Inconvenient Truth

Inconvenient Truth on Cash Versus Credit

admin
by admin
January 12th, 2010

Cut Credit CardsWhat is cash management?  Cash defines your true ability to meet your needs and your wants in life.  Cash available to us describes the reality of what we can plan to do today and in the future.  Cash is not a projection or an assumption; instead, it provides truth about where you really are.  Financial success is found in the ability to measure how much cash you keep or invest in being able to keep.  What came in and what went out, that is the question?

  • Cash Inflow: Money that came in (Credit)
  • Cash Outflow: Money that went out (Debit)

How will you maximize your opportunities for Cash to come in?  How will you minimize the opportunities for Cash to go out?  True cash success will come down to exercising the appropriate life skills, not a get rich quick scheme!  When it comes to your cash you must think with the heart of an accountant.  You must ACCOUNT for:

  1. Where your cash is coming from,
  2. Where your cash is, and
  3. Where your cash is going

To account for something you must be able to see and understand it at all times.  Consistency is critical to make sure that you create a cash management rhythm.

Now, it is equally important to understand that CREDIT IS NOT CASH!  “Use credit if you must, but in true cash you must trust!”  In other words, there may be times where using credit is ok and appropriate.  However, you must understand that credit is NOT cash!  Credit also can give you the impression that you can purchase things you cannot afford.  So, to avoid too much debt, late fees, and paying interest; it is always better to use cash.  Cash makes sure you live within your means and helps you to understand your true cash position on a daily basis.  AND, when you really good at cash management, your values will begin to change for the better – and you will no longer simply live within your means – you will always live within your values – no matter how much money you have!

So, the concept would be to increase the amount of cash you have coming in, and decrease the amount of cash going out, especially the cash you are putting towards your credit cards!

Related posts:

  1. Barack Obama’s Controversial Vegas Remark, Shed Some Light on American Debt
  2. Decrease Debt and Get Out of “The Card Game”

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  • http://intellokids.blogspot.com/ Barbra Stephens

    I’m always trying to live below my means…bringing more money in, I try to be as organized as possible, especially with my time.
    I would like to learn a better way…

  • http://www.bayarearealestateguide.blogspot.com Julie Parker

    Oh, I am so ashamed of the NSF fees I have paid in not balancing my check book and managing my cash better.

    I have used credit cards for years when ever I did not have the cash or did not want to spend the cash I had and that has really gotten me into debt. I am looking to get rid of these bills and stop using credit cards.

    I do have some stable sources of income but normally I have more that needs to go out and choosing what to do with what I have is a concern of mine.

  • Kenyetta Tribble

    My cash management began in as a college freshman. It was my first month and there were so many credit card vendors in the quad offering free items I had to stop. I was a “credit innocent” college student and was sucked in to signing up for an American Express. I was given a $1000.00 limit, which was the most money (well credit) I ever had at once-my financial aid check wasn’t ready yet. Long story short I spent the $1000.00 in one month. I had no clue about cash management, credit cards interest. All I remember is that you could buy something and pay it off in small increments for however long it took. Well not so with American Express, the balance was due within 45 days.

    I shared all this to say that I learned how important cash management was and it has been something that I have struggled with off and on since age 17. I like the how In and Out Cash Management not only defines cash management, but provides coaching support and VISUALS to help me understand where I need to go and how to get there…I’m so excited!!!

  • Jamar

    Great Article. Credit cards can be very dangerous when not used responsibly. And its unfortunate that so many of us have misused them and have been taken advantage of by the credit card companies. If we could only keep in mind that the 5k limit on our Visa Card is money that you have to pay back with interest!

  • Jacoby

    @Jamar, I agree because I got a lot of credit cards right after high school, but not knowing the long term costs associated with interest rates. Now I use them for emergencies only!

    You all might like this tool: check out this tool to calculate the time it will take to pay off a credit card, its pretty nifty: http://www.bankrate.com/calculators/credit-cards/credit-card-payoff-calculator.aspx

  • http://intellokids.blogspot.com/ Barbra Stephens

    This is so interesting to me to hear some of the comments. I was taught early on about money and credit cards…buy my parents. I really learned about money from my grandparents who lived through the Great Depression. As a little girl I loved stories…I didn’t hear you standard fair tales…but life history.
    Oh…I have had my problems with money….things have come up…
    I am really appreciating this feedback…and post.
    You know.
    Getting a full picture.
    Thank you everyone….

  • http://www.bayarearealestateguide.blogspot.com Julie Parker

    Right Barb,

    And don’ you recall someone once saying that Americans want to live like they are rich. So we use credit cards to pretend we have money.

    We buy bigger homes than we can afford so we can enjoy the life of the rich when we are not rich and really cant afford these huge house notes.

    We do the same things with our cars and other luxuries.

    Even grocery shopping we buy what we want or what we crave and often go beyond our means to buy what we lust after.

    I am really working on controlling my spending and impulse urges because if I dont have the cash or the means to make a purchase its because my money management skills are off base.

    How many of us really use a common sense budget to monitor and control our spending?

    What tools do we use to manage our bills and the flow of our cash?

    I know I’m guilty and I’m woman enough to admit I need help.

    This is a really good blog and I love the information and the communication.

    There is a problem in America with spending. We are so used to having money hand over fist that we have never learned to be disciplined spenders and that is what this new economy will take.

    We have to reduce spending and the use of credit cards.

    This means we value discipline over desires.

    Julie

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