Quote:
Originally Posted by jhv48
Let's use number two as an example:
Loses job and has to draw money out of investments (like now? Not a good idea?) or 401k or CD's (both have subsantial penalties and tax consequences, not to mention may take a serious loss on 401k investments to boot). And because of the economy, he's unable to sell the car for what he owes and get out from under the equity loan on the house. Is this scenerio beginning to sound familiar?
So, now he can't sell the car for what he owes, is faced with a loss and taxes on whatever he must liquidate in order to make his house and equity payments and if it runs out. HE STILL LOSES HIS HOME!
However, if he had gotten an AUTO loan to buy the car and his world tanked. He could (worst case again) give it back to the bank (voluntary repo) and use whatever assets he has left to keep him afloat a little longer.
Net worth in this day and age means nothing if that worth is all on paper (equity of a home, rental property, business property, hard assets like art or coins, classic cars, etc). If it is comprised of liquid assets then it is meaningful.
It's how much cash you can get your grubby hands on RIGHT NOW (without trying to liquidate assets) that really matters. Try to sell your rental property in this market and what do you get. Probably next to nothing. Doesn't help does it?
That's why cash is king! Money tied up in assets is worthless in this economy.
It' good to be the King!
And by the way, in either scenerio, he can sell the car and recover SOME of the $100grand. In scenerio one, he just loses some cash. In #2, he can lose his home.
You decide!
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Worthless? Not where I live and work. Me likes hard assets such as rental property, art, coins, gold, silver,
oil, pork bellies, orange juice, etc. Cash is good too.
You're not persuading me and I'm not persuading you. We can all agree to disagree.