The cutting edge solution to rising debt? Paying in cash

Meet the new revolution in personal finance: cash.

A growing number of Gen Z and Millennial debtors are taking control of their finances by spending real money — no Apple Pay, no Venmo, no cards.

One of them is Jamie Feldman, 33, a writer and journalist in Brooklyn, New York, and an avid TikToker.

Until recently, most of his videos were about life in New York, culture, cooking and humor.

A ton of debt changed everything

But about five months ago, Feldman posted a TikTok that changed everything. In it, she is sitting in her car, looking nervous.

“I’m in a lot of debt,” he says, looking away. “I’m starting out with about $18,000 in credit card debt…which is a lot.”

For Feldman, there was no big purchase, no catastrophic spending. It was just life in New York working a low-paying job as a journalist and trying to keep up with richer friends: dinners, drinks, shows, weddings, baby showers.

“I was just making the minimum payments and ignoring it,” Feldman recalls. “I just wouldn’t look. And if I didn’t look, then it didn’t exist, and if it didn’t exist, then I didn’t have to worry about it.”

I can’t live like this anymore

Then, during the pandemic, Feldman lost his job and his finances began to feel out of control.

“I said, ‘I can’t live like this anymore,'” she says.

Feldman felt trapped and utterly alone. No one knew about his financial situation: not his friends, not even his mother. So he decided to come clean to the whole world, on TikTok.

“Why am I telling you this?” she says on her TikTok. “For me to hold myself accountable, I’ll need you to come with me on this journey. I’m terrified and scared.”

At the time, Feldman had no real plan for how he was going to get out of debt.

Same life, different budget

Millions of Americans are in Feldman’s position.

After reaching an all-time high during the pandemic, the personal savings rate in the United States is now at the second lowest level on record. Meanwhile, household debt is rising at its fastest rate in decades.

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Jill Schlesinger, a CBS News analyst and certified financial planner, says she hears people all the time on her podcast looking at their finances in shock: They have no idea how suddenly they’re in debt.

Schlesinger says that in many cases their lifestyles have not changed at all; many have even recently received a raise, but due to inflation and rising interest rates, a normal life has fallen out of their reach and they are suddenly drowning in debt.

“So many things cost so much more,” Schlesinger says, “that the pay raises they thought would propel them into a different kind of life are disappearing before their eyes.”

Awaiting judgment

In fact, when Jamie Feldman posted her TikTok debt confessional, she was prepared for criticism, but instead received a surprising amount of support. “I got a lot of messages from people like, ‘I have a lot of credit card debt, too.’ Or, “I used to be in credit card debt. This is how I got out.”

Feldman began reading everything about debt and finance that he could find. There was a trend throughout TikTok that caught his eye and he decided to try it: using cash to pay for almost everything.

Filled with money

Using cash to budget isn’t exactly new. In fact, financial guru Dave Ramsey has been talking about it for decades. One system he advocates has begun to gain traction on social media: the envelope system known as cash stuffing.

The idea is that you have different envelopes for different expenses: groceries, entertainment, gas, rent, etc. You fill (or fill) each envelope with a certain amount of cash per pay period and spend only with that envelope.

When the envelope is empty, that’s it. (If you don’t have any envelopes on hand, fear not! You can purchase special envelopes on Ramsey’s site for $10.)

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You are required to keep a strict budget and money helps you see what you are spending.

TikTok is full of guys sorting bills into cute design envelopes, talking about how much they earn, how much they spend, and how they organize their expenses.

Financial fad diet?

CBS personal finance analyst Schlesinger is skeptical of the cash stuffing system. “There’s really nothing new in personal finance,” he says with a laugh. She compares cash stuffing to a fad diet.

“What works: Track your spending, make a budget, figure out where your money is going and where you can cut back. It’s not sexy stuff, but it works.”

Schlesinger says stuffing money can also help people reach those goals, but she says it’s so inconvenient in our world today that it can make sticking to a budget even more difficult.

Cash in action

But for people like Jamie Feldman, spending only money has helped a lot. I met Feldman at a grocery store to see how he used the envelope system. “Here’s my grocery envelope,” she said, pulling a Chase Bank envelope labeled “Groceries” out of her purse.

Feldman’s budget for this shopping trip: $45. The food should last you about a week and a half. Feldman planned her menus in advance and created a detailed shopping list.

In the store, Feldman is focused. Their eyes don’t wander to fancy cheeses or prepared foods. Send your cart straight to the bread aisle, where store brand is on sale ($2.99).

Feldman picks up a loaf of whole wheat bread and tosses it into the cart. “I’ve been eating a lot of peanut butter and jelly since I started budgeting,” she says. “That’s 20 slices, so that’s 10 peanut butter and jelly baby.”

Feldman does the math in his head as he goes: chickpeas ($0.89), salad cucumbers ($2.29), a box of ginger seltzer ($3.69), tofu ($1.99), beef ground for meatballs ($6.31), a whole chicken. ($8.78).

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There are places in the store that you avoid completely. “There are these beautiful olive oils in these beautiful bottles that call to me,” she says, pointing down a distant aisle. Let’s be clear.

Feldman says most of getting out of debt comes down to small, mundane moments like this: thinking about menus, creating a list, avoiding the olive oil aisle.

Little change, big impact

But Feldman says these small moments had a big impact on his life.

“It totally changed my understanding of my values ​​and my relationships and the way I am in the world,” she says. “It completely changed my life. It changed my whole view of everything.”

Feldman cooks more, spends more time at home and asks friends out for walks instead of dinner or drinks. Some of his friends are no longer his friends.

Feldman posts his progress on TikTok almost every day (he’s now switched to a mix of cash and debit). And his progress has been so fast in the past five months that he sometimes forgets how much he paid off of his original $18,000 debt.

“Hi, I’m Jamie. I have $16,000 in credit card debt…” she begins in one of her TikToks. “No.” She shakes her head and starts again. “Hi, I’m Jamie, I have $15,000 in credit card debt…”

My goal is not to feel that way

Feldman says her goal is to be debt-free. But more than that it is never again to feel what the excessive spending made him feel.

“I swiped my card and said, ‘I hope they don’t get rejected!’ Or I’d put my card in a restaurant and say, “I’ll deal with that later.” And that is terrible. My goal is not to feel that way anymore.”

Copyright 2022 NPR. To see more, visit https://www.npr.org.

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