An interesting topic of discussion: If one takes out a HELOC and purchases a second home, and then the first home is foreclosed upon, the creditors for the loans on the first home have no liens on the second home. Should they decide to sue for any remaining loan balances after the auction, they may be able to collect. But it becomes a case of collecting on an unsecured loan. More than likely the creditors will never see their money.Correct, but he invested the heloc into RE and continued the leverage-spiral. The same scenario was played-out with the $2.2mm foreclosure.
After taxes you may be able to collect the equivalent of 3.75% on those CDs.First, one can find CD's paying 5.6% or more on 6-8 month terms.
How can you possibly think 3.75% APY beats inflation?That more than beats inflation ... after taxes.
So you are saying that the U.S. savings rate being negative is bad because... the U.S. savings rate is negative?Second, the savings rate in the US is NEGATIVE
No need to lash out just because you are having trouble understanding.Get a clue ...
This is actually the most efficient way to manage money when your buying dollars are eroded by inflation more quickly than savings will increase your dollars.people are spending more than they make.
Sure, there are negative long term effects. But these are the effects of inflation being higher than what the average person can get in savings vehicles. A negative savings rate is just a symptom of this. Fix the inflation-higher-than-savings-APY-after-taxes problem and the negative savings rate will fix itself.If you can't see the negative longer term effects then you're blind.
Both savings and inflation compound. That is fairly common knowledge. Please stick to arguing what you understand.Oh yeah ... educate yourself on compounding over the longer term.
Quote from vhehn:
this is distribution action. the question right now is will it be absorbed and we go higher or will we run out of dip buyers and go lower. too early to tell but the risk is on the long side right now imho.