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cash

Postby fester » Sun Jul 20, 2014 3:51 pm

Does anyone hoard cash? I've been doing so for awhile, since I got job that pays in cash rather than paycheck.

I feel like my own banker. Very few trips to the bank or atm anymore.

No one can 'freeze" these assets, either. And it is not tied to my social security number either; never was.

Does anyone else think this is a good practice?
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Re: cash

Postby WeeZul » Sun Jul 20, 2014 4:56 pm

I do keep some cash on hand, in case of emergency. Not a lot, but enough to see me through a bank run or power grid failure.

I wouldn't hoard cash though, for one reason - if a serious enough emergency occurs, cash can instantly become worthless.

The dollar as we know it is only an extension of US power. It's a tool by which we measure value in other things, be it time, skill, or product. If the system collapses or even suffers a temporary break, people won't want to exchange dollars for things they desperately need. They'll want to exchange things they have for what they need.

If you do want to hoard, I would suggest hoarding a mix of precious metals and valuable items (e.g. tools, water, survival supplies, ammo, fuel, etc.). Some preppers go WAY overboard...but there's some value in the general idea.
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Re: cash

Postby Phathack » Mon Jul 21, 2014 3:30 pm

fester wrote:Does anyone hoard cash? I've been doing so for awhile, since I got job that pays in cash rather than paycheck.

I feel like my own banker. Very few trips to the bank or atm anymore.

No one can 'freeze" these assets, either. And it is not tied to my social security number either; never was.

Does anyone else think this is a good practice?


I keep a few thousand around just in case I need access to quick cash for some reason or another.
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Re: cash

Postby Dr Fu-Manchu » Thu Jul 24, 2014 6:57 am

Yes.

I bought a small safe (nothing fancy) to store certain valuables in. Basically my camera and lens, any important documents like passports etc, some precious metals and , yes, some cash too.

Over a year ago, I withdrew a sum of money form my bank in cash to see if I could get by living on cash alone, and I kept that sum of cash in my safe, dipping into it as and when. The whole buying a safe/living off of cash thing was basically a challenge/experiment for my own benefit, and to explore the validity of such an approach, and the pros and cons of living in such a fashion.

Well, I live pretty frugally as is, and I have been extremely lucky in that requested gifts for the birthdays etc., of family and friends have all been purchasable via cash. Most of the time people ask for gift vouchers from a particular store, so I just walk in and buy them with cash. I should point out that my family and friends are utterly unaware that I have been doing this, so the fact that nobody has asked for something which would require a card payment, such as ordering from a website, was by luck rather than by design.

I've also been helped by the fact that I made a vow to stop buying books...it is my biggest weakness, and my place looks like a library that's been hit by a car bomb at times. I resolved to stop buying new books, and get around to reading through the piles of ones I do have. If I get really desperate, I just get a book out of the local library.

Thus, I've managed to go roughly a year and a half without using my credit card, debit card, ATM or PayPal account, and I'm down to my last £7 and change. I've done everything I would normally do, only I paid in cash. I'd say a key part of this was that I removed my cards from my wallet, so there was never any situation wherein I could be tempted to break protocol. I have to say, living cash-only really focuses you and gives a new-found financial discipline.

All told, that part of it has been extremely positive for me, and really shown me a new way of living.

That is not to say, however, that there are not drawbacks, so here is my experience:

1) That cash is just that: cash. It's not going to be earning you interest or dividends as it would if invested.
Indeed, inflation is probably eroding its value as we speak.

2) My experiment 'broke down' in June 2014 when I pre-ordered the new Jack Reacher novel for someone who asked for it for a gift, so whilst I had a good run (and technically this purchase hasn't been 'charged' yet), you can only go so far with cash in today's world.

3) It properly broke down this month as I have a bill to pay which would be beyond the amount of cash I have left.
Thus, I trooped off to the bank to use the funds that had been sitting untouched in my account during my experiment to pay the bill with, only to discover that my card had expired.
Now, I know I hadn't been sent a new card, so the cashier checked, and it turned out that it had not gotten lost in the post, but instead had not been dispatched. The bank had in effect cancelled my card due to lack of activity.
The upshot of this is that for roughly a month they have had an interest-free loan off of me, as they had my money, and I would have had no way of accessing it or withdrawing it.

I was a little peeved, as could you imagine discovering that you have no way of accessing your money in a socially embarrassing situation, like picking up dinner or drinks? It's a good thing I don't leave bills until the last minute, otherwise I could have gotten spanked on this one, as I was unable to do anything at my local bank branch (it's a small provincial one) and had to travel into the main branch in town the next day and prove that I am me (which is a whole other topic which is vastly interesting from a legal perspective) and order a new card and arrange payment of the bill, so if I'd gone to pay the bill on deadline day, I would have been past due.

To top it off, I checked all of my correspondence from the bank, and at no point was I notified or warned or asked about my card being discontinued, so I had been walking around for about a month thinking I had a valid payment facility in my wallet when in fact I had no such thing...it's a good job that I haven't yet seen a new pair of running shoes that have caught my eye, as I've been looking and would have hated to think of going through the whole charade of trying them on, going to the counter and then not being able to pay. :shock:

That's my experience, anyways...I'll definitely be keeping a store of cash on hand, as this recent experience of being temporarily 'unbanked' and unable to access my money has shown me the potential problems of relying solely on banks.
My only question now is narrowing down how much cash to keep as 'cash' rather than deployed elsewhere. I'm very keen on preparedness, but I'm not one of these too-far-gone survivalist types either.

Anyway, all told, having a store of cash is no bad thing, especially for 'off-book' transactions and the like. ;)
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Re: cash

Postby Primus_Pilus » Fri Jul 25, 2014 2:08 pm

Keeping a small pile of cash is good sense especially considering that in the last 18 months there has been increased support for 'bail-ins' from various directions. Google the term for deeper explanations.

In a sense though when you deposit money into your bank account you are now an unsecured CREDITOR to the bank. Meaning that if the banks go up they can just treat you like the paper vendor in bankruptcy hearings. (And they have already done so in certain places)

IMO, banks do not provide much of a service anymore (bill pay services at best) and their interest rates are pathetic.
I'll keep my wealth outside the banks at this point.
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Re: cash

Postby Zuberi » Sat Aug 09, 2014 4:02 pm

I don't even use the banks. I keep my bread in a credit union and upon my person.
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Re: cash

Postby dd214life » Sun Dec 21, 2014 6:22 am

I keep everything in my checking account. I know it's "bad" to do that, but it's simple and convenient. I like knowing exactly how much money I have at all times. I can access all my money at all times. And I will instantly notice if some of it goes missing.
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Re: cash

Postby oldblueeyes » Fri Jan 09, 2015 8:59 pm

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Re: cash

Postby Golem » Thu Jan 22, 2015 3:47 pm

Other than the face value of that coin being $50, is the gold in it actually worth $50?

Edit: And I just noticed he's banned. Anyone else know the answer?
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Re: cash

Postby Phathack » Thu Jan 22, 2015 6:15 pm

Golem wrote:Other than the face value of that coin being $50, is the gold in it actually worth $50?

Edit: And I just noticed he's banned. Anyone else know the answer?

That's the back side of the coin its an American Buffalo - sells for about $1500-$1800 depending on condition.
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Re: cash

Postby Dr Fu-Manchu » Thu Jan 22, 2015 7:45 pm

Phathack wrote:
Golem wrote:Other than the face value of that coin being $50, is the gold in it actually worth $50?

That's the back side of the coin its an American Buffalo - sells for about $1500-$1800 depending on condition.


Further to Phathack's response, what you need to be looking at is the other information on the coin, namely that it is 1 (Troy) ounce of .9999 fine gold.

As I type this, the spot price for gold is hovering around $1300 per ounce. The remaining $200-$500 difference between the spot price and the prices Phathack quoted take into account the costs of minting/shipping the coin, and as Phathack mentioned condition, I would assume a fair part of it is what is known as 'numismatic value', i.e. its value as a collectible coin.

If it is part of a low run/mintage, then it will typically sell for a premium above other similar 1 oz. gold coins because it is more rare/collectible (despite still being the exact same weight and composition as those more abundant 1 oz. gold coins).

Believe it or not, the very fact that it is currency also has implications which can affect its value. I live in the UK, so for tax purposes it makes sense for me to buy 1 oz. gold Britannias or sovereigns rather than Krugerrands, as despite an ounce of gold being an ounce of gold, the fact that the former are legal tender means they have different (and vastly favourable) conditions attached to them regarding Capital Gains Tax and the like.

Having said that, if I am absolutely forced to own Krugerrands (or similar non-UK gold coins), then I guess I can man up and tough it out. ;)

The same situation exists with silver...would you rather have a paper dollar (or Federal Reserve Note) or a 1 oz. silver dollar?

Before you answer, consider that the spot price for silver is about $18 to $18.50 an ounce.
It's a no-brainer, right? Which is what makes this video all the more entertaining:

https://www.youtube.com/watch?v=z7usCHnZ-8c

He also tries a similar experiment with gold coins too!

You should also be aware that this phenomena is not limited solely to precious metals

http://money.cnn.com/2012/02/15/news/economy/pennies_nickels/index.htm

Pennies and nickels cost more to make (in terms of raw materials) than they are actually worth...it is all due to the dollar losing purchasing power over time. As such, they actually represent an investment because they 'trade' or sell at a discount to their actual value.

http://www.cnbc.com/id/44788851

Bass spent $1 million on 20 million five-cent coins.

Why?

Bass apparently believes that the metal in each nickel is worth 6.8 cents. So the face value is below the underlying value of the coins.


It is currently illegal to melt them down, however I can see numerous plays Bass can make. First and foremost, at an unspecified date in the future, it may be more economical to for the US Mint to simply buy the stockpile from him than mint new coins, simply because the price of nickel relative to the dollar has made it too expensive. As the CNN article points out, they are looking at changing the mixture of metals that goes into the coin, meaning less nickel is used, but that is a slippery slope to start down.

All the while, Kyle Bass is sitting on a pile of original-strength nickel coins. Again, it could conceivably make sense for the US Mint to buy the stockpile from him, and then melt it down themselves and make watered-down new nickels with it.

Ultimately, it comes down to the age old question of face value (i.e. price) versus underlying value (i.e. what the asset is actually worth).
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Re: cash

Postby ranome » Sun Feb 08, 2015 12:49 am

I keep about $5000 USD on hand at any one time. My college-age son has about another $5000 at my house.

I did an experiment recently by going all cash, but since I get paid by check, the cash I hold is all routed through the account as an ATM withdrawal or a less cash received. I calculated total outflows in the twelve months I went all cash was $4800 less than total outflows when I was doing debit and credit cards. Spending is more real when you see the cash actually leave your wallet than when you see digits on a receipt.
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Re: cash

Postby dubya » Sat Feb 28, 2015 4:53 am

An asset is anything that generates income. A business, a rental property, arable land, certificate of deposit, a kebab stand, a laptop, a vintage bottle of wine, an alcohol distillery, anything that can produce something and/or earn you money/interest or save you money. For example a plasma TV doesn't earn you anything, but a laptop can make you money. A gun collection doesn't make you money but an ammo press can. A vintage bottle of wine will go up in value. Look at rich people's houses, they don't even own a tv, but they have plenty of paintings, wine, even a capuccino machine, in other words everything surrounding a rich person is generating money. Now look at your local broke motherfucker. The first thing he has is an 80 inch plasma and an Xbox.

1. The most valuable asset is yourself. A degree, an MCSE, a Class A license, top notch healthcare, yearly bloodwork, dental work, vacations/experiences, a massage, a hooker, a therapist, a personal trainer, books like 48 Laws of Power. You're investing in your primary asset, you.

2. Your home. Instead of paying rent, buy your own place and rent out rooms. Or keep it for your own peace and comfort. Buy other real estate and rent them out.

3. Businesses. Whatever your field, try doing it under your own business. No one can get hired unless it makes money for someone else. Walmart generates $1400/day per employee, do you think they pay their employees $1400/day? No they pay them $80/day and pocket $1320. Walmart would love to hire you, they'd hire the whole world if they could. Don't work for Walmart, work for yourself.

4. Pick 3 things you love, use and/or couldn't live without. Go look up their stocks. If it pays dividends, buy $500 worth and set it to reinvest automatically. Total investment $1500. Now forget you own them. Look em up 20 years later. Either you lost $1500 or you're a multi-millionaire.

5. Hoarding money doesn't earn you anything. You only make money by spending it. Easiest example of this is bills. If you pay your bills late, they charge you late fees and interest. So by paying things right away, it's like earning money. Defensive driver class, 8 hours for $400 discount on your insurance, it's like earning $50/hr. If you're renting out a shitty apartment, get it renovated to a luxury apartment, you can rent it for more. Find things to spend money on that will make you more money.

Money sitting around is called "dead money." Either it's being spent or it's dying.

PS - If you're earning cash under the table, don't bank it, but certainly try to spend it to earn more.
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Re: cash

Postby Hoser » Sat Feb 28, 2015 11:12 am

Sorry, there is no way a $1,500 investment in dividend stock is going to make you a multi-millionaire.
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Re: cash

Postby Dr Fu-Manchu » Wed Mar 04, 2015 7:14 am

Hoser wrote:Sorry, there is no way a $1,500 investment in dividend stock is going to make you a multi-millionaire.


Yes it can...if you invest your $1,500 US on the Zimbabwe Stock Exchange and take your dividend payments in Zimbabwe Dollars (AKA 'ZimBucks'), then you will end up with a sum of money equivalent to one of Dr. Evil's ransom demands. ;)
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Re: cash

Postby Calloway » Wed Mar 04, 2015 10:34 am

Dr Fu-Manchu wrote:
Hoser wrote:Sorry, there is no way a $1,500 investment in dividend stock is going to make you a multi-millionaire.


Yes it can...if you invest your $1,500 US on the Zimbabwe Stock Exchange and take your dividend payments in Zimbabwe Dollars (AKA 'ZimBucks'), then you will end up with a sum of money equivalent to one of Dr. Evil's ransom demands. ;)


That's exactly what the Nigerian prince told me. And all I have to do is send him a few thousand so he can access it! What a bargain!! :lol:
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Re: cash

Postby dubya » Mon Apr 13, 2015 9:10 am

Hoser wrote:Sorry, there is no way a $1,500 investment in dividend stock is going to make you a multi-millionaire.


All of the early investors of Microsoft and Google are millionaires (or billionaires.)

Granted, it's kind of a longshot, but $1500 is peanuts, even if you lose it it's nothing, but more than likely you'll have a nice sum sitting there 20 years from now.

Even if it earns just 10k or 100k, it's nothing to sneeze at.
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Re: cash

Postby Hoser » Wed Apr 15, 2015 4:59 pm

True, but it's on par with buying lottery tickets.
Nothing wrong with that, if you understand you are most likely not going to win.

If you want a 'nice sum' of money in 20 years you have to invest a reasonable amount. As long as you are investing more in addition to pissing away the $1,500 than that's OK. I've seen financial planning surveys where a lot of people include 'winning the lottery' as their retirement plan. I'm just warning against that type of thinking.
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Re: cash

Postby dubya » Thu Apr 16, 2015 12:06 pm

The worst you can say about owning, for example, Boeing stock, is that you probably won't make a mil.

That's a far cry from lotto.

You have a pretty good shot at making something, and a pretty remote chance of losing your investment.
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Re: cash

Postby Hoser » Thu Apr 16, 2015 3:27 pm

$1,500 invested in Boeing 20 years ago would be would be worth about $12,000 today.
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Re: cash

Postby dubya » Fri Apr 17, 2015 12:03 pm

Hoser wrote:$1,500 invested in Boeing 20 years ago would be would be worth about $12,000 today.


Right but we didn't invest $1500 in Boeing, we invested $500 in Boeing and $500 each in two other stocks.

We know that we turned $500 into $4000 with no effort on our part.

We don't know what happened to the other two stocks, they could have tanked or they could have earned big.

None of this has anything to do with luck, it's math.

If there's a %90 chance that every lotto ticket I buy will win $1, %50 chance it will earn $5, and %0.000001 chance it will hit the jackpot, then buying lotto tickets wouldn't be gambling, there would be a %100 chance you will earn some money off it.

The overarching principle here is using historical data to take calculated risks that aren't risks at all.
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Re: cash

Postby Bell X1 » Sat Apr 18, 2015 2:39 pm

Yes, it's a good practice to keep a proper amount of cash at hand. The amount depends on your personal needs. I'd suggest at least a months worth of expenses. Also, propane, ammo, etc.
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Re: cash

Postby toolate » Fri May 08, 2015 7:10 pm

Bell X1 wrote:Yes, it's a good practice to keep a proper amount of cash at hand. The amount depends on your personal needs. I'd suggest at least a months worth of expenses. Also, propane, ammo, etc.


With the interest rates paid in US banks and Credit Unions falling well below the rate of inflation, leaving it there is a loss.

All consumer commodities continue to go up due to inflation. Spending it on supplies that are non perishable, or have a long shelf life is a better inflation hedge.

Stocks and bonds seem to be the only liquid investments available to the average Joe. Real Estate will eventually pay out if you pick the right location. Real estate that generates income is even a better deal.

Now that the Obama has taken a break from "gun salesman of the year," it's time to "invest" in that AR-15.

Pew-pew
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