The Case for Cash

I know you don’t want to hear this and neither did I, but we wouldn’t be in a financial mess if we’d only lived within our means…….”cash means” that is and paid close attention to our wealth. Borrowing on time is a gamble. It’s a gamble that you are still living with the same job or better during the agreed upon time it takes to pay a debt back. It’s a risk you and your creditor take that you and/or your family or those you are obligated to will remain healthy and prosperous so that you do have the means to pay back your debt. It’s an assumption that life will stay status quo or just as it is or better when you agree to the debt. Well, for some the gamble pays off but today a large part of the country lost that bet. There are millions of Americans currently are in debt up to their eyeballs either through mortgages some couldn’t afford, high credit card debt, loans borrowed on assets that have lost their value, positive cash positions in investments and retirements lost and that big old ugly word no one wants to hear, unemployment. But it’s not just in these troubled times that we sometimes find ourselves in this predicament. It is our reliance on credit that we have become accustomed to that can create serious problems in any economy.

I could quote statistics all day but I’m not because you already know how dire this economy is. If financial stress hasn’t touched you yet it may one day. The reliance on credit cards is massive. In the wrong hands credit cards can kill a financial future and sometimes even a personal relationship. If you can’t pay for it with the money in your pocket you don’t need it. Sure its tough to wait for “things” that are wanted and not needed but the sense of accomplishment, self worth and less stress are well worth the wait.

The numbers of homeowners who are homeowners no longer are now in positions of renters and some are homeless. Imagine the numbers of children losing the comfort of the only home they have known and not understanding what has happened. Could it have been avoided? While there are many who have no choice through unemployment or illness to let homes go, a whopping group that has single-handedly become victims through their own fault have set our home values plummeting, banks in need of financial help, tightening of future credit and an atmosphere of mistrust in the housing industry.

The Enron workers losing all their savings in the company pensions and stock should have been lesson enough that you can’t invest in just one thing all your lives. The simple physics rule can be applied here as with all things. “What goes up must come down.” And down it has come; some investments worse than others and some little at all. That would indicate that “diversification” or spreading your investments around into different companies, different funds, different classifications might have been a safer bet. You might have lost less had you been watching from the start. And then we have the greedy little Bernie Madoffs of the world who too are scammers. Shame on those who saw but didn’t believe or pay attention. They are the ones who have lost.

The one pass I will give most people today is the rising loss of jobs. Companies just as guilty of aggressive growth and financial gambling have found themselves having to cut out their most important resource….their workers. True while some responsible companies don’t have a choice there are many companies who grew at all costs without regard to eventually running into a financial brick wall. It happens. There’s a cycle for everything. Even the oldest and most sustainable of companies have had their cycles. The question is, has the management prepared for it?

I would have to say that my sympathies, even with myself are not given freely when it comes to viewing this massive financial mismanagement on so many levels. I am not advocating becoming a miser but I am advocating the power of cash. The need to be debt free is what will ultimately save us and our futures.