Cash is King, Again

What do you do when you don't want to spend any money? I found the easiest way is not to leave the house. When you leave the house, you have to pay for gas, which has gone up over 60 cents a gallon over the last couple of months, fast approaching $3.00 a gallon, again. When you leave the house, you always end up buying something. Temptation looms large everywhere you look. Everything is on sale, ridiculously on sale; the new reality of America.

Mortgage interest rates are down under 5%, oh envy. First time home buyers get a $8,000 tax credit to buy that first house and home prices are still rapidly dropping. On Long Island, the average deal is closing for over $150,000 less than asking price. Even car companies are imploring us to go ahead and purchase a new vehicle and if you lose your job, you can give it back without harming your credit. Isn't it wonderful? All of those bargains, a shopper's dream and yet we are not buying because we simply do not have any cash.

Cash is king again folks because credit is getting too expensive by the day. No one, regardless of credit risk, is privy to a good interest rate anymore and the fees just keep skyrocketing. On June 1st, Bank of America is increasing its balance transfer fee to 4% with no limit, from 3% with a max of $75. The rest of the happy dozen banks who hold all the credit cards in America will follow suit, immediately, I'm sure and some, like American Express, are no longer offering balance transfers on many of their cards. So, if your interest rate doubles as most cardholders' have, you have very little recourse to reduce your exposure except to have the cash to pay off those balances. And that cheap house or that cheap car? You need a 20% down payment in cash to purchase that new house and a significant down payment to purchase that cheap car. I read that the average age of cars in America is now 9 years old. Ouch. At the very least, before we can even think about spending any of our cash, we have to consider that we need to have at least 6 months worth of emergency cash.

Cash has been on the outs for so long, I barely have any in my wallet because of those ubiquitous debit cards. Those of us good enough to shop using debit cards are effectively using them same as cash but the credit card companies charge whopping transaction fees to merchants for accepting those cards. So, we really should put those back in our wallets and stop feeding the credit card companies any more fees and you'd be helping your small businesses as well by giving them a break on those fees. It is time to cozy up to that old fashioned greenback again, cash that is.