First Person: The 3 Risks of Cash

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Since paying off and essentially retiring my credit card, limiting the use of my debit card, and all but eliminating personal checks as a payment option, I'm using cash more often. All of these changes were made to eliminate risk; however, I'm also facing a number of risks by using cash. Here are three risks paying with cash poses.

Easy to misplace or lose completely.

You would be hard pressed to find someone that has handled cash money and hasn't misplaced or lost it at one time or another; I know I have. I've even "put it away" for safe keeping and forgotten where I put it. The biggest problem I have is when I pay at a store and put the money in my pocket instead of my handbag. I can't tell you how many times I've lost money this way. Recently, I put $17 and some change in my pocket, and by the time I got home it was gone. I can only guess it fell out at one of my stops, but there is no way to know where.

Harder to keep track of your spending.

When we use our credit card, debit card, or personal checks to pay for something either the bank or credit card company will have a record of that transaction. However, when we pay with cash, we are only left with a sale slip that may or may not make it home with us. I'm very particular when it comes to keeping track of our spending, and I keep my family on a very strict budget so this is a huge issue for us.

No proof you ever had it if it is stolen.

I don't like keeping large amounts of cash on hand because there is no way to prove that we have it if something happens to it. Money that is kept in a checking or savings account is protected by the FDIC (up to $250,000) in case of loss. My good friend had $1,500 stolen from her home, and because she had no way to prove she had the money, she wasn't able to recover it.

Since no payment method is perfect, I'm trying to find a balance for each. Using cash is easy, but far from safe. My number one rule for cash is to avoid using it to pay for anything that costs over $200 that way I can minimize my loss.

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