relevant to you. Jake found that one because he likes to shop for electronics. 10 percent return right away. So find the one you want to use another action plan. And Brenda, hear me on this and everyone else listening, make sure you pay off your balance at the end of each month.

Make that a habit. What I say to people is if the first time you don't make that payment at the end of the month, get rid of that credit card, cut it up and stop using it because you've got to make a commitment to yourself to pay off that balance monthly because none of the benefits we talked about now, of course, there's still benefits for fraud protection, but none of those perks, none of those benefits. None of those cash back deals and that 10 percent deal that Jake got is going to make any sense if you're paying interest, or if you're paying late fees. You need to also track your spending, keep a record of every single purchase, whether you use cash or credit. That's another problem. See, I didn't really mention that earlier.

One of the other problems that I have with people using cash. It's real easy to not keep track of that. And all of a sudden that $100 ATM withdrawal you made, you're wondering where did the money go? I mentioned on the show a couple of months ago that I actually did some financial counseling for a couple.

They came in, they couldn't understand these people make good money. Like I want to say $300,000 a year, but they never had anything to show for it. So I charged them. I said, Hey, let's, let's work together. It's what I do with clients. I'll talk to you a little bit about how you can work with me. But I said to him, Hey, Why don't we start tracking all your expenses?

And they said, Ralph, Hey, that's a great idea. Then we'll be able to figure out where our money goes. We'll be able to plug those holes. Well 30 days go by, they came and sat down with me. And if you've listened to this story again, you're going to hear it again. But anyway, if you heard it before, came and sat down, I'm looking at their income and expenses.

And they're telling me how they paid their mortgage. They paid their utilities. They paid their car bill. They paid their phone bill, all this kind of stuff. And then at the bottom, there's this thing says ATM withdrawals. And I said to them, I said, okay, where did that money go? Well, that's cash. I don't really know where it went.

And it's really none of your business. And that's the problem with using cash. It's so very hard to track that spending. So is there a place for cash? Yes, but even track that, track where your cash is going. And final thing I'm going to recommend, Brenda, this is an action step is seeking guidance, find guidance.

If you're struggling with debt, or you need help managing your finances, reach out and get help. Seek advice from a financial advisor or a financial counselor. I'll tell you in a few minutes how you can connect with me. Those are all the things that you want to do, Brenda. So again, here's your action plan.

Number one, assess your financial situation, set a budget, choose the right credit card, make sure you pay it off at the end of each month, track your spending. And then if you're struggling, seek guidance.

Well Brenda, let's get to some reflection questions because we've covered a great deal today. We've really gone in depth about the benefits of cash versus credit, but I just want to end with a few reflection questions. Let's start with the first one. Brenda, ask yourself this and everyone else listening, what are some situations in your life where using cash has helped you stay on budget and avoid overspending?

Because there is a place for cash. There are times there are those seasons of our lives when we're in that lean season, where maybe the best thing to use is cash, but ask yourself that question. What are some situations in your life where using cash has helped you stay on budget and avoid overspending. Journal those, write those down and benefit from the knowledge of what you went through. Second question. In what areas of your financial life do you feel tempted to overspend when using credit cards? What are those triggers? What are those things? Oh, it's so easy. I just throw it down. And then the follow-up to that is ask yourself, how can you better manage that temptation?

My friend Craig nailed it yesterday when he said when we go online shopping Ralph, we put everything in the shopping cart and we don't hit pay now. We wait 24 hours. We wait 36 hours and he shared something you go back and check out our live show from yesterday. He shared something. He said Ralph, I was amazed at the end of the month how much money we saved. He said in fact, I looked at my credit card balance and I said man, it made me feel like we've been wasting money all along.

So ask yourself that question. What areas of your financial life do you feel tempted to overspend? And what can you do to avoid that? And number three, and I think this one is crucial. How can you incorporate the principles of stewardship and generosity in your daily financial decisions, whether you're using cash or credit, that's the big picture of what we talk about on this show.

So consider that. How can you incorporate those principles of stewardship? That generosity that we talked about, how can you make that more impactful in your daily decisions? It will definitely help you with your finance. If you hear nothing else I say today, think on those things, reflect on those things.

It doesn't matter whether you're using cash or credit. Are you really living out that stewardship that the Bible commands you to live out? So Brenda and everyone listening, I want to encourage you to take action today. You know, if you could have great ideas, you can have great intentions, but I say this all the time, take action.

Start by assessing your financial situation. Set some realistic budget, set some realistic goals for yourself, and if you need additional assistance, I mentioned this a few times, you can go right to askralph.com. You can click on the button. It says, book a call with me. And I will work with you. I will come alongside of you.

I'll assess where you are right now. And we'll develop a specialized plan to help you get to your financial goals. Again, you can book a call with me. Just go to askralph.com and I'll tailor a plan just for you. And one more thing I'm going to ask you to do. If you've enjoyed today's show, if you found value in today's show, you're like Ralph, man, you nailed it today.

Tell somebody about that. Take out your phone and send a couple of text messages and just put askralph.com. So you got to listen to this. If you're trying to decide whether you're going to use cash or credit, listen to Ralph, please do me a favor and share that with others. Just send them to askralph.com. They can find all of our episodes and all the show notes there. They can find the blog and some shorts we do. Just send them there and let's grow this movement. Let's grow this movement of people who are empowered, people who are strong in their finances, their discipline, and they're making those good financial stewardship, Christian stewardship decisions.

Now tomorrow's episode, we're going to be discussing how do you safeguard your family wealth from the grip of slot machines? Yes, I got a doozy of a listener question tomorrow. It's one you don't want to miss. And remember this as I close, my passion is to help you achieve financial success. I want to see you live out your dreams and I want to see you grow in your faith.

And I know together, working together in our community, we can master your finances from that Christian perspective. So as I always end the show and I want to encourage you to stay financially savvy and may God bless you abundantly.

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