The perception of money

Several months ago I went on a cash only basis for living, at least as much as I could. The immediate result was to require me to draw cash for the expenses of daily living. Once or twice a week, I replace the cash I use with another collection of cash. As the expenses are paid, I replace the cash I use with more cash.

Oddly, there has been a secondary affect on my perception of money. When you put that cash in your moneyclip or wallet, you feel like you have something there. The concept of money is perceptible and tangible. You can count it readily and evaluate it. You are forced to consider it directly when you figure on what you can buy. In some sense it becomes more real than it would be if the only source of money was a checking account. The old saw says: "How can I be out of money if I still have checks?" Your tangible money becomes abstract and intangible when it is represented by a checkbook.

There is nothing really unusual about this. A checking account is created to allow you to represent your wealth with a piece of paper so that you can readily and easily use your wealth to make purchases.

The real problem occurs when you expand this concept with the idea of credit. Credit is a way to expand your spending power by agreement with a third party who extends your buying power on the idea that you will ultimately pay him back for the goods purchased on the agreement.

But see how intangible the idea of your money becomes when it is expanded by an agreement to extend credit. All of a sudden you don't see that money or feel it in your hands. As a matter of fact you can't see credit except by considering the things you buy with it. In addition, you may not even know the true extent of how much credit you do have until its gone completely.

I am afraid that my feeble mind is unable to wrap itself completely around the extent through which credit expands my wealth. I do understand that credit allows me to purchase more in a faster manner. I also realize that ultimately you have to pay the piper for the dance. However, as credit becomes more and more expensive to have and keep, the relative merits of credit become less tangible. Finally, I retreat to my cash. If I earn a dollar, and receive a dollar, I can spend a dollar. If I want to buy more, I need to earn more dollars. If I want to buy something large, I need to save my dollars. How simple.

Credit is good, as far as it goes, and is necessary for the large things, like a house, which we want to purchase in our lives. But credit is bad because it expands our ability to pay beyond our ability to understand what we can pay back. Therefore, our ability to perceive the limits of our buying power are further limited by our inability to perceive where those limits are or where they might lead us. Until we find ourselves in a position where our inability to pay back the credit extended is choking us to death.

Welcome to the American Dream and my place in it.