The Perils Of A Cashless Society

Randall Davey

 The internet is rift with talk about a cashless society, fueled by a shortage of coins in the marketplace. While some see it as an example of a conspiracy or government over-reach, with either stoking fear of prophetic overtones. Both concerns may be legitimate, but I fear there is a more immediate concern, illustrated by the following case study. 

When a couple came to my office, I couldn’t tell if they were red-faced from the Phoenix July sun, embarrassment, or anger. It turned out to be a combination of the three. Dr. Steve blurted out the ugly truth. The two had more than $110,000 on credit card debt with rates of interest as high as 21%. “Between the home shopping network, eating out, vacations, Amazon, and advances to our adult children to assist in buying a home, we got in over our heads. We made buying decisions based on our ability to pay the minimum monthly with plans to pay things off down the road. It’s “down the road” and our debt is increasing. Wanda said, “buying things on credit is just too easy.” 

It’s certainly possible that America, if not the world is on track to be a cashless society but it’s not likely to happen overnight. Bear this in mind. 52% of the world’s population don’t have access to broadband service. 43 million Americans are included in that number. i 24% of Americans are unbanked or underbankedii. By definition, these are adults who do not have or do not qualify for a bank account of any kind. While that’s a monumental problem for the devotees of a cashless society, I’m deeply concerned about the extent to which most Americans are operating in a near cashless society now, ignorant of the short-term and long-term impact on their balance sheet. Before you swipe your card, raise these questions. 

  1. Do you purchase via credit card for convenience and to secure convertible points or do you use credit cards because you have no or limited cash for the same transaction? 
  2. Do you purchase more than you can pay off at the end of the month and reason that a small balance isn’t all that big a deal? 
  3. Do you follow a fairly strict spending plan and know how much you can buy without compromising your emergency savings or retirement strategy? 
  4. Do you assess the feasibility of a purchase based on the minimum monthly required or on the total impact the decision will have on your balance sheet? 
  5. Do you factor in the true acquisition cost of a “sale” item when financed over time? 

At this writing, 40% of Americans can’t pay the minimum monthly payment on their credit cards. [Invest In You, May 2020]. Covid 19 has only exacerbated the problem. The first step toward financial health? Draft a ruggedly realistic spending plan. The alternative is just plain ugly. 

Randall E. Davey, CAP® is a financial advisor with Guide Advisors, Inc. In certain circumstances, he may offer insurance as a sole proprietor or through Guide Advisors, Inc. Randall can be reached at or by phone at 206-486-2477. 

i BroadbandNow, written by John Busby, Julia Tanberk and BroadbandNow Team February 3, 2020. 

ii Report on the Economic Well-Being of U.S. Households in 2018 – May 2019. Board of Governors of the Federal Reserve System. 

Advisory services are offered through Guide Advisors, Inc., a Registered Investment Advisor in Washington, and other jurisdictions in which it may conduct business. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the states listed above or where otherwise legally permitted. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. The information contained in this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. 

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