Why To Have Cash?

blueencounters2_zpsmc3yuppp

Why To Have Cash?

You may have heard the expression “Cash is King”. I thought this was an old saying from the pen of Benjamin Franklin or perhaps William Shakespeare. Turns out, according to Wikipedia, “The origin of ”cash is king” is not clear. It was used in 1988, after the global stock market crash in 1987.” The phrase was also widely used during the global financial crisis in the Fall of 2008. Companies that had cash, i.e. money that was not invested in any type of asset that lost its value, could survive and avoid foreclosure. This is also relevant to households, in terms of avoiding foreclosures. Actually, what prompted me to write about the subject, was an article which appeared in the San Francisco Chronicle on December 27, 2017 – Cash Losing Cachet – More Places Don’t Take It by Andy Newman. The story starts with an event connected with the opening of a new lunch spot called Dig Inn on Broadway and 38th Street in Midtown Manhattan, which only accepts credit cards or debit cards – no cash. This can be understandable for various reasons – convenience, speed, smaller wallets, easier to reconcile (i.e. to check the bill at the end of the month), or to see the charge right away on your mobile phone, purchases online, and the list can go on and on. Now let’s take a look at the other side of credit card usage. The increase of debts, mistakes in not paying bills on time, lowering credit scores, which automatically increases your interest rate on all your credit cards. According to the site creditcards.com, in a report published on December 27, 2017, “Consumers increasingly are relying on credit cards to make payments instead of cash or debit.” According to new research from the Federal Reserve, credit card usage climbed to 10.2 percent in 2016. In addition to this, “The national average APR climbed to 16.24 percent”, and “the number of cards with maximum APR above 25 percent has jumped”.

The only reason I am writing about such an important subject at the beginning of the year is to share with you a bitter but good medicine.

In my line of work, before I can figure out how to help my clients buy a new property, or lower their monthly payments, or to get cash out for remodeling or to pay college tuition, I need to run a credit report. And believe me, I’ve seen it all. Let’s say in January or February you will need a new mortgage for whatever reason. Meanwhile, in November-December you took vacation to the foreign lands or bought a lot of holiday presents, or appliances (since everything on sale). But now your credit scores are down and your minimum monthly credit card bills can prevent you from qualifying. Have you ever asked yourself how long it will take to pay off existing debts without incurring new ones? In our business and household, my wife is in charge of our money. We have survived many storms thanks to her frugality and care. She ensures that we always have cash in the bank. Years ago, I had a business coach who taught me how to save money. It always starts with knowing your monthly cash flow, how much cash we need to survive for the next six months. My next writing project is a book titled “Retirement Solution for Smart People”, where I will address how to save in more details.

P.S. I personally mostly use credit cards sparingly, to be sure that the balance can be paid off at the end of the month. I do carry some cash to pay for services like haircuts or shoe repair. But I always carry dollars to support some of people who only take cash, whom I encounter on the streets of San Francisco, some of whom you can see in these photos.

Enjoy and Share with a Friend.

Do Not Keep Me As A Secret!
Smile And Please SHARE It With A Friend!

Cheers,

Manny<br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /> Signature