A long time ago and in a land far far away… well actually it was 1980 and my wife and I, as newlyweds, just moved to Alaska—this is a true story. I was working for a financially secure and slightly older gentleman who, one day as I was passing by his office, called me in and asked me an interesting question. "What’s the difference between a rich man and a poor man?" Being young and just starting my career, I thought the answer was rather obvious and so I quipped, "one has a lot of money and the other one doesn’t." It doesn’t take a rocket scientist to figure that one out. However, his response back, was somewhat surprising.

He stated that the difference between a rich man and a poor man was a $100 bill. He asked me if I had one. "No," I answered. He then asked, "how many people out on the street walking around right now do you think have a $100 bill in their wallet, pocket or purse." I responded, "probably not very many." He said, "my point exactly." He then took his wallet out of his pocket and pulled from it a $100 bill and handed it to me and said, "put this in your wallet, keep it there and know that you have more money in your wallet than most people do, and that if a small emergency comes up, you’ll be okay." So I gratefully put the bill into my wallet and left. You know, I actually did feel rather rich, and knowing that a $100 bill could cover about any minor emergency that could come up, like running out of gas or an unexpected business lunch with co-workers or whatever it might be; I really was covered. Back then my wife and I didn’t have a credit card or debit card—just cash and a checking account, and for some reason my wife said I wasn’t allowed to carry the checkbook.

Two weeks had passed, and I was again passing by his office, he called me in and asked if I still had the $100 bill he’d giving me. I lowered my head and said, "the other day I was low on gas and didn’t have any money so I used it to fill the car up. Once I had broken the bill the remainder went rather quickly." He chuckled and pulled out his wallet again and handed me another $100 bill and said, "see if you can make this one last longer this time." My first thought was, this isn’t a bad deal we have going here, but he quickly said that this was the last one he was going to give me. Well, again I was back on top of the world feeling rich. This time I kept the bill for almost 6 months before I needed to use it, once again, once it was broken it went fast.

Let’s now fast forward to 2010 where a large percentage of the population of the U.S. carries either a credit card, debit card or some other form of a charge card. Who carries cash anymore? How much cash do you have on you right now? I went into a Subway the other day and ordered their six-inch, special-of-the-day sandwich, which was only $2.99, and I had to use my debit card to pay because I didn’t even have $3 on me. Is it any wonder that so many people are having financial struggles? Not only because of the current economy but also because of what seems to be an endless supply of money that we really don’t have—credit. This idea of credit, can at some point, come back to bite us hard if we don’t manage it correctly. Here are some interesting credit card statistics.

CREDIT CARD ISSUER STATISTICS

Total cards in circulation in U.S.

• Visa credit: 309 million, as of June 30, 2009 (Source: Visa.com)

• Visa debit: 352 million, as of June 30, 2009 (Source: Visa.com)

• MasterCard credit: 211 million, as of September 30, 2009 (Source: MasterCard.com)

• MasterCard debit: 130 million, as of September 30, 2009 (Source: MasterCard.com)

• American Express credit: 54 million, as of December 31, 2008 (Source: AmericanExpress.com)

• Discover credit: 57.1 million, as of December 31, 2008 (Source: Discover.com)

Americans currently owe $917 billion on revolving credit lines and $69 billion of it is past due, according to the latest Federal Reserve statistics. (Source: www.consumerreports.org, September 2009)

What’s the biggest difference between now and 30 years ago regarding our spending habits? Yes, 30 years ago many people used credit cards, but many people also carried cash in their wallets. A credit card was only supposed to be used for emergencies or for purchasing large dollar items, limiting the need to carry around large amounts of cash, knowing however, that when the bill came due, it was to be paid off in full, monthly. So when your cash ran out, buying something else wasn’t an option, you just made do without. People back then understood how easy it would be to get into trouble financially using credit cards excessively. People also know this today; however the idea of doing without, if you don’t have the cash to pay for it immediately, or saving towards purchasing it at a later date ,when you can pay for it in full, has been lost or at least conveniently forgotten. This idea is still sound financial advice today. When the money is gone, make due with what you have and go without until you have the money to purchase it outright.

An excellent way to keep yourself from getting into financial trouble is to create a budget and then track your expenses daily. There are several ways to do this. Create a budget on paper and then jot down, in a note pad, your daily expenses. This is inexpensive but somewhat time consuming. Another, more efficient way is personal finance software; either a desktop application or an online service. Read "Online Finance Software vs. Desktop Finance Software" to get a better understanding of the pros and cons of both of them. Online personal finance software allows you to easily create a budget and then automatically download your daily transactions. When your purchases are in excess or getting close to exceeding your budget, you’ll receive an email or text alert warning you to rein in your spending. This will help you stay in control of your money, instead of it controlling you.

Want to feel great each day even if you do have financial stress; since fewer people carry cash these days compared to 30 years ago, tuck a $100 bill into the bottom of your wallet or purse and know that you have more money on you, than most people you’ll meet and pass each day.

Also, see if you can make your $100 bill last longer than 2 weeks or 6 months. It truly is a great feeling.