EP003 The Power of Cash
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In this episode of Money Peach TV, we break down the 7 common myths about using cash, and how we ended up saving $27,000 by switching to a cash lifestyle.
But first, let me share with you what is really going on…
Sadly, we are moving away from using cash as a society, and this bugs the crap out of me. First, let me share this little nugget with you:
Carnegie Mellon, Stanford, and MIT did a study in 2007 on the relationship of feeling pain when using credit cards vs using cash. What they found was the further you get away from using cash, the less you actually feel you are spending money.
Here is a direct quote from the article:
Credit cards effectively anesthetize the pain of paying,” said George Loewenstein, Carnegie Mellon
For you and I, this is more of a gee-wiz fact, but for companies all over the world, this is big money. If a company knows you are going to feel pain when using cash and that same pain can be minimized whenever you spend, companies are going to develop a plan. Their plan(s) may include:
- Accepting Credit Cards
- Apple Pay
- Amazon One Click
- Alexa, buy this for me
Think back to where you were or what you were doing in 2003. Did you know this was right around the same time McDonalds started to first accept credit card?! Prior to 2003, McDonalds would only accept cash or debit cards, however they also began to realize this whole idea of feeling money.
McDonalds later went on to report that when you use a credit card inside their restaurants, you will spend 47% more on average!
How could this even be possible?
It’s simple: You stopped feeling the money.
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