Color of Money Live

Apr 05, 2012

Should we ditch our cash for electronic currency? David Wolman envisions a time when people will text money. Wolman will be joining The Washington Post nationally syndicated personal finance columnist Michelle Singletary Thursday, April 5th at 1 p.m. ET. to discuss his book "The End of Money: Counterfeiters, Preachers, Techies, Dreamers -- and the Coming Cashless Society." The book was the Color of Money Book Club pick for March. During the chat, Singletary will also be available to answer your personal finance questions.

So an very interesting topic today, don't you think especially given the recent announcement that Canada is getting rid of its pennies. So again joining me today is David Wolman, who has written a very interesting book that advocates for the end of cash. Join in the discussion. What do you think of going cashless?

And as always, I'm also here to answer your personal finance questions. 

So let's get started.

A month or so ago, I wrote in with a "good" dilemma: we were considering buying our future retirement home but dithering about spending the money. Your guests said something like, "it sounds like this has been a dream of yours for a long time" and that I should go for it. That really hit home for me: I realized that it HAD been a dream for well over 10 years, and that I was letting fear scare me away from grabbing at that particular brass ring. We went on our trip, fell in love with a place, and are now under contract -- and we got a great deal to boot! So thanks so much for helping me give myself permission to enjoy the fruits of my labors. :-)

What a great way to start the chat. It does feel good to spend your hard earned saved money!

Good Afternoon, I finally got out of debt and I'm starting to save. I currently put away 200 plus per month and I contribute to my 401(k) at work. Is there anything else I can do?

You took the right first step -- getting out of debt. Good for you.

Just strive to build your emergency fund -- 3 to 6 months of living expenses.

Put money in a separate 'life happens fund." That's a creation of mine in which you save for the things in life that happen such a a car repair, or maybe a vacation. The point is you don't have to dip into your emergency fund to pay for the things.

Canada just announced that it was eliminating pennies because it costs too much to produce. The government said cash transactions will begin to be rounded to the nearest nickel. Do you know how much it cost the U.S. to produce pennies? Should we follow our northern neighbor?

Greetings! Wow. It's great to see that so many people are interested in this question of the fate of cash, and approaching it from so many different angles. With some quick scrolling I landed here, so let me start here. (It's also nice to start small, or at least w/ small change.)

Go Canada! Nixing the penny is a no-brainer as far as I'm concerned, and many countries and central banker types around the globe seem to agree. Right now we're at about $0.024 to make a penny and $0.11 to make a nickel. That varies, of course, due to the spot price of the constituent metals, but there you have it. You need not be an economist to see that as some seriously skewed math. Should we follow our neighbors to the North (and the Aussie, Kiwis, Scandinavians, and others)? Heck yeah.


Michelle, thank you for your advice over the years, as it's literally paid off! We've recently had our first child and want to increase our life insurance coverage. We're in our mid-30s and only have some life insurance through our employers. We want to do more but navigating the options (term? whole? universal?) is overwhelming. Where to start? What's the smartest choice financially? Thanks!

First, you are welcome. And new baby how very nice. My first baby is on a college tour right now meeting with school officials and hopefully wowing them so she can get some FREE money! She's 16. I feel so old. 

But to an independent insurance agent. I favor term because the cost is lower than whole, etc. and you get more coverage for your money. And it is a good idea to get some life insurance seperate from your job because if you lose your job you lose your life insurance often.

In my line of business, many people went and got Master's Degrees. Folks asked me what I was going to do. I told them I had to save for our child's college education. Some folks got promotions or other jobs. Others are in the same job but with a MA degree. Now, it almost appears that I need a higher degree to keep my current job that I am more than proficient at performing. I don't want to go in debt to keep my job and appear more "name" brand and up-to-date. I do keep current in my profession but on the cheap, e.g, reading management books and journals. By the way darling child is in college and we didn't save enough but are doing ok for tuition because of house and car debt only. I can't imagine retiring and still having our own student loans or our child's loans.

I'm writing about this for Sunday. But I agree about this sad trend of seniors dragging debt into their retirement years.

As for your advanced degree. Talk to you bosses. See what they think. You may be worried for naught. Perhaps just taking a class or two or going to a training session will satisfy any educational issues they might have for your job. And I wouldn't go back to school and incur any loans. Both my husband and I got advanced degrees. Most of it was paid by our employers and the rest with cash.

Hi David and Michelle, You probably know by now that Michelle is a big fan of cash for people who want to stick to a budget. The whole psychology of seeing one's wallet go from full to empty is a powerful and almost automatic self-control mechanism. What are your thoughts on this? Also, how about the impact of non-cash money on small businesses, a sector of the economy that the govt is trying to encourage to grow? I shop at farmers' markets to support local agriculture and small business owners and they are cash businesses. One could argue that the costs of handling cash are greater than for non-cash money, but these are small enterprises that don't pay someone else to count their cash; they just do it themselves at the end of the day. On the other hand, that service charge payable to Visa or MC would come out of their pockets whether or not they have all the time in the world to count cash or could actually use the convenience. Finally, although I am hardly a privacy nut, I do like the idea that not all of my transactions are capable of being traced and analyzed. And I have never partaken of illegal substances so I'm not talking about those sort of transactions! I just mean that what I do with my disposable income is private and should stay that way. My atheism would make me a strange bedfellow with those who see the end of cash as the beginning of the apocalypse but I have to say that I have more in common with them than you on this front. But thank you for writing an interesting book!

One of the topics I try to address in the book is the fact that money has different functions: medium of exchange, store of value, unit of account, blah blah. That is the textbook definition stuff, but it's actually crucial when thinking about how we treat (read: spend!) money, and how we have a habit of treating different forms of money differently.

Everyone knows it can be tough to break a $100 or $50 bill. Our brains know that a bunch of smaller notes may add up to $50, but there's something special about that $50--about the paper. When analyzing some of these behaviors and the various spells that cash casts on our minds, psychologists and behvaioral economists talk about things like "pain in spending" and "salience of the form." To cut to the chase, for many people the pain in spending is more severe, more palpable, when they have to fork over tactile objects, as compared to making a payment with electornic money in some form. This is no doubt a strong defense for keeping cash around. I try to dismantle, or at least scrutinize, that thinking in the book. But Americans right now are $800 billion in credit card debt, so something is obviously hurting people, and whether or not cash truly is the right weapon for fighting back, thousands, if not millions, of people believe it is the answer, and they have found an ally in it. That is a fact that technologists and digital money enthusiasts need to be senstive about. But the thing is, that cash has all kinds of costs and dark sides, too.

While I agree with a lot of your opinions about college, not accruing so much debt, picking a good program, a lot of jobs don't really have a college degree that fits them perfectly. I am a tech editor with a defense firm. I have a writing degree and spent four years writing poetry and fiction, with no classes in any sort of professional or technical writing. Googling around, I found one, non-online university with a specific professional/technical writing program. Perhaps the colleges need to get with the program and offer degrees in things that are actually useful. It took me three years out of college to figure out what I was really good at, and what my English degree qualified me for. It's really about learning all you can about what you are best at and then throwing yourself into figuring out how you can survive doing that.

I agree. Where I differ with peopl on this is their thinking I don't value education for the sake of learning. I do. I have two degrees and my masters did not help me earn one extra penny or least I didn't get promotions, tv show, etc. just because I had it. But I wanted to learn more about business for myself so I got the advanced degree but with no debt.

I think parents, grandparents, educators need to be honest with students and help them see  that they need to do consider hard what jobs they can get with the major they want to take. If you are going to college with debt you can't afford to just go for the education. You need to get a J O B.

If one's going to celebrate Tax Freedom Day on April 17, did they celebrate all the things our taxes buy? Three weeks each in January and February for old-age pensions, public education, and national and local defense, security and safety; then we can move to public parks, regulating exploitation of consumers, workers and the environment; road maintainance, etc.

Zing! I love this comment. Ever heard of the tax gap? This is a boring term for an absolutely colossal problem: the gap between what taxpayers collectively owe and what we pay. The best estimate right now is that this # is ~ $400 to $500 billion a year. Not all of that evasion is cash-enabled, of course. But a huge chunk of it is. Big, big problem. And that's just one facet of the costs-of-cash prism. Cash management? Printing, moving, storing, securing, counting, inspecting, etc... -- all of that is ~ $150 billion a year. For a bit of perspective, that's 3x the budget of the Department of Education.

I paid off my student loan this week! Other than a mortgage, I am completely debt free, and it feels wonderful! Thank you for being that little voice in my head telling to me to pay it off as quickly as possible!

Bravo or Brava to you. I really mean that. I love these testimonies. And glad to be that annoying voice. I hear that a lot. Warms my heart. Just want everyone who is in debt to feel what you feel right now -- FREEDOM. It's priceless.

Michelle,Thank you for being such a good mentor. I wrote you a few years ago when I had paid all my debts. Your columns and books have always helped me stand strong against all the people and companies that want me to spend more than I can afford in the hopes of a "good life." Recently, I had saved up to make the jump to grad school (necessary for my career advancement). I was so worried about doing it sensibly. Since I waited ten years after doing my undergraduate work, I was fully prepared to pay my own way at a low-cost, excellent institution and work at the same time, but I am so happy and grateful to say that I don't need to do it! I can keep my nest egg! I got full tuition and a stipend at TWO places, one of which will cover my living expenses. What an incredible reward and all because I gave myself options, worked hard, and got lucky. I just had to celebrate with you and with all the folks here. Thanks for being such a great community of people. Wish you all the best in your pursuit of real, non-material happiness and financial freedom.

Wish you could see me now. Tearing up. Really. Of course I'm a big old cry baby.

I'm so proud of you. You prove what I tell folks all the time. That good things come to people who wait, delay things they can't afford. Save.

Kudos. I know others are on this chat and who will read later will celebrate for you. And it's inspiration for others.

What would be your advice to couples considering having a baby, who can afford the basic budgeted expenses and have good savings, etc, but have concern about the financial commitment? Daycare for an infant currently runs $1,200 - $2,000, $1200 for a home daycare (if you are lucky to find it). We can afford it (for one, at least - twins might be another story), but it is certainly a lot. Would you look at this like taking on a debt, in terms of financial planning? It is likely to be around the amount of our mortgage, if not higher, and seems to me to be much more of a commitment. There are tradeoffs I can see, why many women (and men too of course) wait until a later age to start having kids in the DC area.

I so understand your concern. I was worried about the cost of children too. Add in saving for college, the stuff they break, the sports, camps, clothes, movies for a family of five (we have three kids), etc. 

But with each child we did what you are doing, we looked at the cost, went over our budget and went for it when we saw we could make changes to cover the extra expenses.

It's not the romantic way to look at having children but it is realistic. 

If you can afford it and not tank yourself financially then go for it if that's what you want.

Besides if you are good to them and occassionally let them have want they want, you'll have a backup to help take care of you in your old age! I had three to increase those odds.

In the excerpt of your book that was published on The Awl, you mentioned that the US cannot get rid of the penny because it would be a tacit acknowledgement that inflationary monetary policy has made our system of coinage useless, and that this can lead to much worse inflation. So, what do you make of Canada's nearly simultaneous announcements that it would begin minting digital currency, and getting rid of its penny? Is this risky? Wise?

As mentioned earlier, I think it's wise. No--I think Canada's byebye to the penny is fantastic. However, the reason I bring up this idea in the book, this notion that forcing people to think a little too much about inflation might make them go beserk is a legitimate one, or it's at least worth considering. I'm not so pessimistic that I think American's can't have a rational, level-headed understanding of the role and realities of different currency denominations, inflation, purchasing power, etc. But when a financial journalist friend put this idea to me--that making people worry about the value of a penny might make them worry about the value of a dollar, and that could threaten the Whole Darn System--I was captivated enough thzat I wanted to put it in the book. FWIW, I also struggle to find strong reasons why Washington is so resistant to the idea of killing the penny. This one, although certainly speculative, if not a bit out there, seems to merit consideration.

Why do we still have paper $1 bills? One dollar today is the equivalent of a quarter back in 1975. Could you imagine people in 1975 using a paper quarter? That's what we're doing today. The same goes for the penny. There's no way it costs the gov't less than a penny to make a penny - they have to be losing money on this coin.

I suppose the short answer to this Q is that we have paper $1 bills because people seem to dislike $1 coins even more. There is also the powerful lobby on behalf of a certain paper manufacturer in MA and some cotton (linen fiber) producers in GA, which I touch on early in the book. Yes, special interest groups even have a hand in the world of cash production.

I know I hated the dollar coin. Kept confusing it with a quarter. And as cheap as I am, I was not happy the few times people didn't tell me I had given them a dollar instead of a quarter. 


Thanks for your column Michelle on going cashless.  Something you didn't mention but which comes up regularly: nobody can prevent me from giving cash to someone, but authorities or companies can block payments to parties they don't like.

Donations to wikileaks, PayPal recently blocking payments to erotic eBooks, the recent SOPA bill all come to mind.
Next time it may be something less extreme that I "should not be paying for."

Maybe Wolman addresses this.

Great point, and although not precisely the same, a decent place for me to jump in w/ a few notes about the privacy thing. The blocked payments to Wikileaks example is a terrific--and worrisome one--and I discuss it in the book.


Privacy--or lack thereof--in the digital age is a scary thing. Full stop. Just signing on for this chat today, I had to do a little song and dance w/ a WashPost administrator so that we could feel safe about passwords and such. But this is the world we live in: Facebook and Google gather data about us, and most financial activity on the globe today is already electronic. We need to fight for privacy and push for robust regulation to protect it.


However, the case I try to make in the book is that the difference between privacy and anonymity not just a matter of semantics. Privacy we want, but most people, when they pause to think about what it means to live in a civil society, don't actually want anonymity. If you vote, pay taxes, have a driver's license, plan to collect social security--any/all of that means that you are now, to a degree, a known quantity. And as radical as it sounds, I would say that's OK. There is nothing in the Constitution saying that you have a right to anonymity in the hiding-in-a-cabin-in-Montana sense of it. Civil society means playing by the rules, and many of us actually want law enforcement to have a kind of break-the-glass access to, say, securty camera tapes at an airport, or to financial records of mafioso or convicted drug dealers. None of that is to say that privacy concerns should be dismissed hastily. But this is a TENSION, and to jump to cash's defense because it provides an anonymous means of transaction is, I think, a gross oversimplification.


Given the recent big data breach, shouldn't we carefully consider the privacy and theft issues with having every thing go electronic?

More on privacy--yeah! In thinking about the fate of cash, I found it quite amusing that just a day or three after Canada decided to kill the penny, we saw news of this huge data breach. It had a real one-step-forward-two-steps-back feel to it. On the other hand, for those of us geeking out on quesitons about money in various forms, the present is a very lively time!

I think the most important thing is that you graduate having learned skills, not just gaining knowledge. I got a degree in a political science and I admit at the time I had no idea what I was going to do with it. Every job I've gotten since has hired me because of the math and statistics classes I took, not because of my knowledge of political theory. People are hired because they are skilled writers or designers, not because they have an English or Art degree. I think there are too many college programs that allow students to graduate without any marketable skills.

Exactly. Well said. Well said.

And my point exactly. Fine if you want to major in English or Poltical theory. But also get some skills at the same time that will help you get a J O B. 

Why don't you like cash? Are you afraid of all the issues with data theft?

For starters, it's filthy. And expensive. And very helpful for criminals of every stripe (except B. Madoff). It's also most costly for those who have the least of it. This is a huge part of the book--and a rather counterintutive idea upon first glace--but let's see if I can hit on a few key points somehwere here...

After fifteen years of chipping away and scrimping, I am finally free of my student loan debt! Best of all, my husband gave me a check for the last few grand as a paper anniversary gift. Makes me feel a little cheap for getting him a Sodastream, but there was no better feeling than calling up the Department of Ed and teling them it wasn't them, it was me, and I just didn't think we could keep this relationship going. PS - On a whim, I asked the student loan rep if they could cut me a break if I paid the balance then and there. He gave me 10% off the total! Just for asking! So that's a little more money in my pocket than I was planning on.


That's not yelling that's me excited. 

Love it. And a discount. Way to go. 

More celebration. 


I understand that while writing the book you didn't use cash. Is that true? You actually didn't use any cash and for how long? How did that experiment work out?

It really wasn't too bad, right up until those handful of occasions when it was totally impossible. Paying the babysitter one night when my wife was out of cash (and babysitter's dad didn't have a PayPal account). Hopping a train ino NYC one time. And then, of course, when I got to India to report on what could be called the mobile money revolution. While reporting on that, ironically, I still needed some cash. There are some other episodes sprinkled here and there in the book. The truth is, though, it would have been infinitely harder to only use cash for the year. Think it through for a minute with your life and the things you have to pay for. Borderline ridiculous, right?

Re: lavish spending for the convention in Las Vegas....have you ever tried to plan a meeting in a major city? Yes, cheese plates DO cost $19 per person! And, $44 for breakfast can be a buffet of eggs, cereal, and coffee. Yes, based on the information money was wasted (commerative coins), and probably holding a covention in Las Vegas might not be the best idea, BUT unfortunately, hotels charge a huge amount of money for catering and if you are holding a meeting at said hotel, and you need to feed attendees anything, it will cost more money one would think.

I actually have planned things at a hotel and the costs can add up. And you are right to an extent. But when the government is running a deficit and people are broke and unemployed it is just not good common sense to pay $75,000 for your team paid by taxpayers to build a bike. Play Jenga in the office for goodness sake.

Michelle, I am going through a divorce and while I have some student loan debt I have no auto debt. I am in a position to hold onto my home by buying out my spouse but it's a bit of a financial stretch. I have an emergency fund and life happens fund. Any thoughts? If I were to sell I would never be able to get into the same house with that money...there's just too much equity already built up. I wasn't sure what your take would be! Thanks

Do you need that much house now? Ask that question. Lots of spouses try to hold on to a house that really, truly takes two incomes. Then I see the spouse who keeps the hosue lose it in the end. When you say financial stretch that concerns me. It often doesn't leave any room for error, job loss, illness, the things in life that happen. Might be better to sell and start over.

I'm an odd one. I understand Michelle's theory for why she suggests cash, but I prefer CC. I use CC's (2) which each have a cashback option for between 1-3% depending on where I shop. I use them for almost everything (probably about 95% of my purchases). I pay them off each month. I get between $800-900 per year back (when I was a small business owner and use the card for the business, I got about $1500-1600 per year). Yes, impulse buying when using a CC instead of cash makes me spend more, maybe $30 or so a month. So I spend about $350-400 more every year, but I get about $800-900 cash back per year. Definitely sounds worth it. I still come out ahead of where I'd be if I resisted impulse buying by using only cash. I understand that this doesn't work for everyone, but it definitely works for me.

So to keep the dream going, you would hire a really good fee only financial planner to figure out how to protect the money but I doubt an adviser would suggest you set up accounts to stay withing the FDIC coverage. 

Frankly I think you would be just fine with a few accounts and some solid investments.

Hi Michelle! I just read your recent columns (thanks, Tia!) and I think the way that you are bringing up your kids is so amazing. Your 14-yr-old's comments about why she didn't want to participate in the lottery dreaming were hilarious. I wish more parents were like you but I feel like no one really teaches kids the value of anything these days.

I know right. If you haven't read the piece I did on the Mega Millions, you had to. She had me falling out the chair. She was so dead pan when she said it. Like really, you ain't buying me hardly anything. So funny. But honestly I know lots of parents who are teaching their children well when it comes to handling money. The key is to just stay focused and look ahead. As the parents, grown ups, we know what it takes to live a good life without debt and financial stress. So when they ask for stuff or nag you just keep thinking about that. 

I know I provide them with a good home and we keep the drama to a minimum in the house so I don't NEED to buy them stuff to make them happy. I'm cool with the looks that say "I'm putting you in a nursing home" when I say no to the many things they want me to buy. I'm cool because right now that 16 year old (not 14) is on a college tour and we have the money saved to send her to a reasonably priced college. She doesn't have to take out loans. She doesn't even have to work during the semester (although we will require it for breaks and summer). We at least removed that stress.It feels good.

I too am writing just to share the good news. When my daughter graduated from college she was very diligent about paying off student, credit card and new car debt. Now that she is starting grad school in August, i have been preaching about staying away from loans ("Michelle wouldn't like it."), and here's the good news: she has gotten a fellowship that covers all tuition and fees, and a good part of her living expenses as well. (Definitely better than winning the lottery, because she earned it!)

You see: careful and responsible financial behavior doesn't necessarily depend on physical money. And personal financial management tools are only going to get more clever, and only going to become more helpful when it comes to guiding us toward smarter financial decisions. Think about Quicken and how novel that was for people when it first came on the scene as a budgeting tool. Now there are things like The home screen for that service shows you your net worth right at the top of the page, and for most people with a mortgage, that means a negative number. I would argue that design and info deliver of that variety will have a tremendously positive impact on our financial behavior, which could be far more profound than the old-fashion earmarking-in-envelopes strategy espoused by people who have never given much thought to the wider societal costs of cash.

David, love that twist. So funny.

Another wonderful testimony. Keep them coming. Inspiration for all.

I love the idea of going cashless. How do you think we would accomplish things like tipping, though? Not at restaurants- it's easy enough to add a credit card tip. But what about hotel bellmen, valets, people you want to give a couple bucks to without a scene or exchange of funds transfer information?

Tipping is one of the strongest defenses for keeping cash around in the short term. It would foolish to advocate for the cashless future prematurely, and until there is a way (or ways) to tip people who depend on cash tips for income, we definitely shouldn't go there. But I think technology will get us there. Something along the lines of aiming a phone at a code next to a name on a name badge--SOMETHING of that kind might be here before we know it. And it's worth adding that people tend to tip more when they pay w/ electronic money than when they pay w/ cash.

In Michelle's column about your book you say going cashless is good for the poor. Can you explain further? Won't going electronic hurt the poor who often don't have the money for cell phones, internet, etc. This doesn't make sense to me.

THANK YOU for this Q. Really. (And for level-headed delivery. A woman at a recent book reading put it slightly differently w/ something along the lines of: you classist b**tard!)

So the short answer is NO--electronic money is a tool you, me, Michelle, and many many people take for granted. This isn't about credit cards; not even a little. It's about access to a safe and secure means to store your wealth, however little or however much you have. For most of us today, that means having a bank account. We have all kinds of reasons to dislike bankers in 2012, but a no-frills bank account isn't one of them. Compared to the billions of people who are trapped using only cash, having the ability to toggle between electronic and physical money is a luxury, even if most of us in wealthier countires rarely stop to consider it as such.


When you are stuck using cash, the costs of cash skyrocket. Check-cashing services and their fees. Usurious local lenders, especially in poorer parts of the world. Your money is subject to theft, extortion, or destruction, and--this is key--it has a habit of being spent. I don't mean spent neccesarily on frivilous things. On the contrary, the poor are brilliant survivors, and they know how to stretch limited resources in incredible ways. But cash in hand (or under the proverbial mattress) has too many claims on it. The drunk uncle, the neighbor who needs a new pair of shoes, the roof that needs repairing, the child who needs medication for an ear infection. The problem is that to climb out of poverty and stay out, you need to save for bigger ticket investments. Schooling is the big kahuna, but something like farm equipment would be another good example. And it's so much harder to save without access to a savings account. Development wonks talk about this as access to financial services, but I would think of it more as simply leveling the playing field. Think of it this way: cash isn't merely expensive, it's that the costs of cash are unevenly distrubuted, and they hurt the poor more than anyone. Cellphones, it turns out, promise to change all of that.


I don't use ATM cards. I deal with cash or checks and checks minimally. I do use my credit card for major purchases, e.g, hotels, etc. I spend less when I count out the money or look in my wallet to see how much is left. Seeing cash is different than electronic zipping of money.

I like this turn of phrase, "credit card for major purchases." I open the book w/ the story of the underwear bomber. And whenever I'm reminded of that episode, I'm still just baffled that this guy bought a one-way ticket to the other side of the globe with $2100 in cash (or whatever it was), and yet that fact, coupled with other warnings that had made it to the desks of law enforcement, he still almost blew up an airplane.

Hi Michelle-- Big fan of the chats. We are in our 40s, no kids, own a house, both steadily employed. However, I'm closing in on a one year fellowship at a University and my wife would take a sabbatical from her job to come along. We're looking for resources on what financial and logistical considerations we should plan for during this adventure. Are you (or the chatters) aware of any such resources? Most of the sabbatical stuff I find tends to focus on how to organize your year of travel not the practical considerations...

Not sure of any resources. But generally the same rules apply. Budget, budget, budget. 

Hi Michelle. My husband recently got into a conversation with his coworkers about what would happen if they won the lottery. All but my husband said money for kids would be put into a trust fund that would be distributed once they turned 18 (or 21 or whatever). My husband and I think that is just not a good idea at all. What do you think?

I say when they are 50.

Just joking. I think we all have to be careful about passing on great wealth to our children. There is something to be said about working for what you have.

Do you think this is the first sign that other coins will go and then cash? What should people do with their pennies. I'm not below picking up a penny I see in the street.

Don't pick it up. Really. From an economist perspective, the cost-benefit just isn't there. You risk a back injury when you stoop to pick up that essentially useless little metal round, which will cost you a lot more than a penny can buy. You might as well pick up every acorn you see on the sidewalk as well, and either sell them to a enthusiastic organic farmer at 2 cents per unit, or sign them with a Sharpie and see if you can sell them as artwork!

Hi Michelle, I've written in about paying off student loans before. I am close to paying off one of my loans, only have about $1,200 left. I have enough to pay off the loan, but am wondering what is the best way to do that? Is it ok to pay off online or is this something best done by mail/check? Thanks for all your solid advice over the years. I'm still a way's off from paying off all my loans, but thanks to you, I got rid of my credit card debt and have paid off a significant chunk of my student loans over the past few years. Every little bit helps, right?

Good for you for sticking to this journey.

Before paying off the last bit of that $1,200 call to double, triple check the payoff. And have the lender give you a date that the payoff is good for. Then pay online and be done with it. And on to the next. 

Hi Michelle, I need some of your "tough love." We recently moved into a 1960s house as part of scaling-back our financial commitments, and still haven't fully rebuilt our cash reserves. Well, the house could really use new appliances and cabinets and counters to redesign the kitchen so that it works better for us; but, that means spending about $5,000-$8,000 (my husband is able to do most of the work himself, so that saves us a lot). We'll be getting some money back from the Feds and State, as well as flex spending. I know the responsible thing would be to rebuild our savings first, but the kitchen redesign would make our day-to-day lives so much easier. I know the money saved on energy costs will take quite a while to make up the money we spend on the new appliances (although some of these may be from the 1980s, so maybe it would add up faster than I think). Talk some sense into me, please.

So if you  really need to buid up your savings do a combination.

Keep saving, but pick one or two things you can do to make life easier and spend the CASH to do those improvements.

Then save some more. Stop and pick another project you pay cash for.

That way you are saving and improving your daily life.

I agree with your article.  I think there are also a few points to
take into consideration beyond what you point out.

1) It is harder for cash to be confiscated by governments or banks or
past due creditors.

2) Cash is private.  I think many would not like the government to
know that they are purchasing investment coins, guns or the like.

3) Beyond tips - the black market.  While I believe everyone should
pay taxes when due, having an electronic paper trail for the IRS to
review every cent of transactions for sales taxes, or maybe gift taxes
or any of the 100s of things that they can get you for.   While I
don't know how much of the black market supports the entire economy,
bringing it to a screaching halt may be undesirable for everyone.

4) Security.  A dollar bill or coin isn't going to be unavailable
because the internet is down.  Ever try putting a smart phone in your
mattress?  Dollar bills are much more cushy :)

Fair enough--phones are not soft. This writer also rasies the valid point about a blackout or major calamity, in which the banking system fails and all of our digital devices run out of juice. In the short term, a decent defense of cash, although there are some interesting anecdotes in the book speaking to this, such as the banking strike in Ireland ~ 40y ago. Commerce should have ground to a halt because there was no paper money available. Instead, people just started circulating hand-written IOUs. Remember: money is only an idea, which means anything can be money, provided we believe in it. Wampum shells, cows, Facebook Credits, Bitcoin, feathers. They have value because people trading in them believe they have value. We feel that way about rectangular slips of paper that otherwise have no utility. That is the magic of money and national currency, but we have clearly already decided that we are OK with national currency in electronic form. Remember: most money and most economic activity today is already electronic. And yet--and this is the paradox that makes this topic so fascinating to me--when you wonder aloud about whether cash is on its last legs, people fire back w/ these emotionally charged responses. But perhaps that's to be expected. It's money, after all.

Do you really think we are near a time when cash will be obsolete?

Near term? No way. Medium term? I'm hopeful. There seems to be a number of different forces ganging up on cash like never before.

Hi David, I don't mean to sound confrontational, but what gives you confidence that criminals won't simply figure out a work-around with electronic funds that they can't do now with cash? Think about all of the identity fraud that happens now from the comfort of some crook's apartment in the dingy suburbs of Moscow, Pyongyang or Oklahoma City for all we know!

I think many will just pivot and move to the digital realm. But all of the thuggish ones, for lack of a better term, will have a tough time. 10,000 bank robberies in the US in 2009-2010. Surely not all of those entrepreneurs are tech-savvy enough to hack their way to riches. More broadly, I think this issue is just making business harder for them.

What a wonderful chat today. I loved all the testimonies. So many of you have so much to be proud of because it is not easy getting rid of debt. If you have a debt defeater story keep them coming. Send them to my e-mail at either or

I'm also looking for people 50 or over who are still paying off student loans for themselves or children, grandchildren.

Finally, thanks so much to David Wolman for joining me today. I know he gave me a lot to think about when I read his book. And great answers here today. 

As always, thanks to all of you who joined the chat. If we didn't get to your question I'm so sorry. But keep your eye on my print column or eletter you may see your question answered.

Take care and stay financially safe!

In This Chat
Michelle Singletary
Singletary writes the nationally syndicated personal finance column, "The Color of Money," which appears in The Post on Wednesday and Sunday. Her award-winning column is also carried in more than 100 newspapers. Her latest book is "The Power to Prosper: 21 Days to Financial Freedom." In her spare time, Singletary is the director of a ministry she founded at her church in which women and men volunteer to mentor others who are having financial challenges.

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