this post was submitted on 26 Nov 2023
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Borrow against the value of the securities, obviously, like people with actual money do.
Sometimes it's so obvious that only poors use the internet.
Yeah, borrow against the value of the securities!
Who will pay the debt when I die? My children via the estate? My children via the bank's increasingly higher fees? My children via taxpayer-funded loan "forgiveness"? Sounds like a Bernie Madoff scheme to me. Best keep my money under the mattress.
Your estate, via the value of the securities at sale, whose value will have increased in the intervening time. What do you think is the downside, here?
You're trying to tell me that borrowing against securities solves the problem. But it only moves the problem.
If I borrow against the securities, I get cash. I use that cash. I now have zero cash (again). Then I die a horribly quiet death with megabucks owed for loans against the securities. The estate does not have cash to pay back those loans. You're saying those securities would be sold... for more profit than what I borrowed against? Then it sounds like I didn't borrow against their full value. And if I did borrow against their full value, then the loan cannot be paid back because the cash is spent.
Yes, it moves the problem until after you're dead, and it moves the problem into the future when the value of your securities will have substantially grown, thereby reducing the real cost of your house. Both of those things are good!
You have zero cash plus a property asset. The value of that asset will grow as well. Both the asset and your securities are, in fact, growing in value at an interest rate that's greater than the interest you're paying on the loan.
So you're getting free money. It doesn't come from nowhere, of course; it comes from the future people who buy your securities. They essentially paid you in the past to buy a house, and they'll be paid to have done so by people who need to enter the securities market later on (by buying securities.)
Well okay I did ask about buying a fancy house so I think it's a reasonable assumption.
But I want to change the argument ~~move the goalpost~~. Let's suppose I bought a fancy house and the housing market bubble finally burst... and that the house is now worth 1/3 of what I bought it for. That loss of value caused a massive heart attack and definitely caused death.
Or let's say I spent the money on hookers and blow. Might as well go out with a bang, after all.
Now all of that value truly is gone. Sucks to be my kids I guess. But at least I had a fun time, right?
Why do you think it sucks to be your kids? They inherit a free fancy house and any of your securities that weren't sold to pay the note.
I mean, it sucks for them that their cool dad is dead, but maybe they take comfort in the fact that you went out doing what you loved (raw dog nutting into bitches.)