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.
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.