These days you can use your credit card or debit card just about anywhere. There’s even the technology to swipe credit cards using your cell phone! Imagine the neighborhood kid with a lemonade stand sporting the Visa or MasterCard logos asking “Will that be cash or charge?” Pretty soon you won’t be able to use the excuse “I don’t have any cash on me” to fend off the Girl Scouts selling cookies at your door. Technology is making the use of credit and debit cards more and more convenient each year, but what is the cost of this convenience? To the average consumer, the obvious cost comes in the form of increased spending.
According to Dave Ramsey, author of the bestselling book, Financial Peace, a person will spend about 12%-18% more per month with a credit card than they would have if they used cash. And now that cards contain chips and other technology that allow you to wave the card instead of swiping it, this can cause you to spend an additional 9%!
I’m not implying that the technology itself is bad. I do, however, question the motives behind new technology when it applies to my spending habits. The easier it is to buy something, the more likely I’ll buy on impulse. The more places there are that can accept credit cards, the more likely I’ll spend money even when I’m out of cash. Is it just me, or does it seem that “new technology” is somehow designed to separate you from your money?
Let’s consider some other recent technological advances that negatively affect your financial bottom line.
4 Expensive Technological Advances
1) Satellite Radio – For a monthly subscription cost, I can listen to my favorite radio personalities bypass the FCC regulations and say anything they want. The variety of channels is enormous and the quality of the broadcasts is phenomenal. The only problem is, I’m hardly ever in my car. Also, wasn’t radio meant to be free?
2) Cable/Satellite TV – Same principle. Gone are the days of rabbit ears and static. I can’t think of anybody I know who is watching free television anymore. The most popular shows are on the cable networks anyways. My advice? Cancel cable and stop watching TV to save a ton of money. It’s not as necessary as you think it is!
3) Digital Video Recorders (DVR) – You can get a decent VHS recorder for about $20 to record shows. Compare that to a DVR which costs an additional $10 per month on your cable or satellite service per unit! I must admit though, it is very convenient to record a whole series with one push of a button. Still, it’s not enough for me to justify the ongoing cost.
4) Smartphones – Most people these days have high-speed Internet at home, but then pay for it a second time to have Internet capabilities on their phone too. In fact, most of the popular smartphones, like the iPhone 4, require an Internet package for up to an additional $30 per month. It sure is convenient, but the costs are astronomical.
I really do like new technology, but I can see how easy it is to get carried away with it too. If you’re overpaying on conveniences like these, consider these cost-saving alternatives:
Save Money With These Alternatives
1) Netflix Streaming - Instead of a high subscription cost for premium cable channels and a DVR, why not use Netflix “streaming” and watch movies and TV shows using Wi-Fi or your PlayStation 3. It’s $10-$15 dollars per month instead of $50-$130 per month. The catch is that you have to wait for shows to come out on DVD and for Netflix to allow them to be “streamed.” But you can still pause, fast forward, and rewind just like a DVR. I think it’s worth waiting when you can save that much money. Be patient!
2) Using Cash – Instead of swiping your debit card and credit card (or waving them), use cash. For things you already buy, you’ll spend less money overall. Better yet, if you use a cash envelope system, you’ll have limits on how much you can spend on gas, food, and entertainment. This will prevent the overspending associated with using a credit or debit card.
3) Cheaper Internet Options – Depending on your provider, you probably are paying for more Internet than you need. Some companies offer multiple high-speed bandwidth options and it’s very likely that the cheapest one is good enough for your family. Often, the lowest tier of high-speed Internet can be half the price of the highest tier, which is often the default option on your Internet package. If you’re considering going way down to dial-up, I wouldn’t recommend this unless you’re really strapped for cash.
In short, while technology can certainly make our lives easier, there is significant cost for that convenience. For me, I’m content with what I have: A non-smartphone with talk and text, the lowest tier high-speed Internet, basic cable, and a cash envelope system to keep my spending within budget.
What about you? Do you pay too much for technology convenience when there are lower cost or free alternatives with which you could easily get by?
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Editorial Disclosure: This content is not provided or commissioned by any bank, credit card issuer, hotel, or airline. Opinions expressed here are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.