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The Sweet Sound Of Cash – Financial Privacy Benefits

by Bill Rounds Esq. on October 1, 2009

Reading time: 5 – 8 minutes

Protecting your personal privacy is a lifestyle design choice and can protect you from identity theft. Developing effective privacy hygiene habits and practices that are conducive to secrets will give you more control over which aspects of your life are made known to whom and when.  One key way to do this is to use cash for as many transactions as possible.

I suppose the sweet little grandmother Sally Harpold ‘had something to hide’.

PRIVACY BENEFITS OF USING CASH

One of the biggest returns on privacy for the effort invested is probably by using cash for as many transactions as possible; whether as payment or receipt of funds. Another is Bitcoin which is like digital cash; or cash you can use on the Internet. The paper trail which follows such transactions vanishes into anonymity when you use cash. It is almost impossible to link you to a transaction whether you are looking at your own financial records or the records of a merchant.

All reporting requirements for tax and other purposes should still be followed but even this only reveals some information about the aggregate amount of cash that has changed hands. Nevertheless, the benefits to the average person can be enormous.

In the unfortunate event that your bank records or statements are compromised then the cash transactions will appear only as withdrawals or deposits and there will be no way of telling where that money came from or went. The more cash transactions then the fewer bits of information that are available from reviewing your financial statements.

PRIVACY BREACHES BY CREDIT AND DEBIT CARDS

Using cash instead of credit or debit cards also keeps the damage from compromised statements to a minimum. Just look at the mess Stratfor caused their clients by not accepting Bitcoin. Then you are less likely to suffer from identity theft.

However, with credit or debit cards you need to be careful when using them to make purchases and carefully select which purchases to make which cards and when because financial privacy is not built in to the design by default like with Bitcoin or cash. This means means that your transaction information will be in the hands of credit or debit card companies, marketers and other “affiliates” of the credit card company or banks.

Talk about the potential for a wild goose chase!

SNEAKY NINJA TIP FOR USING CREDIT CARDS

If you are really sneaky then you could carefully craft which expenses you pay with credit cards and which ones you pay with cash so that marketers and anyone else who has access to a record of your credit and debit card purchases will only have the profile that you carefully painted. Or perhaps you have let someone use your credit card to make gas purchases in a location far away from where you actually are. Talk about the potential for a wild goose chase!

AN UNFORTUNATE EXAMPLE

A rather dramatic example of why someone should use cash to make a purchase is found in the experience of Sally Harpold. Although she was prosecuted under Indiana state drug laws for purchasing one box of Zyrtec for her husband and, a few days later, one box of Mucinex for her daughter.

Both medications are available over the counter and without a prescription but the Indiana law prohibits the purchase of more than a certain amount of medicine containing ephedrine or pseudoephedrine within a seven day period.

Without her knowledge Sally purchased two medications which, combined, exceeded the statutory limit. Although she had (1) never had legal trouble before, (2) had no intent to commit a crime and (3) was not committing a victimless act that is wrong or immoral in and of itself nevertheless she was prosecuted. In order to have her record expunged, but not from the Internet, she was forced to pay for the cost of the criminal prosecution.

This extremely bad decision by county prosecutor Nina Alexander to enforce a poorly worded law in a manner which was never intended could have been avoided if Mrs. Harpold made one or both of those purchases with cash.

In this example, a cash transaction would have left the purchase of the over the counter medication in complete anonymity and it would have been impossible to connect to Mrs. Harpold. I suppose the sweet little grandmother Sally Harpold ‘had something to hide’. Or is she really a drug abuser in Indiana?

CAVEATS TO USING CASH

There are some caveats to using cash as often as possible. Cash is almost impossible to recover if stolen so having enough cash on hand to pay your expenses can raise security concerns. You should never use cash solely to with intent to commit fraud, evade taxes or engage in behavior which could be construed as money laundering. So avoid using cash with either a washer or dryer.

Also, banks and other institutions may be required to file Currency Transaction Reports for any transaction or series of transactions that are greater than $10,000. They also may be required to file Suspicious Activity Reports if they think that your cash transaction is somehow suspicious.

CONCLUSION

One of the most effective ways to protect privacy is to use cash or Bitcoin for as many transactions as possible. By taking control of the facts which are recorded, stored, archived, databased and searchable forever you greatly reduce the probability for identity theft.

This will go a long way to protecting both your personal privacy and financial privacy and may even keep you out of jail. So consider getting a copy of The Free Bitcoin Guide and using cash and bitcoin as often as possible to secure the financial privacy you want..

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3 comments

ABOUT THE AUTHOR: Bill Rounds, Esq. is a California attorney. He holds a degree in Accounting from the University of Utah and a law degree from California Western School of Law. He practices civil litigation, domestic and foreign business entity formation and transactions, criminal defense and privacy law. He is a strong advocate of personal and financial freedom and civil liberties. This is merely one article of 123 by .
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{ 3 comments… read them below or add one }

1 JG May 21, 2011 at 3:50 am

If you use cash for everything, how do you build up a credit score in order to get a mortgage?

2 Tao September 16, 2011 at 12:14 pm

If you control an offshore corp. I would assume you could get a credit line in the person of the corp. The corp can take out mortgages, etc…right?

3 Penny Pincher November 25, 2011 at 7:23 am

@JG, you could get loans and pay for those with checks and give yourself a cash “allowance” each week and buy stuff with that. That way only your transactions that related to “building your credit score” would show up.

But the assumption that one should get a mortgage should be re-examined. You can get a house for as little as $5000 cash, although $15,000 is more common, in the Midwest. The house will be messed up and need work, but if you can buy cash, you won’t have a mortgage payment and you can use what you would otherwise spend on interest on repairs instead. The trick is to find a distressed piece of real estate and pay only 65% what the house is worth. That’s taking into account repairs too, so a house that is worth $70K fixed up, but needs $15,000 in repairs, the most you should pay for it would be around $20K. Less if you can get away with it, because of the closing costs etc. And then if you’re handy, some of that $15K in repairs would be your elbow grease instead of cash. Look up the rules for capital gains tax on the sale of a home, and you can do this over and over again, with just the house you live in or you can just have a free and clear home.

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