Philip Brewer in Wise Bread suggests that we carry some cash while on the road. My own principle is to have about $20 cash in my wallet, and one credit card (no debit card). Unless I am on a major trip out of town, when I take more cash with me (but still one credit and no debit card). The credit card I use gives 5% cash back on gas purchase, and I always pay balance in full.

I have another suggestion to make, from my own experience. That is to always have some money available in your local bank account. This can help you get hold of ready cash if needed on short notice, like in matter of hours, and there is no rich friend nearby to bail you out.

Until recently, I used to keep only a few hundred dollars in my local credit union account, just above the minimum required balance. With most online money market accounts offering over 5% APY, who needs the crappy 0.75% bank saving rate, right? I thought so too, and diligently sent the left-overs of my bi-weekly paychecks to my two MMAs (after expenses and automatic transfers to my IRAs).

Then came the day about three weeks ago, when I suddenly needed $1800 to pay for a major expense. The only payment option was either a cashier’s check or money order. I thought I could write myself a check of $1800 from my MMA, and use it in my bank to withdraw cash. Unfortunately, the bank policy is to hold the check for 48 hrs before releasing cash (should have seen it coming). Luckily I found a friend who did not make the mistake I did, and who could lend me the cash.

The take-home message is that it pays to mix prudence with greed (maybe I am being too harsh on myself, but this was a harsh lesson).