Freeze (yes, freeze) your credit cards — use cash

It’s time. Take all of your credit cards out of your wallet. Lay them on your kitchen table.

Now, place each one in a sandwich bag you can zip up (one card per bag). Grab the bags and toddle on over to the kitchen sink. Fill each bag with water until it nearly reaches the top. Seal the bags and toss them in your freezer.


Your credit cards are officially frozen, and I promise that you will survive on cash and debit.

The beautiful thing about using only the money in your bank account is that when it runs out, it’s out.

This forces you to manage your spending more carefully than if you have the safety net of credit cards to fall back on. You’ll also note that while your credit cards are frozen, there shouldn’t be any new charges.

Last, the cash system makes you more conscious of your spending, which should cause you to think twice about whether you really need to buy that new pair of boots, or if you can get another year out of your current ones.

If you’re like most Canadians, the holidays hurt your bank account. But overspending behaviours aren’t something you can’t overcome in 2019.

Here’s how to make the most of the cash system:

Set up pre-authorizations and stop automatic credit-card charges for fixed expenses: Make a list of fixed expenses (ones that don’t typically change) that you incur throughout the course of a month. This should include rent, utilities, transit passes, child care, gym memberships, and more. If these items are currently being charged on your credit card, move the charges over to your bank account through pre-authorized debits (PADs).

Tap or pay with physical cash for variable expenses: Variable expenses are things such as groceries, books, prescriptions, haircuts, clothing, birthday gifts, trips, coffees, lunches, and more. Tap or pay cash for these. These costs have the potential to blow up if you’re not careful. Set limits on your spending, use coupons, find deals, downsize your latte to a small vs. a large, DIY your nails or make your lunch. You can control this category. I make a list of variable expenses, and I spread them out so that they don’t all hit at once.

Pay using debit online: When I tell people about the cash system, they inevitably present the counter argument that online shopping is where the best deals can be found, so therefore they need to leave one credit card unfrozen. Untrue. There is a workaround. Most major retailers will allow you to pay with PayPal (which will debit your bank account), or they’ll allow you to purchase gift cards using PayPal, and then those gift cards can be used to pay for goods at the online store. If you find that annoying, good. That’s partly the point. Online shopping has made it too easy for us to spend. So, clear those filters on your computer where your credit card numbers are saved. You’ll need to find another way to pay.

Carrying credit card balances? Make your regular payments: While you’re on the cash system, you’ll still be making regular payments toward the balance on your credit cards. But, unlike previous months, you’ll actually be making progress. You may even find that you’re able to pay the balances off faster because you’ve freed up money by cutting back on unnecessary spending.

Should the temptation arise to use your credit cards over the next few months, you could grab them from your freezer and thaw them out in your sink … or, if that’s not fast enough, you could grab an ice pick or try the microwave. But I suggest you give the cash system at least 90 days. In my business, that’s about the length of time it takes for our clients to start making permanent changes to their spending behaviours, and you can do the same.

Published in the Toronto Star on January 7, 2019.