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The cutting edge solution to rising debt? Paying in cash

Jamie Feldman, 33, found herself drowning in credit card debt and decided to try a radical idea: only spending cash.
Stacey Vanek Smith
Jamie Feldman, 33, found herself drowning in credit card debt and decided to try a radical idea: only spending cash.

Meet the new personal finance revolution: cash.

A growing number of Gen Z and Millennial debtors are getting a handle on their finances by spending actual paper 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.

Up until recently, most of her 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's sitting in her car, looking nervous.

"I have a lot of debt," she says, looking away. "I'm starting with about $18,000 in credit card debt...which is so much."

@realgirlproject I will talk about nearly anything on the internet. Except, until now, my credit card debt. I have.. a lot. And I have always had tons of shame about it. But.. why? Money stuff is stupid & weird & so few of us were ever equipped with tools to properly manage it. After yrs of weddings, trips I couldn't afford & being unable to say no to things I am finally challenging myself to make real changes. Starting with @Beyond The Green Coaching’s financial freedom course. Stay tuned! #debtfreejourney ♬ original sound - Jamie Alyson Feldman

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

"I was just getting by making the minimum payments and I was ignoring it," recalls Feldman. "I would just not 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 her job and her finances started to feel out of control.

"I was just like, 'I can't live like this anymore,'" she says.

Feldman felt trapped and totally alone. Nobody knew about her financial situation: not her friends, not even her mom. So she decided to come clean to the whole world, on TikTok.

"Why am I telling you this?" she says in her TikTok. "In order for me to be held accountable, I'm going to need you to come with me on this journey. I'm terrified and scared out of my mind."

At the time, Feldman had no real plan of how she was going to climb out of debt.

Same life, different budget

Millions of Americans are in Feldman's position.

After hitting a record high during the pandemic, the personal savings rate in the U.S. is now at its second lowest level on record. Meanwhile, household debt is rising at its fastest pace in decades.

Jill Schlesinger, CBS news analyst and certified financial planner, says she hears from people all the time on her podcast who are looking at their finances in shock: They have no idea how they are suddenly in so much debt.

Schlesinger says in many cases their lifestyles haven't changed at all; many have even recently gotten a pay raise, but because of inflation and rising interest rates, regular life has climbed out of reach and they're suddenly drowning in debt.

"So many things cost so much more," says Schlesinger, "that the wage increases they thought would propel them into a different type of standard of living are just vanishing before their eyes."

Waiting for the judgment

In fact, when Jamie Feldman posted her debt confessional TikTok, she was braced for criticism, but instead she received a surprising amount of support. "I got a lot of messages from people being like, 'I'm in a lot of credit card debt, too.' Or, 'I used to be in credit card debt. Here's how I got out of it.'"

Feldman started reading everything about debt and finance she could find. There was one trend that was all over TikTok that caught her eye and she decided to give it a shot: using cash to pay for almost everything.

@realgirlproject I only regret spending one thing today and that is time watching the Handmaid’s tale 🙄🙄🙄🙄🙄🙄🙄 #debtfreejourney #debtfree #moneytok #cashonly #budgeting #nyc #debtpayoff ♬ original sound - Jamie Alyson Feldman

Cash stuffing

Using cash to budget isn't exactly new. In fact, financial guru Dave Ramsey has been speaking about it for decades. One system he champions that has started getting a lot of traction on social media: the envelope system AKA cash stuffing.

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

When the envelope is empty, that's it. (If you don't have any envelopes on hand, never fear! You can buy special envelopes on Ramsey's site for $10.)

You are forced to keep a strict budget and the cash helps you see what you're spending.

TikTok is full of young people sorting bills into cute, designer envelopes, talking about how much they're earning, how much they're spending and how they're organizing their expenses

@cashstuffing.com Just got my paycheck, now it’s time to do some cash stuffing! 🤗❤️ PSA we are having a SALE right now on all budget binders for the new year!!! 🥳🎉 ♬ I Just Wanna Know - Luke Reeves

Financial fad diet?

CBS personal finance analyst Schlesinger is skeptical of the cash stuffing system. "There really is nothing new in personal finance," she says, with a laugh. She likens cash stuffing to a fad diet.

"What does work: 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 cash stuffing can help people achieve those goals, too, but she says it's so inconvenient in our current world that it might make sticking to a budget even more difficult.

Cash in action

But for people like Jamie Feldman, spending only cash really helped. I met Feldman at a grocery store to watch her put the envelope system to use. "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 dollars. The food needs to last her about a week and a half. Feldman has planned out her menus in advance and created a detailed shopping list.

At the store, Feldman is focused. Her eyes do not wander over to the fancy cheeses or the prepared foods. She rolls her cart directly to the bread aisle, where the store brand is on sale ($2.99).

Feldman grabs a loaf of whole wheat and tosses it into the cart. "I've been eating a lot of peanut butter and jelly since I started budgeting," she says. "This is 20 slices, so that's 10 peanut butter and jellies, baby."

Feldman does the math in her head as she goes: chickpeas (.89 cents), cucumbers for salad ($2.29), a case of ginger seltzer ($3.69), tofu ($1.99), ground beef for meatballs ($6.31), a whole chicken ($8.78).

There are places in the store she avoids entirely. "There are these beautiful olive oils in these gorgeous bottles that are calling out to me," she says, gesturing to a distant aisle. We steer clear.

Feldman says most of climbing out of debt boils down to little, mundane moments like this: thinking up menus, creating a list, avoiding the olive oil aisle.

Little change, big impact

But Feldman says these little moments have had a huge impact on her life.

"It's totally changed my understanding of my values and my relationships and just the way I am in the world," she says. "It completely changed my life. It changed my whole outlook on everything."

Feldman cooks more, spends more time at home, and asks friends to go on walks instead of out to dinner or drinks. Some of her friends aren't her friends anymore.

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

"Hi, I'm Jamie. I'm in $16,000 of credit card debt..." she begins in one of her TikToks. "No." She shakes her head and begins again. "Hi, I'm Jamie, I'm in $15,000 of credit card debt..."

@realgirlproject please excuse my @invisalign mouth I couldn’t wait to brush my teeth to tell you these important takeaways about my failure 🫣🤣🫠 #debtfree #debtfreejourney #debtfreecommunity #money #moneytok #budgeting #cashenvelopesystem #tiller ♬ original sound - Jamie Alyson Feldman

My goal is not to feel that way

Feldman says her goal is to be debt free. But more than that it's to never again feel the way overspending made her feel.

"I used swipe my card and be like, 'I hope it doesn't get declined!' Or I'd put my card in at a restaurant and be like, 'I'll deal with that later.' And that feels terrible. My goal is to not feel that way anymore."

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

Stacey Vanek Smith is the co-host of NPR's The Indicator from Planet Money. She's also a correspondent for Planet Money, where she covers business and economics. In this role, Smith has followed economic stories down the muddy back roads of Oklahoma to buy 100 barrels of oil; she's traveled to Pune, India, to track down the man who pitched the country's dramatic currency devaluation to the prime minister; and she's spoken with a North Korean woman who made a small fortune smuggling artificial sweetener in from China.