Financially Fragile: Could you come up with $2,000 cash in 30 days?

[Francesco]

$2000 would be a lot of money in my accumulation phase. It has been much better since then.

With the GFC, interest rates came down. Accumulation got better. With CPI, pension increased, accumulation got better. With low employment rate and low vacancy rate, rent payments increased and again accumulation got better. With refinancing, again accumulation got better.

I appreciate that for those with a business and unrelated with the mining sector times are not that rosy. Businesses based on non Asian economies are not faring well also. Many of those so-called American and European bubble economies are bursting. Many are 'hoping' that it will happen to Australia. So, far from my perspectives - not yet.

So, $2000 is not difficult to manage. $100,000 is also manageable. I would not like to be in that position as it dents the reserves.

 

[jaycee]

No matter what I say you will try and twist it to suit yourself,if I was going "hahaha" about it I wouldn't have a frown face following it,I would have a face


Thats a pretty wierd line,"yes" many people only have what they have because they have made decisions in the past being it work,smoking,drinking,holidays,cars,boats etc.
But some have made right decisions and sacrifices to get to the spot where they are now.

Sorry, I wasn't trying to pick apart anything you've said, I didn't think we'd actually disagreed in the past (have we ? I Certainly didn;t hold nay memory or hard feeling over it). I was just trying to make a comment but I obviously stuffed the point, so t's lost now, dont' worry about it...

Again sorry, I wasn't trying to point out you were wrong in any way or whatever else it could be construed as...

 

[Bon]

From my wage alone? No chance in hell.

I'd be going into my savings or selling shares to do it.

I think everyone who is using credit to raise the funds didn't read the article and kind of missed the point.. it was $2k in cash, not from a loan.

 

[Aaron_C]

From my wage alone? No chance in hell.

I'd be going into my savings or selling shares to do it.

I think everyone who is using credit to raise the funds didn't read the article and kind of missed the point.. it was $2k in cash, not from a loan.

So a cash advance from a credit card, personal loan or a line of credit isn't 'cash'? You bet it is! Why does it matter if it is borrowed or not?

 

[Pa1nter]

Sorry, I wasn't trying to pick apart anything you've said, I didn't think we'd actually disagreed in the past (have we ? I Certainly didn;t hold nay memory or hard feeling over it). I was just trying to make a comment but I obviously stuffed the point, so t's lost now, dont' worry about it...

Again sorry, I wasn't trying to point out you were wrong in any way or whatever else it could be construed as...

The one thing with print written at speed is we cant show emotion and nearly always comes across wrong,like a text to a friend sent in a hurry,it can be taken out of context.
No hard feelings here either
That was a smile

 

[Bon]

So a cash advance from a credit card, personal loan or a line of credit isn't 'cash'? You bet it is! Why does it matter if it is borrowed or not?

Read the article linked in the original post, I think the author was referring to cash in the form of savings, or investments that could be liquidated... not getting access to credit.

 

[Lil Skater]

$2k isn't *a lot* of money, but it is certainly *real* money.

I'd have no problem coming up with the $2k in the next few minutes, $20k though - I'd be screwed, without taking out a loan or getting myself a credit card. A few months ago $20k would've been doable, but then I decided a wedding and Paris would be a lot more fun!

I always find it incredibly surprising when I speak to people twice my age with nothing. No way to pay their rent, no budget in place, no reserves if something goes wrong. Crazy.

I couldn't do it, for me I would be too concerned something would go wrong and I'd have no way to survive.

 

[Shaneelastic]

Because of an 'oops' moment with my works payroll, the ATO surprised me with a 3k repayment for my HELP debt. Wonderful Just saved it over the month.

Like others have already mentioned, it is a lot of money to some, not a lot to others. I'd hope that most of us would be able to meet this test.

i heard of this with an outsourced payroll company - biggest in the world mind you!!!

 

[Deltaberry]

Put it on Mastercard, thanks.

Some things are priceless.

 

[MIW]

So a cash advance from a credit card, personal loan or a line of credit isn't 'cash'? You bet it is! Why does it matter if it is borrowed or not?

To some it matters immensly, see the countries (Greece, Italy, Portugal, Ireland, etc...) that have all that debt but no cash savings? Cash is considered savings by old school but with all those financial derivatives nowadays it can be manipulated just the way you presented it....
No wonder the whole world is in a mess.
Borrowed cash which is backed by a paid off asset I suppose would be ok.

 

[travelbug]

$2k isn't *a lot* of money, but it is certainly *real* money.

I'd have no problem coming up with the $2k in the next few minutes, $20k though - I'd be screwed, without taking out a loan or getting myself a credit card. A few months ago $20k would've been doable, but then I decided a wedding and Paris would be a lot more fun!

I always find it incredibly surprising when I speak to people twice my age with nothing. No way to pay their rent, no budget in place, no reserves if something goes wrong. Crazy.

I couldn't do it, for me I would be too concerned something would go wrong and I'd have no way to survive.

OOH Wedding in Paris. That sounds lovely!!

Sometimes unexpected things happen and those reserves quickly get lost.
I was 32 and just about to start my last year of UNI (with 2 young kids) when my hubby lost his job. That was the toughest 9 months of my life (financially wise). But if I'd quit I knew I wouldn't have been able to finish my degree. We borrowed money off my mum. Never went out. We went to garage sales on the weekend and sold stuff at the markets. You do what you have to to survive. We then struggled on a new teachers wage for a few years then started paying mum back. We were very poor for quite a few years.
Sometimes you don't have a choice as to whether you could do it or not. You just have to.

 

[BayView]

Between savings, Everyday LOC, Business OD, credit cards, we can get our hands on $2k without too much of a problem.

Problem is; will have to put it back pretty soon to cover the bills.

Peter and Paul are our best friends at the moment.

 

[Tehanu]

So a cash advance from a credit card, personal loan or a line of credit isn't 'cash'? You bet it is! Why does it matter if it is borrowed or not?

It matters a lot for the Americans surveyed because many of them don't have access to credit any more. A key lesson is: you can't rely on access to credit as "savings" when the economy is going down - banks cut off access to credit in order to save themselves e.g. removing LOCs, slashing credit card limits. For example,

http://online.wsj.com/article/SB123117246022354083.html

Also, "responsible" borrowers (those who have good credit scores, don't miss payments etc.) are getting hit too.

Also, as house prices drop, access to "equity" in their properties (assuming they are not part of the quarter under-water) is very difficult.

The bank giveth credit, the bank taketh it away (within the terms and conditions of your agreement).

I suspect part of the reason so many Americans got caught out without enough reserves for a rainy day is precisely because they were relying on credit as "savings".

As for the original question, yes I could easily access $2000 in cash.

 

[geoffw]

A friend of mine had his wife die quite suddenly about six months ago.

He had to come up with close to $20k at short notice, and that was quite a struggle for him.

Hi wife's superannuation paid up eventually but it was a struggle.

He's not an investor, but had a very well paid job and good assets.

 

[Peter_Tersteeg]

Relying on a credit card to get you out of trouble is a good way to get into more trouble.

It astounds me that some people on good incomes have to live from one pay packet to the next, whilst many on low incomes manage to have a little tucked away, 'just in case'. This is usually done by simply setting aside $20 a fortnight without fail.

 

[Aaron_C]

A credit card should be used to buy time. It's never the solution per se.

 

[HomePage]

$2K in 30 days? Easy. Heck, I could access 100 times that 100 times quicker if I had to (not without payback costs though). My philosophy is to always have a buffer 'cause you never know what life's going to throw at you.

 

[investor2009]

If you have a few properties and cannot come up with a couple of grand within a week then you will be finding yourself in trouble sooner, rather than later. Period. Unless of-fourse you're on variable rates and they come down and you manage to save yourself heaps of money and then lock them in at a really good rate But theres alot of luck involved there and it could have almost just as likely gone the other way.

Point is, play it safe. And I think we as investors learn that rather quickly that having cash is just a normal thing for us because we know its a necessity. I now feel ther more the merrier and cash I have now seems like almost nothing when once upon a time I would have felt 'rich!'

Other folk have the opposite approach to money and just can't keep hold of it. In fact, the're a little bit worse than that. Not only does it slip through their fingers, they go into massive negative debt taking on as many credit cards as the banks will possibly give them.

 

[buster]

I dont think it is normal for investors to have cash, having cash is a huge opportunity cost and limits tax deductions I would think savy investors would have many different buffers they could liquidate and plenty of equity in reserve to draw on. Average LVRs are something like 50%. Any-one with any money sense would pay of their credit card after the interest free period. Cash may be good in a super fund for some-one nearing retirement. I personaly think having wealth stored in the form of cash is a waist of money. I would rather spend it before it devalues.

 

[Seabreeze]

Read the article linked in the original post, I think the author was referring to cash in the form of savings, or investments that could be liquidated... not getting access to credit.

What does this mean?

If I have $500k of assets and $398k of debt and a $400k Line Of Credit, does that mean when I take $2k out of the LOC to bring the debt up to the $400k limit that I am using cash or debt?

If I have $300k of assets and $398k of debt and a $400k Line of Credit (ie my properties have dropped in value but the Bank is yet to revalue the LOC), does that mean when I take $2k out of the LOC that I am using cash or debt?

If I have $100m of assets and $398k of debt and a $400k Line of Credit, does that mean when I take $2k out of the LOC that I am using cash or debt?

Or do I need to pay every last cent of my debt off, regardless of my asset base, before I can be considered to be using "cash"?

I prefer to think in terms of gross assets, net assets (or LVR) and net income. Whether or not I can access $2k at short notice will depend on the credit buffers I have available - not whether I have saved "cash" separately.