Debt

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Cash – 10 Fun Facts

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With debit and credit cards for spending and direct deposit putting funds in our accounts, cash may no longer be king. But, the paper bill has an interesting history in America. A few fun facts about cash:

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  1. Has it ever seemed strange to you that the Secret Service is in charge of both presidential security and counterfeit prevention? The second task is actually what the organization was originally formed to handle, way back in the Civil War Era.
  2. “In God We Trust” was not added to America’s currency until 1957. The slogan first appeared on a US coin in 1864 and has been used intermittently since then. The addition in 1964 was a statement that God was on the side of the Union cause; in the 1950s, because of high tensions over the threat of communism.
  3. The Bureau of Engraving and Printing prints 26 million bills worth around $907 million in currency every day and goes through 9.7 tons of ink. There are two locations where US money is printed. One is in Fort Worth, Texas, the other in Washington, DC.
  4. A dollar bill weighs about one gram. Five quarters weigh about one ounce; if you don’t have a postage scale, you can balance $1.25 in quarters on one end of a ruler and your letter on the other to estimate postage weight.
  5. The first $2 bill was printed in 1776. They were taken out of production in 1966, but reintroduced a decade later as a cost-savings concept. They remain the least popular bill. Only about 1 in 100 bills printed today are of the two-dollar denomination.
  6. The largest bill currently being printed is the $100 bill. Five-hundred and thousand dollar bills were printed until 1934; however, these were only intended for transferring money from bank to bank in the days before electronic transfers.
  7. How long an average bill stays in circulation depends largely on its denomination. Frequently used dollar bills usually only last around 21 months. A hundred, on the other hand, lasts seven and a half years on average.
  8. “Paper” money is actually made of a combination of around 25% linen and 75% cotton. If you look close, you will see that there are also tiny red and blue fibers throughout the bills. These are a device to make it harder to counterfeit bills.
  9. The highest denomination bill ever printed was a gold certificate in the amount of $100,000.
  10. Each paper bill printed costs 6.4 cents. While it costs about three times as much to create a dollar coin (18 cents) it’s considered a good investment because coins last so much longer than bills and thus have to be replaced far less often.

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Cash Is No Longer King: Stockholm Homeless Now Take Plastic

We’ve been hearing about the “cashless society” for years, a time when paychecks are replaced by ACH and you swipe a card or even scan your phone to pay for everything from your morning paper to nighttime drinks. But, in the states at least, there are still plenty of times that you need cash on hand. Many small shops still don’t take plastic, and you are likely to find that cab drivers, farmers markets and others aren’t ready to take anything except folding money.

But, in Europe, many people have transitioned entirely to virtual transactions. And, members of Stockholm’s homeless population have learned to adjust. Many of the city’s homeless support themselves selling a local culture magazine called Situation Stockholm. The publication covers local celebrities and can be purchased for 50 kronor (about $8). Sellers keep half the money they earn selling the magazine. But, with a little less than 3% of transactions in Sweden being made with cash, very few Swedes carry coins or bills anymore, which made it hard for Situation sellers to get a sale.

To combat this, magazine sellers are now carrying mobile card readers. Experts at the magazine suggest that the switch could increase sales by 20% or more. Many people in Sweden believe that the country will soon be the first truly cashless society.

Going cashless has a number of benefits, but also some serious drawbacks. When you go plastic, you get to enjoy a few perks:

  • instant records of all transactions so you know where your money goes.
  • protection against theft. With debit and credit cards, you are usually only responsible for up to $50 of unauthorized charges if you report the irregularity immediately.
  • bonuses like points and cash back. Many people choose to put every transaction possible on a rewards credit card so that they can get reap these perks.

But, there are also some downsides to trading paper for plastic:

  • you need to be much more careful about your spending. People who pull out the plastic can spend up to 30% more than those who use cash.
  • you can get hit with a lot of fees. Gas stations often charge a small premium for using credit instead of cash. Many credit cards come with annual fees. And, if you are rebuilding and need to use prepaid debit cards, those can have everything from monthly fees to charges for using the card.

In the end, the most savvy shoppers will keep a combination of cash, debit cards from a free checking account and at least one credit card with no annual fee. By having all of those available, you can pick and choose in each situation which option works best for you.

Credit Card Breaches and Student Loan Debt

Cash is King – Can You Live Plastic Free?

Could you live a plastic-free existence?

While a high credit score does much more than just give you access to credit, some people choose, instead, to eschew credit altogether. Some have been burned by consumer debt in the past. Others have ethical or moral objections to consumer culture or to lending institutions. Do you think you’d be able to pull off a no-credit lifestyle? You’d have to have the following in place:

A Plan for Every Purchase

If you don’t have the cushion of credit, every purchase would have to be saved and planned for in advance. This would go from building a budget that includes everything from the power bill to your weekly latte on up to more substantial purchases like cars or houses.

While this precision takes more effort, there are some substantial upsides. With cash, you will have a better idea where all of your money is going. The need to save before you buy cuts down on impulse purchases. And, in the case of something like a car, once it’s paid for, it’s paid for. Not having the burden of a monthly car payment frees up a portion of your budget; plus, you can carry a smaller amount of insurance than you’d be required to have if you owed money on your car, which also saves you cash.

Substantial Reserves

To make a large purchase like a house in cash would require having a six-figure bank balance. But, there are some great benefits to going this direction. Cash in hand gives you bargaining power in areas like the price, closing costs and the timetable of your purchase. On the other hand, buying with a mortgage means that your cash is still free to invest, which could have a larger pay off in the long run.

Traveling would also take more finagling than it does with credit cards. With no credit cards, you will probably have to make cash deposits for everything from rental cars to hotels to cruise ship accounts. Usually, each of those vendors would just put a hold on your credit which is lifted after your trip is over. If you choose cash deposits instead, you’ll need to save up for those in addition to any costs of your trip.

Eagle-eyed Attention on Your Cash

If someone steals your credit cards and goes on a shopping spree, you can contact your bank’s fraud division and get the charges removed. But, if someone steals paper money, you have little recourse. If you use debit over credit, you will also need to watch finances closely. If you report unusual activity within two business days, you are just out $50; but, wait longer, and you could be on the hook for up to $500.

While some people choose to go 100% cash-only, everyone has the option to do it some of the time to get the best benefits of this lifestyle choice. Consider, for instance, building cash in a savings account for your next electronics purchase. By picking and choosing when to go plastic and when to go cash, you can get the best benefits of both lifestyles.