Why you should go on a cash diet

Remake America

What if there was a diet that could help you save $1 out of every $5 you spent? You won't find this exercise on late-night television, but it can help you save 20 percent of your income, Yahoo! Finance expert Farnoosh Torabi says.

A cash diet helps consumers in two ways, she says. In the long term, it reduces credit card interest payments. In the short term, it has habit-altering psychological effects. Credit and debit card spending gets people into trouble because there's no finite sense of limitations, Torabi says. An all-cash diet forces spenders to consider the value of their spending in real time.