In the past six months, I’ve spent more money on personal development than I have in my entire life. I’ve also spent considerable amounts on laptops and on a holistic wellness program. Now that I’m somewhere in the third stage of personal finance, I see the value in investing, and I’m not just talking about the stock market.
What I started to notice was how having my finances in order was creating more savings. In just six months, I’ve saved more than $1,250 on the costs of goods and services because I was able to pay the total amount up-front.
No Interest
There are a few ways that astute GRS readers can easily identify in which paying in cash (or with a credit card paid off in full) can save money. For one thing, paying in cash means no interest. The higher the interest rate, the more you pay. Credit cards also present the possibility of late fees and other charges if you don’t pay the balance every month.
Negotiation Power
I haven’t actually used the bargaining power of cash myself, but I read about it in researching this article and feel it’s important to mention. (I’m awful at negotiating. It’s something I’m trying to learn.) Basically, if you are dealing with someone who is in a position to negotiate price, you can get a better deal by offering to pay in cash. For small businesses, cash is cheaper, faster, and a sure bet. No personal checks to cash (that could bounce), and no credit card fees—the transaction is completed on the spot.
Contrary to popular belief, one time cash is not king is when you’re negotiating for an automobile. In fact, mentioning your ability to pay in cash may mean you’ll pay more. Car dealers make more money when you finance through them. If you announce your intention to pay in cash, they’ll be less likely to lower the price. Agree on a price and keep your payment method to yourself until you’re in the finance office.
The lesson here is to consider the business and the person with the bargaining power. Is it in that person’s best interest to receive cash? If so, it never hurts to try to negotiate. I say that to you, readers, as well as to myself!
