If you’re like me, you instinctively reach for your bank card and it’s not your first instinct to carry cash. However in this market, it’s time to de-stress your finances!

With the turmoil in the global economy it’s understandable that people are worried about their money. MP Dunleavey explores some of the ways you can get a grip on your financial emotions and de-stress a bit — and she interviewed me. There are 3 steps, but I want you to read her entire article HERE so I just posted Step 2. Oooh, and guess which goddess she mentions halfway through the article? ;-D And check out Lakshmi, Goddess of Riches…

The second step is switching to a cash-based mindset. That doesn’t mean giving up all forms of plastic. It means learning to think and spend based on how much money you actually have.

That’s how your grandma did it, and my grandma, and anyone’s grandma who lived back in the 1930s, ’40s or ’50s — before you could borrow yourself into oblivion. Grandma (and Grandpa) somehow managed to furnish a house, raise and feed a family, procure a car and save for emergencies — all with cash. Why? Because credit as we know it today did not exist. Actual credit cards became common in the 1970s. When you bought something, you paid for it and then got the item, not the reverse.

What was it like, living on cash — and why is it so powerful that it can turn your financial life around, even now? Some of the Women in Red have been living in a cash-only world to get their financial lives on track. Nancy Munro, a consultant in West Palm Beach, Fla., said she often thinks about her paternal grandmother, who died at age 100 in 2006, with $250,000 in savings.

“Her secret? She made do, or did without things, all her life, knowing that the responsibility for taking care of herself rested with no one but her,” Munro said in an e-mail. Munro says that she and her husband are “still taking the grandparent mindset and applying it.” They have no mortgage, no car loans, no personal debt. They save their spare change, rarely eat out, comparison shop for everything, make automatic transfers to savings — “and no holiday buying on plastic!”

Alas, “living within your means” is just a giant personal finance cliché at this point. People have lost track of what it signifies. LWYM has come to mean that you’re fine if you spend every dime you make. If you have to use plastic to cover a few gaps here and there — your vacation, the holidays, some groceries — that still counts as “living within your means” because you eventually pay it all back. Probably.

So let’s rename “living within your means” for the modern era. We’ll call it “real-income living.” It means, obviously, making the hard choices necessary to live and save on what you earn. So it’s really about spending a small portion of your income to live, and saving a large chunk of it — for emergencies big and small, for the unexpected and for a warm, cozy, secure and happy future.

That’s real-income living. Cash is finite. If you buy stuff you don’t really need (or stuff you think you need because you didn’t stop to think), you end up putting what you do need on a plastic noose called a credit card. You don’t have to aspire to Depression-era frugality, as several readers have warned me. Those were desperate times, when some people starved to death and many struggled for survival.

“Gram made nearly every piece of clothing the family wore,” writes Megan Williams, a Women in Red reader who recalls her grandparents’ fortitude with a mix of admiration and skepticism. “During the Depression, my Grandfather’s underwear (yes, underwear!) was made from chicken feed sacks.”

You’re not going to turn Tupperware containers into shoes. And I’m not suggesting you grow a bailout garden and can green beans (unless you’re so inclined). As scary a time as this is, we as a country are unbelievably wealthy compared to those who survived the 1930s. But we all need to come down to earth, to a more solid and sensible way of living, with cash as the anchor.