Carrying Cash

Today’s topic is about carrying cash with you.  I used to carry large sums of money with me, back when I was in High School.  I regularly carried $200-300 in my wallet.  Why?  Because it was a 30-minute drive to the nearest ATM and I didn’t own a car.  So if we only went in town once a month, that $300 was my spending money for an entire month, maybe longer.

Once I got out into the world and found out that real civilizations have card readers that allow you to pay with credit and debit cards, I stopped carrying that much cash.  I went down to about $100 and paid for a lot of stuff with my Debit Card.

Then once I got a credit card with rewards points, I almost totally stopped carrying cash.  I usually carry three or four dollars in one for use in vending machines while I’m on the job, or I’ll stop by the local Walmart that has a change machine and break some fives into quarters.

It’s amazing how much that kind of stuff can change.  I used to use nothing but cash, that way I couldn’t go into debt.  Then I used almost nothing but my Debit Card so that I could always keep track of my finances.

Now I use a credit card to save money!

I know that sounds strange, given the rampant credit card debt in this country, but hear me out and it makes sense.

I get rewards points, which I can cash in for gift cards, plane tickets, hotel stays, etc. for every dollar I spend with the card.  Some things are even double or triple rewards.  So I use the card for all of my normal purchases, but I don’t go racing out and buy a bunch of crap I don’t need.

At the end of the month, I pay the card off in full.  This means I don’t pay any interest, so the high rate on the card (24.99%, geez!) doesn’t affect me.  And, as a matter of fact, I actually make money.  How so, you ask?

Think about it…if I have a thousand dollars in the bank and I spend ten dollars a day, that means by the end of the day I’ve spent $300.  So if I get paid 1% in interest per month on my saving account (haha, I wish!) then the average amount of my checking account will be much less than if I put all my debt on the credit card and waited until after I got my savings account interest to pay it off.  Instead of getting 1% of $700 (actually $878, if you do the math), I get 1% of $1,000.  So instead of making $8.78 in interest, I make 10.

I don’t pay any interest, but I do get paid interest.  It might not be much…but making money is better than losing money.

Not to mention all the security protections that credit cards offer, that makes it an even better plan.  Unfortunately not many people can restrain themselves from running out and maxing out a brand new credit card as soon as it comes in the mail.  If you are one of said people, don’t try this plan.

~RCS

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