I was inspired by this post by Mark Cuban.
It made me think a lot about the great benefit wads of cash has. In my sales job, I work with a lot of farmers. Farmers are traditionally more of a cash only business. There a lots of great stories of someone selling a tractor or property to a farmer who pulls out $100,000 in $100 bills and pays in cash on the spot. The customers who have a better cash flow are able to order items during price break times or order during the offseason when deals are easier to come by. The savings for a small farmer can be in the thousands- a larger farmer or wholesale produce can really get up there.
I posted earlier about my thoughts on toyota and how I would go out and buy a toyota today if i had the cash. As we have in our sights an exact day when we will be debt free (March 15th 2012!), I have been thinking about what to do therafter. How do we invest? What things will we need to purchase at that time? What can we do for business opportunities for my wifes photography business and my own other ventures? Hmmm.
So right now I am pondering hoarding a crap load of cash to jump at random opportunities. The problem is the tyranny of the urgent. In 2 years, I will most likely need an updated car as I travel a fair amount for work- and my travel will increase as my income increases. Our house is a shade small for our needs right now. So the two biggest needs we will have is a car and a down payment for a house.
The car is pretty easy for me. I am planning on saving until we have $10,000 in cash to give me some great option to buy a whole lot of different types of cars.
The house is another story. I do not want to get into a cash needy home. Our house we currently live in has had our washer/dryer, A/c, and heat all die on us in 5 years. It happens. No big deal (well, it drove us into debt considerably but hey). I would hate to spend our down payment (probably 5-20,000 depending on how well we can save and how much my income increases) then see the rest of our savings ripped away with minor problems on the house. That is why, I am seriously pondering renting... hmmm. Get some cash on hand, negotiate a lower rent for a longer period of time renting, and then after three years we either have more cash to buy a home, or we can move elsewhere. Renting has its problems as does owning (this post is great on the rent or buy topic. Our area has a lot of older homes for rent that the owners have owned for over a decade. Part of the- rich white old guy part in the western suburbs of Chicago. Their mortgages are less than what I could get today by any stretch of the imagination. so they can charge less for rent than I can pay monthly for a house. They take on the risk while I can save money. When I have enough cash to be able to transfer risk, then I can buy a house or negotiate better rental rates.
So to sum up. My goals are to:
1) Get out of debt!
2) Sack away a crapload of cash
3) use that to purchase a better car
4) make sound decision on our living situation to stay cash heavy
5) start making sound investment decisions to get that cash growing.