I spent 2 weeks using cash only - here's how 14 days changed the way I'll spend forever

A while back, Business Insider offered "13 tips to save up to $1,000 in 30 days or less," based on Ramit Sethi's challenge to help people save $1,000 in a week.

I decided to implement one of these strategies - the "cash-only diet" - for two weeks and test its effectiveness.

The "cash-only diet" is as simple as it sounds - you ditch the plastic, determine how much money to withdraw for a certain amount of time, and only buy things with the cash you allocated for yourself.

The theory behind living cash-only is that you're less likely to make impulse purchases - you'll buy more of what you need and less of what you want - as you have a limited amount of cash set aside in your wallet. In addition to becoming a more conscious spender, you have to cross the barrier of physically handing over your money and watching it disappear.

"Rather than blindly using your credit card and deferring whether it's worth it or not until your bill comes - by that time, it's too late - using cash forces you to make that decision when you pay," writes Sethi. "You withdraw a limited amount and watch it dwindle. It's very primal: Since we're more motivated by loss than by gain, each dollar you physically spend will cause you pain: the good kind of pain."

He's not the only advocate of the cash-only diet. Research shows that people spend significantly more when using credit cards instead of cash, and some people use this strategy to get out of deep debt.

I gave it a whirl for two weeks, heading to the ATM at the start of each week for $125, as I keep my monthly costs under $500 (this excludes rent and utilities). Here's why I'm never going back to my debit and credit card days:

1. I know exactly how much money I'm spending. Ordinarily, I'm very diligent when it comes to tracking purchases, as Manhattan has a way of discreetly eating up your money. I use an Excel spreadsheet to record income and daily expenses, and tally everything up at the end of the month to ensure I'm living below my means. It's a decent system, but I never have a general idea of how much I'm spending every week (I could easily open my document and crank the numbers, but I generally don't do that on a weekly basis).

By withdrawing a certain amount of cash on a specific day, I knew exactly how many days it takes to spend that certain amount of money. It's eye-opening and alarming, how quickly it disappears, and forces you to change your spending habits.

2. I think longer and harder about big purchases and cut back on spending after making one. By allocating a fixed amount of cash for a fixed time frame, I realized how one big purchase could wipe me out for the week. There are times when I will have to make bigger purchases - there's no way around wedding gifts or certain wardrobe upgrades - but the cash-only diet forces you to ensure the purchase is a need rather than a want.

I made two bigger purchases over the past two weeks: a wedding gift for a good friend ($52), and a new pair of Sperry's shoes ($60). I was able to validate both purchases, but that didn't change the fact that a huge chunk of my cash for the week was missing. It forced me to alter my normal, day-to-day spending habits and meant that I had to go several days without spending anything.

Had I been using my credit card, I probably would have continued spending as I usually do, rather than accommodating for the bigger purchases and cutting back for a few days.

3. Having cash at all times is convenient. Sometimes cash is simply the easier form of payment, something I completely underestimated and never fully appreciated. It was great to use for tipping; it was helpful when splitting a restaurant bill with several friends; and it provided me spare change, which I need every morning to buy a banana from my 31st and Broadway fruit vendor.

The one thing I did miss about using my credit and debit card was having an online record of all of my transactions. Not having access to that forced me to ask for receipts and keep track of them, which was a good habit to start forming.

I also missed earning Cashback rewards from my Discover card (I receive 1% back off each purchase). This didn't bother me as much when making smaller purchases, such as a coffee, groceries, or laundry, but using the credit card for bigger purchases can result in a decent amount of cash back over time.

For this reason, I will use my credit card for big purchases (for me, that means anything over $50, but is a number that will probably grow with time), and consciously adjust my spending habits afterward. Mixing in the use of my credit card will be crucial if I want to keep my account active and build strong credit. Additionally, with bigger purchases around the corner as I get older, using a credit card over cash will be much more practical and efficient in many cases.

As for everyday transactions, however, it'll be all cash for now.