Getting Out of Debt by Going All Cash

Some North Texans are preparing for their future by paying down debt and living within their means -- and without credit cards.

Diane and Al Evidente don't have a single credit card. Instead, they spend only cash. "We were in this constant cycle, and I got tired of it," Diane Evidente said. "Our tendency was to put things on credit cards and not scale back our spending," Al Evidente said.

Seven years ago the couple decided to cut up their credit cards. Every purchase is run through their bank account, and the only plastic they carry is their debit card.

More Americans in their 60s are carrying significant debt because of home mortgages than ever. Many are forced to delay retirement in order to pay the bills.

The average American household with one credit card has nearly $10,700 in credit-card debt, according to Cardtrak.com.

Diane Evidente uses a Quicken spreadsheet to watch the family's bottom line."We've got to be in constant communication, because we do have a lot of money coming in and out of the account," she said.

The Evidentes allocate about $5,695 per month to cover living expenses. Staying vigilant about their budget allows them rewards."We were able to go to Vegas and the Grand Canyon using all cash," Diane Evidente said.

Paying cash gave her husband the bargaining power to buy a 3-year-old 328I BMW below market price."It's wonderful," he said.

He saw the car on a dealer's website and knew it had a manual transmission, which is "not as easy for dealers to move." He watched the price drop over the course of several weeks and then walked into the showroom and offered the dealer $21,000. He put $12,000 down and got 2 percent financing for the rest.

His wife got $700 off a top-of-the-line washer dryer by paying cash. She bargained with an Internet retailer who dropped his price down to $2,000 because she wasn't using a credit card. Adrian Johnson, 32, is another North Texan living a cash-only life.

"I feel like it's my passion to encourage other people to live a debt-free lifestyle," said Johnson, who began his journey by following well-known financial expert, radio show host and author Dave Ramsey.

Johnson said he hasn't used a credit card since 2005. He was once a student deep in debt. He ended his big spending by cutting up his credit cards. Johnson eventually paid off $34,000 in debt by closely watching what was going out of his bank account.

When he got married, he told his wife she should close her credit card with a $1,000 limit. "I said, 'Hey, I'll give you a thousand dollars. Get rid of the credit card. Let me be your credit card,'" Johnson said.

He said his wife saw the light when her $1,000 in cash. "She realized that she stopped spending more money," he said.

Johnson, who works full-time as a teacher, also started a consulting business to show other families the benefits of debt-free living. He began by consulting people at his church.

He also helped his friend, Michael Sanders, who uses an envelope system."I go to the ATM, I withdraw it and drop it in the envelopes," Sanders said.

The small white envelopes are his filing system to stay in check financially. One envelope is for his grocery money -- $80 every two weeks. Another envelope is for gas, and one is for fun money for things such as eating out. When the envelopes are empty, he is done spending.

"If I run out of gas money, then I don't drive," he said. "It's as simple as that." Sanders said he buys a lot of times at the same place. His grocery store sends him coupons for being a loyal customer.

"These coupons are to go back and get things for free," he said. He also has a basic home phone plan without the bells and whistles that runs him just more than $20. "I don't have call waiting or those other services or anything like that," he said.

Shedding his debt also inspired Sanders to shed in other ways. He has an old picture of himself 100 pounds heavier in an expensive suit on an pricey trip to Seattle. "I spent a lot of money on that trip," he said.

He took pictures with luxury cars he once coveted, but those days are over. Now 100 pounds lighter, Sanders said he feels better and continues to pay down debt that gives him peace of mind.

"I have no credit cards; only my debit card," he said. He said he agrees with his friend and mentor, Johnson, who has one credo: "Cash will get you what you want."

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