[USER]

A while back I posted about whether to use a HELOC or some money we have in a brokerage fund for a planned renovation. Feedback was helpful, but several people suggested to “use cash”.

My question is, why would anyone just have $150k in cash sitting around? We put extra cash we aren’t using each month into accounts that gain interest, hence suggesting using the brokerage account funds.

That’s cash we have saved and yes taking money out of there will prevent the compounding interest that we would get if we use that money for the renovation and perhaps the heloc even with the variable but current 8% interest is better, but I’m stuck on the suggestions to use cash.

Even if we made an extra $20k monthly, we would move it to an account that would gain interest until we got to the $150 mark would then be in the same position. What am I missing ?

[Anna]

Typically when someone says use cash they are referring to the 6-12 months of cash normally suggested to keep in a high yield savings account.

And though that is not normally near $150k, it should be a substantial amount that could be used towards some renovations and then you would only do the renovations a little at a time with what you had available to work with.

That’s just a suggestion, obviously a lot of people take out loans but several people I know, only do what they can afford to pay in cash.

[Don]

FREEDOM. If you don’t understand the freedom of no debt then just enjoy your loan and being a slave to the lender. It’s a suggestion that you don’t need to take. I doubt anyone “has $150k laying around” not earning interest, looks like yer just being silly for some reason.

Don’t miss: Seeking financial/tax advice – I really don’t even know what the options are

[Kevin]

If you have the monthly excess income to pay off the 8%HELOC in 6 months, I suggest doing it that way.

I did a similar thing but much riskier, and made a post about it. I took out 275k of HELOC last June with the intention of building a pool/patio. I invested the money in TSLA hoping for the gains to pay for the pool. Tsla tanked 60% and my heloc interest went from 4% to 9%. Worst case scenario lol

I put the ~150k the pool cost on 15 month 0% credit cards, and just did tsla options trading to pay the monthly interest on the heloc. Anyways….with TSLA back up now, the pool is more than 50% paid for with gains and I’ll sell those tsla shares later this summer or early winter and have a “free” pool.

Roller coaster ride….but worth it in the end.

[Jos]

Get a SBLOC against your brokerage account. Keep the shares but use as collateral

[Damon]

Cash is being used synonymously with liquidity. Also, everyone has different situations so they give advice based on their experience.

[Author]

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