Dear Dave: What is your opinion of businesses that no longer accept cash?
Dear Heath: Honestly, I think the whole scenario is kind of silly. Businesses that are suddenly into the “no cash” thing lose out on a lot of transactions. Believe it or not, there are still tons of people out there who make purchases only with cash. So, from a business owner’s perspective, this philosophy can cut into your market share.
I really don’t spend a lot of time thinking or worrying about the situation, though. When it comes right down to it, most businesses are doing that kind of thing for one or two reasons. Some of them just think cash is old school, and they want to give the impression they’re cutting edge and into technology. Others do it — depending upon the space they’re in — because their sales using plastic are higher than with cash.
I’m a cash guy. There are some situations where I might walk away if someone wouldn’t accept hard, cold cash, but in most cases I don’t think anything about it. I’ll just use my debit card, and buy what I need.
Dear Dave: At what point can you spend, and have a little fun, when you’re following the Baby Steps plan?
Dear Jen: Everyone likes having fun, and there’s nothing wrong with spending some cash if you can afford it. I just want people to make sure they have their finances in order first.
I recommend completing the first three Baby Steps before you run out and buy a bunch of toys. Just to review, Baby Step 1 is saving $1,000 for a starter emergency fund. Baby Step 2 is where you pay off all debt — except for your home — using the debt snowball method. In Baby Step 3, you go back and fully fund your emergency fund with enough cash to cover three to six months of expenses.
Completing the first three Baby Steps puts you on pretty solid financial ground. At this point, once you’ve saved up the cash, it’s OK to take a vacation or buy a reasonably priced toy. But don’t have so much fun that you forget about the other Baby Steps. Baby Step 4 means putting 15 percent of your income into pre-tax retirement plans, like mutual funds and Roth IRAs. Don’t neglect saving for college if you have kids. That’s Baby Step 5. Baby Steps 6 and 7 are paying off the house early, and building wealth and giving like never before.
Remember, there are only three things you can do with money — spend, save and give. You can do all three without putting yourself in a bind by following my plan!