One way to tell old school people from new age people is to watch what they do at Starbucks when its time to pay. It used to be that we would roll our eyes when someone used a card to pay for a coffee. It felt like that person was skating on thin financial ice, putting something as small as a coffee on a credit card. Of course it could have been a debit card, but that was only more suspicious since debit cards were for people who had to prove they had money prepositioned in the bank and might not have had access to credit. Obviously that has all changed now. Using a debit card for a purchase is a sign of strength. It means that you have money in the bank and do not have to rely on credit. As for using a card of any sort, cash has gone from being King to being almost irrelevant.
For as long as I can remember, I have carried anywhere from $500 to $2,000 in cash with me wherever I go. If you asked me why you would probably have gotten different answers at different times in my life. The range of reasons has gone from a sense of status to a sense of security (have something to give an assailant to make him happy rather than upset). Of course there is always the issue of a Michigan bankroll. A Michigan bankroll is a specific way of organizing cash where bills are arranged with the larger denominations on the outside and smallest denominations on the inside. This creates an illusion that someone has more money than they actually do when the cash is viewed from the outside. The typical arrangement has $1 bills on the outside, followed by $5s, $10s, $20s, and any larger denominations in the center. The money is usually folded in half with all bills facing the same direction. This style of carrying money got its nickname “Michigan bankroll” because it was supposedly popular in Michigan, particularly Detroit, though similar money organization techniques are known by different regional names elsewhere. It’s sometimes associated with people trying to appear wealthier than they are or those who want to show off their money without revealing exactly how much they have. I very consciously arrange my bills this way with $100s and $20s, but keep the $10s, $5s and $1s in a separate stack, but still arranged with largest on the outside. My money clip is magnetic and has two sides to accommodate the two piles of cash. Every time I stop to organize my wallet, I think of two people. I think of Kenny Rogers telling us in The Gambler to “never count your money, when you’re sitting at the table”, and I think of Woody Allen in Take the Money and Run when Virgil Starkwell says that he had taken a course at NYU about how to keep a neat wallet.
I even still keep three $100 bills tightly folded and behind my license. That’s not there for a potential bribe of a policeman, but it is there in case I ever forget to have cash when Joventino is over (really, that is my flimsy rationalization for the exact amount I carry in reserve). I use cash to pay Joventino and Omar and Handy Brad when they do work around the house. It’s also necessary to pay the Buddy dogsitters. I also use cash for any fast food purchases and other smaller purchases. I don’t have a set limit on what constitutes a small purchases, but if it gets up over $40 I am likely to reach for a card to transact. My theory is that I should conserve my cash, which is very funny since that is the very thing that I am supposedly conserving cash for. It makes little sense…or maybe I should say cents?
I am about to travel to Europe and for some reason, I am still in the habit of taking extra cash along when I travel. It’s not as though ATMs work less well overseas. In fact, ATM’s are often the easiest and best way to get foreign currency since the crank just dispenses local currency and it saves on step of going to a foreign exchange office. Knowing when and where to exchange currency is certainly an art form since there are times when the airport seems logical and times when its better to get the currency in advance. What never makes sense any more is trying to get your hotel to act as your exchange. Most often they just wont do it for more then a few hundred dollars, if at all. That leave the ATM as the instrument of choice.
During my years of trekking around the emerging markets, a term I helped create in 1988. Actually, the term “emerging markets” was coined by Antoine van Agtmael in 1981 when he was an economist at the International Finance Corporation (IFC), the private sector arm of the World Bank. Van Agtmael invented the term while trying to start a “Third-World Equity Fund” to invest in developing country shares. He was repeatedly rebuffed in his fundraising efforts, and as he recalled: “Racking my brain, at last I came up with a term that sounded more positive and invigorating: emerging markets. ‘Third world’ suggested stagnation; ’emerging markets’ suggested progress, uplift and dynamism.” The term was initially created as a marketing catchphrase rather than a rigorous economic definition with specific criteria. It was designed to be aspirational, transforming the perception of countries previously labeled as “less developed” or “third world.” I actually succeeded where Van Agtmael failed by running all over the globe in 1988 and successfully raising the first real Emerging markets Equity fund for all of $110 million. I did that with a guy names Dean LaBaron, who ran Batterymarch Financial and had a G-4 jet that we used to circle the globe. It was on that trip that I should have learned that cash was no longer King since Dean never carried cash I was forever paying for odds and ends.
It was in those days that I bought a three-pouch letter wallet to keep different currencies in. I have it to this day. I used the largest pouch to hold the least stable currencies. When you went to Brazil or Argentina in those days and it had been a few months since they had changed their currency through a massive devaluation, the shear bulk of carrying cash was a challenge. The mid-sized pouch was for more stable but less used currencies (like those from the Middle East). And the smallest pouch was reserved for the big, liquid currencies like Euro, Pounds, Yen and Swiss Francs. You end up with lots of vestigial cash since swapping back to dollars is almost always something others do not want to do for you. I remember going into East Berlin in 1987 through Checkpoint Charlie. We were required to exchange a set amount of dollars to East German Marks. When we got to Unter Den Linden Strasse, the only thing we could buy with the Marks was beer and it was dirt cheap. We all left with unusable East German Marks. I didn’t even bother putting those in the big pouch.
As I head off to Europe, I have about Euro 200 in the side pocket of my passport case. That will work for me in Italy and Malta and I will just have to make due at Heathrow during our layovers. I’ll be taking $2,000 in U.S. currency even though the dollar is weaker by 10% thanks to Trump’s tariff shenanigans. I just can’t get past the need to feel like I have money in my pocket rather than just plastic. It makes no sense, but then all the crypto bugs have been saying that for years….