Zachary W. of Idaho Falls, Idaho, carries hundreds — sometimes thousands — of dollars on him at all times. He owns three wallets, each strapped to the inside of his pockets and belt buckle. He lives strictly by cash, and cash alone. No checkbook, deposit pages, debit card, or credit card. Don’t even try to give him a gift card — he’ll return it!
“My parents grew up during the Great Depression,” he explains. “Their family lost everything from the house where they lived to their business. . . . Growing up, they never used banks — didn’t trust them. They kept their money in coffee cans.” Today, Zachary follows faithfully in their path.
What Do Unbanked and Underbanked Mean?
A survey by the FDIC shows that 6.5 percent of Americans are considered unbanked. This means that, like Zachary W., they have no bank accounts or lines of credit opened in their names.
Meanwhile, 18.7 percent are deemed underbanked. Underbanked people might have a bank account, but they also rely on non-traditional banking services such as payday lenders, check cashing services, and pawn shops to get by.
Angelina Ort’s Story
Angelina Ort and her husband are among the underbanked. They start each morning by counting a messy pile of cash on the kitchen table. They then split it up based on need. When the cash to pay a bill comes up short, they go to a check-cashing business about two miles from their house to get a money order or cashier’s check.
Every time a bill comes due (including yearly taxes, utilities, and even the occasional check to their kids’ schools), it’s the same story. For them, the fees that these services charge and their distance from home are worth the hassle to pay bills in person or through a third-party service.
Despite the extra efforts to make it work, Ort — like Zachary W. — stands firm by her commitment to not use banks or credit to run her family's finances.
“I didn’t grow up with good role models,” she explains. “My mom and dad were gamblers, and when they died, they were in so much debt. . . . I couldn’t let myself slide like that. So I convinced my husband to live off of cash. He hated it at first because it means it’s going to take another 10 years to save up the $100,000 for a house.”
The Mindset Behind Cash-Only Living
Financial therapist Nicole Coope, LMHC, NCC, believes that individuals and families like Zachary W. and the younger Ort and her husband are contributing to a possible trend that is based on the need to protect themselves from the unknowns.
“These types of beliefs are not random. They are generated and shaped by the beliefs and behaviors of our family or origin, as well as our own personal experiences,” Coope says.
“People will gravitate toward systems that give them the greatest amount of control . . . out of fear that they may one day find they do not have enough to meet their basic needs: food, water, clothing, and shelter.”
Cash-Only Living and Credit Scores
Today, Ort and her family only have a checking account and a savings account. They do have a pension for Ort through her job, but the rest of their savings goes into the one family account.
The family's checking account sits empty, as it has for nearly eight years.
Because she hasn't had a line of credit in her name in years and has closed the two past accounts, Ort’s credit score hovers around 670.
Meanwhile, Zachary W. hasn’t checked his score in the past 10 years and has no plans on doing so now. He’s more concerned with how close he can keep his money.
Security Measures for the Unbanked and Underbanked
Security, in particular, is an area where life gets a bit more complicated when living cash-only. Zachary W. admits to using his parents’ old methods of storage. For example, he spreads cash around his house in clever hiding places. However, he also pays a small fee for a local pawn shop to hold onto a larger amount of gold bars for him in their higher-security vault.
“I know the owner,” he says. “I trust him. I researched his insurance, and I have a contract with him that we re-sign every time I make a deposit. You don’t get that with a regular bank.”
For Ort and her family, protecting assets means carrying multiple purses and wallets, using indestructible gun safes for added peace of mind, and paying for a higher-grade home security system. (Though if you're working on a budget, companies like Protect America offer quality, personalized home security systems for affordable prices.)
“The risk of carrying cash around is worth it to me,” Ort says. “I’m okay with having to go out of my way to make this crazy cash-only thing work. . . . If it means not having to trust that banks or credit card businesses are doing the right thing with my family’s money, I’ll gladly carry cash for the rest of my life.”