Chase Private Client Invitation!

[driftless]

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@wasCB14 wrote:

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@driftless wrote:

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@Thomas_Thumb wrote:

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@tacpoly wrote:

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This just reinforces the fact that in the end, savings is as (even more) important than credit -- and people should seek to increase their savings as eagerly as they increase their credit lines.  I'm curious, how many here actually have more in total savings than their total credit lines? 

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Saving is the pathway to financial freedom - IMO. I maintain a modest total CL which meets my needs and have no plans to solicit increases.

Savings (excluding non fungible assets) between 20x and 25x total CL. Not quite where I'd like to be given a retirement age goal of 62 (or earlier)

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+ 1 Interesting that you have your assets pegged at 20 - 25x of your CL. I know what you mean but, unlike the general consensus on this board, I view my total CL as a necessary liability and not an assest.  I suspect that you share that view.  

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I think that's going overboard. Available credit shouldn't be mistaken for cash or an emergency fund, but if you have the restraint to not spend recklessly (and that is an important condition) it shouldn't be considered a liability.

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It is, by definition, a liability.

[Thomas_Thumb]

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@driftless wrote:

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@Thomas_Thumb wrote:

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@tacpoly wrote:

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This just reinforces the fact that in the end, savings is as (even more) important than credit -- and people should seek to increase their savings as eagerly as they increase their credit lines.  I'm curious, how many here actually have more in total savings than their total credit lines? 

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Saving is the pathway to financial freedom - IMO. I maintain a modest total CL which meets my needs and have no plans to solicit increases.

Savings (excluding non fungible assets) between 20x and 25x total CL. Not quite where I'd like to be given a retirement age goal of 62 (or earlier)

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+ 1 Interesting that you have your assets pegged at 20 - 25x of your CL. I know what you mean but, unlike the general consensus on this board, I view my total CL as a necessary liability and not an assest.  I suspect that you share that view.  

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That's just where my assets are at present as I plan for retirement. Clearly ratio will, to a degree, be reflective of time in the workforce. That being said, I could potentially have "achieved" a much higher total CL (dropping the above ratio to 4x - 5x). It's a personal thing but, since I stopped traveling excessively for a prior employer, I have limited total CL to well below a rolling average yearly income.

The main point, as mentioned above, is prioritizing a sound savings strategy over credit maximization. Having credit is not a bad thing but, the desire for more can become an obsession to the detriment of money management.

[wasCB14]

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@driftless wrote:

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@wasCB14 wrote:

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@driftless wrote:

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@Thomas_Thumb wrote:

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@tacpoly wrote:

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This just reinforces the fact that in the end, savings is as (even more) important than credit -- and people should seek to increase their savings as eagerly as they increase their credit lines.  I'm curious, how many here actually have more in total savings than their total credit lines? 

---

Saving is the pathway to financial freedom - IMO. I maintain a modest total CL which meets my needs and have no plans to solicit increases.

Savings (excluding non fungible assets) between 20x and 25x total CL. Not quite where I'd like to be given a retirement age goal of 62 (or earlier)

---

+ 1 Interesting that you have your assets pegged at 20 - 25x of your CL. I know what you mean but, unlike the general consensus on this board, I view my total CL as a necessary liability and not an assest.  I suspect that you share that view.  

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I think that's going overboard. Available credit shouldn't be mistaken for cash or an emergency fund, but if you have the restraint to not spend recklessly (and that is an important condition) it shouldn't be considered a liability.

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It is, by definition, a liability.

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Well, in GAAP (which I'll admit does not always translate perfectly to personal finance, but seems as good a place as any to start) a balance sheet reflects only the drawn portion of a revolving credit facility. The full amount of available credit appears as an off balance sheet disclosure.

If you get a CLI, and through your argument have an increased liability, what corresponding asset has increased? Your equity hasn't changed.

Say you get a $10k CL CC. In your thinking, it's a $10k liability right off the bat before you do anything with the card. Then you take a $10k no-fee cash advance on it. The cash advance gives you $10k cash as an asset, so that's a debit entry for $10k. What's the corresponding credit entry? Does your $10k CL card suddenly become a $20k liability?

[tacpoly]

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@wasCB14 wrote:

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@driftless wrote:

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@wasCB14 wrote:

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@driftless wrote:

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@Thomas_Thumb wrote:

---

@tacpoly wrote:

---

This just reinforces the fact that in the end, savings is as (even more) important than credit -- and people should seek to increase their savings as eagerly as they increase their credit lines.  I'm curious, how many here actually have more in total savings than their total credit lines? 

---

Saving is the pathway to financial freedom - IMO. I maintain a modest total CL which meets my needs and have no plans to solicit increases.

Savings (excluding non fungible assets) between 20x and 25x total CL. Not quite where I'd like to be given a retirement age goal of 62 (or earlier)

---

+ 1 Interesting that you have your assets pegged at 20 - 25x of your CL. I know what you mean but, unlike the general consensus on this board, I view my total CL as a necessary liability and not an assest.  I suspect that you share that view.  

---

I think that's going overboard. Available credit shouldn't be mistaken for cash or an emergency fund, but if you have the restraint to not spend recklessly (and that is an important condition) it shouldn't be considered a liability.

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It is, by definition, a liability.

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Well, in GAAP (which I'll admit does not always translate perfectly to personal finance, but seems as good a place as any to start) a balance sheet reflects only the drawn portion of a revolving credit facility. The full amount of available credit appears as an off balance sheet disclosure.

If you get a CLI, and through your argument have an increased liability, what corresponding asset has increased? Your equity hasn't changed.

Say you get a $10k CL CC. In your thinking, it's a $10k liability right off the bat before you do anything with the card. Then you take a $10k no-fee cash advance on it. The cash advance gives you $10k cash as an asset, so that's a debit entry for $10k. What's the corresponding credit entry? Does your $10k CL card suddenly become a $20k liability?

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You're picking nits.  He views it as a liability, but does not treat as such in balance sheet calculations. 

The thing is there is so much focus on quickly and aggressively increasing credit limits, that increasing savings seems to have gotten lost.  Multiples of your annual income in combined CLs should not be the goal.  Personally, I want to have high enough credit limits to easily cover normal spending and splurges, and to have enough savings not to have to rely on those credit limits should something unexpected arise. 

[driftless]

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@tacpoly wrote:

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You're picking nits.  He views it as a liability, but does not treat as such in balance sheet calculations. 

The thing is there is so much focus on quickly and aggressively increasing credit limits, that increasing savings seems to have gotten lost.  Multiples of your annual income in combined CLs should not be the goal.  Personally, I want to have high enough credit limits to easily cover normal spending and splurges, and to have enough savings not to have to rely on those credit limits should something unexpected arise. 

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Same here.