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Lines of credit?


maverick9
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5 minutes ago, PotO said:

 

Lemme see ...

 

You are willing to pay about 9% APR to borrow money against an anticipated inflow for 90 - 180 days instead of using your very liquid investments that earn less than half of the loan's APR.

 

Professor @hegemony, would you like to offer a remedial third-grade math session, please?  

 

First, where possible, I prefer not to draw funds out of medium/long-term investments for short term uses.  It introduces a market timing risk that, in principal, I choose to avoid.

 

Second, understanding the cost, I prefer to have the forced discipline to repay the credit line as intended, rather than leave myself vulnerable that I might divert some of the invested funds for purposes other than restoring them to the investment fund.  This simply acknowledges a personal behavior vulnerability.  I own up to being "human".

 

I'm willing to pay the 2.5% "penalty" (5% APR excess funds cost, up to 6 mo.) for the sake of the above.  I acknowledge the cost.

 

Of course, I don't look for you to "bless" this logic.  I have been forthright in delving into the details.  I'll let what's been stated stand and refrain from further reply.

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1 hour ago, hdporter said:

First, where possible, I prefer not to draw funds out of medium/long-term investments for short term uses.  It introduces a market timing risk that, in principal, I choose to avoid.

That's what I use a margin loan for. Decent rate and easy to transfer to checking account with no reporting. But I guess you can accomplish the same thing with an unsecured LOC.

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2 hours ago, PotO said:

You are willing to pay about 9% APR to borrow money against an anticipated inflow for 90 - 180 days instead of using your very liquid investments that earn less than half of the loan's APR.

 

Maybe all financial advisors are dumb also, but it's never recommended to sell investments for short term cash flow. It's like pulling money out of your house to pay off CCs. 99% of humans will never pay it back. Taking a margin loan or using a LOC is always recommended to give you the pressure to pay it back and maintain your investments.

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7 hours ago, shifter said:

 

Maybe all financial advisors are dumb also, but it's never recommended to sell investments for short term cash flow. It's like pulling money out of your house to pay off CCs. 99% of humans will never pay it back. Taking a margin loan or using a LOC is always recommended to give you the pressure to pay it back and maintain your investments.

 

My condolences.

 

I feel sorry for anybody who needs to be pressured to pay back a loan -- even a loan from yourself.  Seriously.

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10 hours ago, PotO said:

 

Lemme see ...

 

You are willing to pay about 9% APR to borrow money against an anticipated inflow for 90 - 180 days instead of using your very liquid investments that earn less than half of the loan's APR.

 

Professor @hegemony, would you like to offer a remedial third-grade math session, please?  

 

I'm with you but then I also wouldn't mingle biz and personal credit and I see no benefit of fa LOC since we always PIF both for our biz and in our personal cash management.

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6 minutes ago, hegemony said:

 

I'm with you but then I also wouldn't mingle biz and personal credit and I see no benefit of fa LOC since we always PIF both for our biz and in our personal cash management.

 

Agreed.

 

As a rule, I will not mingle personal and biz credit.  That said, there are times when AmEx offers have 30% off on FedEx so I will use my biz card to pay for a personal shipment.  

 

I also agree that there is little use for a LOC.  I have them just because they are there ... they are an option.  What respectable Credit Pimp will pass up a positive tradeline?

And, to be fair, they do play a role, albeit not significant, in financial management.  The Navy LOC acts as overdraft protection.  While I have never overdrawn an account, it's nice to know that if I fook up and I mistakenly write a check (or equivalent) larger than my balance, it will get covered.  

 

And I did use the LOC once to send $10k to another Navy Fed member.  I had that money in cash in USAA, but to transfer to his account I would have had to set up two-factor ID and that would take a few days.  So I used my LOC money and then transferred the money from USAA to my Navy account knowing it would arrive the next day and I'd avoid any interest.  The Navy LOC charges no interest if the money is paid back by the following day.  

 

In general, however, an LOC tradeline is to a Credit Pimp what an enemy body count is for a Marine.  The more the merrier.  

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16 hours ago, hegemony said:

 

I'm with you but then I also wouldn't mingle biz and personal credit and I see no benefit of fa LOC since we always PIF both for our biz and in our personal cash management.

 

Where'd the idea of a "mingle" come into this discussion?

 

Great, a LOC doesn't benefit you.  Do you presume to grasp what everyone else's circumstances are in suggesting this tack is ill-advised, period?

 

You are aware that we're floating two homes because of Bev's logistical difficulties associated with her illness.  I'm not crying poor because of it (we've seen $800k combined appreciation since closing on the new house 12/2019 ... obviously we're looking at some giveback if we don't sell GA soon and make the move to MA). 

 

This situation and it's related out of pocket costs outpace our base monthly cash inflow.  (Since retiring, I've deferred receipt of all retirement benefits.)  Again, I'm not crying poor ... far from it.  It's just that 25%-40% of Bev's compensation is in the form incentive pay after the close of the year ... and our base monthly expenses, plus a few capital outlays, are dipping modestly into that anticipated compensation.

 

I'm sharing a perspective here because I value and benefit from others' shared experiences and perspectives.  But as to anyone who cares to use it as an opportunity to cast aspersions ... well, there's someone here who specializes in the emojis with which I'd pile on that move.

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1 hour ago, hdporter said:

 

Where'd the idea of a "mingle" come into this discussion?

 

Great, a LOC doesn't benefit you.  Do you presume to grasp what everyone else's circumstances are in suggesting this tack is ill-advised, period?

 

 

lighten-up Frances.

 

I merely stated my situation. Nowhere did I suggest my situation is proper to be generalized to others. My financial life is pretty simple. HTF did you read my comment as casting aspersions? and emojis? WTF?

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32 minutes ago, hegemony said:

HTF did you read my comment as casting aspersions? and emojis? WTF?

 

I didn't.  The comment was directed to "anyone who cares to" do so.  I've been under a bit of stress this weekend and it's seeping out where not appropriate. 

 

I've allowed @PotO's general comment flow in this thread get under my skin and it sought a convenient vent.  That's my problem, all around.

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Just now, hdporter said:

 

I didn't.  The comment was directed to "anyone who cares to" do so.  I've been under a bit of stress this weekend and it's seeping out where not appropriate. 

 

I've allowed @PotO's general comment flow in this thread get under my skin and it sought a convenient vent.  That's my problem, all around.

on the "mingling" I mentioned not mingling in response to the first post in the thread.

 

you do you, man.

 

 

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