Image Courtesy: Dan4th

If you haven't realized it yet by reading this blog, I hang onto a large amount of cash. I've also been called a "cash hoarder" by some of my close friends.

My current goal is to save $50,000 in cold, hard, cash. I'm about $18,000 away from my goal as of the last checkup. I'm fairly confident that I will be able to meet this goal by the end of this year or early 2010 instead of December 2010 as I'd originally planned. If I hit my goal within the next six months, I will then increase the goal amount to $75,000.


You may ask, why so much cash? There are several reasons that I hang onto a large amount of cash.

Low Risk Tolerance
I'm not a big fan of the stock market. I have a low tolerance for risk when it comes to my money. I don't like the wild swings of the stock market. I sleep better knowing that if I put $1 in the bank today, that $1 will be there tomorrow along with a couple of cents in interest.

Outside of my 401k, I don't do any additional investing. The recent number of scandals involving ponzi schemes (think Bernie Madoff) and people losing large amounts of money in bogus investments does not help my view of investing.


Cash Gives You Options

If you've ever applied for a loan or credit card, you know how the process goes. You have to submit all of your financial information and hope that you are worthy enough that the bank will loan you money.

If you have cash in the bank, you don't have to worry about that. Do you need to replace your vehicle and you find a nice one for $5,000? You can simply go to the bank and withdraw the money from your account without the headache and hassle of applying for a loan. If you water heater breaks and you need a new one or you need emergency auto repairs, don't let trying to find the money to pay for the repairs add to your worry.


Right now, we are in a "credit crunch". Due to the amount of money banks have lost due to bad loans, they are being very, very picky about who they give money to (and I can't say that I blame them). If you are like me, you aren't as worried about the credit crunch as much as others. I've had the credit limit on several of my credit cards cut because the bank is trying to minimize the risk of loss and it really didn't affect me that much.

Large Expenses Ahead
I have a 16 year old sister that will be headed to college in a couple of years. I know my mother can't afford to pay for any of her education so I plan to help her out as much as I can. I had to work two jobs in college in addition to my student loans, just to make ends meet. I want her to work but just not as much as I had to. In college, you should be focusing on getting your education; not trying to figure out how to pay the bills. Due to my mother's low income, she will be able to get grants and qualify for loans but I don't want her to come out of college with the amount of student loan debt I had/have. Having cash in savings will allow me to help her without wreaking havoc on my own finances.

You always hear about the great returns people have earned in the stock market. Yeah, that may be true but there are also people that have lost their shirts. It's generally only in economic environments like we are in now that people seem to remember that "cash is king".

What about you? Do you hoard cash? Has the recent economic environment changed the amount of cash you save?

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19 comments

  1. N. Avery // August 19, 2009 at 11:29 AM  

    I am completely on board with you. My cash goal isn't quite as high as yours, but it gives me so much peace to have a large cash cushion.

    I wish I could find my own SingleGuyMoney with similar attitudes in my area! I am currently debt-free except for my mortgage and working to have my mortgage paid off by the time I'm 30. Even if I move up in home before then, it will be great to have it mostly paid off and a big cash cushion.

    Keep up the great work!

  2. Yana // August 19, 2009 at 11:43 AM  

    Your way of thinking is much like mine. I'd rather have cash than credit, and what is confusing/amusing lately is that every time I go to the bank to make a deposit, I get offered a "pre-approved" credit card. I have no interest in it, but actually don't believe I'd get it if I accepted the offer, as I don't have great credit.

  3. prufock // August 20, 2009 at 8:08 AM  

    I have to give you credit for being a very good brother and son. I hope I'm in a financial position in the near future to help out my family like that.

  4. kenyantykoon // August 20, 2009 at 8:14 AM  

    i like the way you think even if i am not like that. i have high tolerance for risk and so i rarely keep money in the bank. as for helping your sister out i think that it is very noble. its nice to see that there are still some decent pple in this world
    http://kenyantykoon.wordpress.com/

  5. Anonymous // August 20, 2009 at 9:40 AM  

    With owning 2 houses and obviously making a ton of money, do you ever get pressure to help your mom out?

  6. Kimberly // August 21, 2009 at 2:11 PM  

    I totally agree with you! And kuddos for your willingness to help your sister!

  7. Annie // August 21, 2009 at 4:18 PM  

    If "cash" is any money that can't lose value, than we have about $125k (earning, at this point, up to 4%).

    We have another $450k in various investments.

    I don't see anything wrong with that balance, although I know a lot of people would. With low job security, we'd rather have the cash available and safe.

  8. Single Guy Money // August 21, 2009 at 8:38 PM  

    @N.Avery: It's certainly hard to find someone with similar financial goals. It sound like you are doing great and I hope you keep up the good work!

    @Anonymous: I don't make "a ton of money". I'm just careful with what I spend. And no, my Mom never pressures me to help her out. I just feel obligated to do so.

    @Annie: That's a nice stash you have there! Keep up the good work.

  9. Gabriel Girl // August 22, 2009 at 12:24 PM  

    I had always wondered whether I was alone in my distaste for the stock market. All of the personal finance books seem to say that the more you invest the better, and that is the surest and sometimes only way to wealth. The stock market just gives me ulcers, and I don't even have money invested!

    I try to put a huge chunk of my money in ING, which earns relatively good interest for a bank account.

    Thanks for letting me know I'm not alone!

  10. frugalgrad // August 23, 2009 at 6:48 PM  

    Another catchphrase for you: Cash is Cool. I really want to be in your situation right now with a nice amount of cash on hand but I guess I have to work harder at it. Your sister is lucky to have a brother who is in a position that can help her. You buy the domain for your blog but use the blogger platform for free show that you are really careful with your money. Good luck on getting that 50,000$ cash.

  11. FinanciallySmartServ // August 24, 2009 at 3:00 PM  

    Cash is always good but when you look at the various bank charges here in my country most persons are moving towards investments. Even though the stock market is not that stable now it is better than having $100 in the bank and when you go back none is there because it was taken out in bank charges. It is wonderful that you are preparing to assist your sister in college. Not everyone can manage the duties of school and work.

    All the best.

  12. Amy // August 25, 2009 at 10:28 AM  

    I still have money in the stock market but I also have become a cash hoarder - we have about $53K in cd's, savings, and I-bonds. No mortgage but we have a car loan, which we are going to double or triple up on and get it paid off early. It's costing 5.65% and HSBC is paying, what, 1.45% now? Talk about penalizing savers.

  13. Anonymous // August 26, 2009 at 7:34 PM  

    I like you am a cash hoarded but I see a problem with that. With all the money the government is printing inflation will eat away at your savings.

    If inflation is 7% this year, next year your $50,000 will only purchase $46,500 worth of goods. The next year it will only purchase $43,245. Remember, the government more than doubled the money supply.

    My advice to hedge against inflation is to buy gold and silver. When inflation goes up so does the value of your precious metals.

  14. Teejay @ rentacarmanila // August 26, 2009 at 11:11 PM  

    I'm just curious. Where do you store the cash? CD?

    And how much do you get in return? Do you employ a CD Ladder?

  15. SingleGuyMoney // August 27, 2009 at 6:17 AM  

    @frugalgrad: Yep, cash is cool!

    @Amy: Yep, I agree that we are being penalized for being savers!

    @Anonymous: I'll have to look into precious metals.

    @TeeJay: I currently keep my cash in a high yield rewards checking account paying 4%.

  16. payday loans // September 3, 2009 at 9:59 AM  

    cash is the new best thing since Caesar invented it :)

  17. threadbndr // September 11, 2009 at 6:26 PM  

    I've always been a bit of a cash hoarder. My goal is to always have a years worth of gross pay in cash and cash type instruments (CDs, EE and I bonds, etc). I call it my "go to h@!! fund". It's very liberating to know that you could just walk out the door and coast for a year or more(not that I WOULD, but I COULD).

  18. Anonymous // October 8, 2009 at 2:36 PM  

    Yeah, my husband and I are big savers. We have about $70k in cash right now and no debt except for the mortgage, which we are paying off a little extra each month.

    It gave me the freedom last month to quit a job and stay home with my small kids!

  19. SingleGuyMoney // October 8, 2009 at 7:09 PM  

    @Anonymous: Cash is king!!!!