Mortgage Info for Homes and Small Business Financing

Being Disruptive Using Cash

I am pocketing my credit and debit cards and using cash as often as possible.  And I have no plans of ever using my phone to pay for anything.

Since the early ’70s the offers for credit and use by consumers have skyrocketed.  In August 2016, U.S. consumer debt rose 8.5% to $3.687 trillion.  TRILLION!  Of this, $2.712 trillion was non-revolving loans, and it rose 9.0%.  Credit card debt totaled $974.6 billion, and it increased 7.0% during the month.using cash
We’ve been trained well to willingly accept the role of debtor.  Historically, Americans have always been savers and traditionally rejected debt especially after the Great Depression.  Since then, we’ve been instructed to buy and consume as a duty (George Bush, post 911).  How neatly patriotism and debt were tied together and delivered in a pretty box with a bow.  We couldn’t wait to dive in…

I am rejecting this notion.  As a debtor I feel less free.  And freedom is more important to me than having “things”.  Having less debt allows me to have more choices.  That’s freedom.  One way I intend to accomplish this is to start using cash for all my purchases.

What can using cash accomplish?

  1. It helps small businesses avoid a quick haircut on their revenue.  Both credit cards and debit cards require the vendor to relinquish as much as 3.0% of the total sale.  In 2008, $48 billion was extracted from vendors by credit card companies.  This can result in a number of things happening.  The vendor may choose to raise their prices across the board or charge you, the user of credit or debit more as they do at many gas stations.
  2. Using cash in transactions restores privacy to commerce.  As you should be aware, privacy is a huge issue in many areas of consumer interaction.  Privacy in a financial transaction such as a mortgage is highly regulated.  Now, awareness of personal privacy has increased dramatically with the implementation of HIPAA rules in all medical settings.
  3.  I am no longer comfortable creating a digital trail of commerce for large companies to exploit.  Even in the grocery store, our buying habits are being tracked through the credit, debit or customer appreciation records transparently maintained in the background as you check out.
    I don’t know about you, but they are not directly compensating me for building their databases – I have no interest in assisting them in doing so.  Even if they suggest they can target me with special offers because they know my buying habits I am not interested.
    In fact, I feel like I need to take a shower!  Perhaps, the biggest overall issue is our data is being sold without our knowledge or permission.  Credit repositories such as Equifax, Experian or Trans Union do this regularly as part of the services they offer businesses.
  4. Everyone accepts cash.  I can not think of a vendor who will not accept cash.  The aforementioned haircut is one reason AND the underground economy is another.  Cash flies under the radar.
  5. Finally, using cash reduces the possibility of creating additional debt.  If I don’t have the cash I won’t be tempted to buy useless, nonessential things.  If I use cash, then I can’t create additional debt

using cash

Yes, I know that using cash is not always as convenient as swiping a card through a reader.  But, your information will never be stolen using cash as it is increasingly happening while using your plastic card especially if your card is equipped to be contactless.  And with the new EMV technology chip embedded, it takes an inordinate amount of time as they transmit more and more data about your specific transaction.  As Evan Dashevsky points out in his PC Magazine article, any liability for credit card fraud has been pushed from the issuers on to the retailers without a chip reader.

As they say, cash is king.  And I choose to use it as a tool of disruption.

 

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2 Responses to Being Disruptive Using Cash

  1. Well written! However you probably shouldn’t underestimate the trickle down effect credit card debt has on your business. Paying off big balances was my #1 reason for refinancing. Just sayin.

    • Thank you, Tricia for your kind words.

      We love to help those borrowers who are struggling with consumer revolving debt. We would just as well like to see them free from the onerous terms of the typical revolving credit card account. However, there is a potential downside to securing any debt with your primary residence. If you can’t service the loan the property may be taken away and sold to satisfy the debt. The worst of all possible situations.

      The wise and judicious use of credit to purchase appreciating assets is the best solution.

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