We always paid off the balance each month, mind you, but we had no “automatic” way of recording exactly how much we had spent in each category, especially because purchases on a credit card are time-delayed by a few days. This made for hard work, because keeping track of the situation required
1) Saving receipts, and identifying each purchase on the receipt into its Budget category (groceries, miscellaneous, etc.). After all, you can buy just about anything at Walmart or Target, from clothing to groceries to electronics.
2) Entering these components into a spreadsheet to keep track of how the money was spent, and how much is left per category.

We never stayed under our target. Sometimes we would go over budget badly (by a factor of 2 in some categories). This can lead to a defeatist attitude!

Starting in 2007, we began using credit cards for only gasoline purchases (pay-at-the-pump), or emergencies. We withdraw cash each month, and deposit it into a “groceries” envelope, and another envelope for “eating out”, etc. This gives us much more accountability with our money, and cuts us off hard and fast when we have reached our spending limit. We have stayed under budget each month the cash-only method has been in force! It is much easier to track our past expenses, and plan our future expenses each month. Its all psychological, and what works for some may not work for others.

Now I am patiently waiting for April 1st, because we are down to around $50 spending for the month. It’s a good thing we stocked up on necessities last week!

By the way, your blog has special significance because June 9 is my birthday.

Your e-mail comments are below:
————————————————–
While I agree that the easy access of credit cards makes impulse shopping a lot easier, I don’t have any comparison myself between shopping with cards and with cash since I almost charge everything with cards. It’s true that we spent money on stuff that we don’t use a lot, we try not to make our purchasing decision based on how easy we can pay the bill. I am interested in how you figured out you actually spent more when using credit cards.