Amex "total assets" help

[kdm31091]

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@Anonymous wrote:

I think of an extreme example... like a guy that literally has all of his money tied up in real estate... multiple houses, apartment buildings, maybe some commercial sites etc. but if he has essentially nothing in savings, bonds and such his "total assets" would be viewed as very small which just doesn't seem to make sense to me.

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You should always have actual, real money in savings, or some such, so you can access it. Tying up all of your money in real estate is not smart. Yes, you theoretically can sell it and get the money, but then you still need a place to live, so that will eat away some of the money right away.

Credit card companies are concerned with liquid assets, money that you can access right here and right now. A house has a certain value but it is not guaranteed, same with a car. It's not the same as cash in an account. Amex (or whoever) is worried about the money available to you to repay debts. You aren't likely to sell your house to pay off a CC.

[DrZoidberg]

A financial asset by definition has contractual worth. Meaning you purchase a bond, and by contract this bond is worth said dollars. No matter what happens, that bond is worth that money. Same with stocks and savings. 

A house is not. There is not contractural guarantee your house is worth $250k. 

You asked for advice and it was given, it seems you don't want to acccept it. If curious if you can use it, just ask Amex through chat. They'll tell you. This thread is starting to become a record player.

[Anonymous]

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@DrZoidberg wrote:

A financial asset by definition has contractual worth. Meaning you purchase a bond, and by contract this bond is worth said dollars. No matter what happens, that bond is worth that money. Same with stocks and savings. 

A house is not. There is not contractural guarantee your house is worth $250k. 

You asked for advice and it was given, it seems you don't want to acccept it. If curious if you can use it, just ask Amex through chat. They'll tell you. This thread is starting to become a record player.

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I asked for opinions not advice.  Your opinion is different than mine.  I don't have a big deal with that where evidently you do.  If you feel that a thread that's only been alive for a few hours has become a record player then no further need for you to listen to the record.

Sure there is no gaurantee that the house is worth $250k... but if I know I can unload it for $100k in 3-4 weeks (taking a huge loss regardless) to me I see it as a $100k asset.  Again, my opinion, and it's cool if yours differs from it.

[Anonymous]

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@kdm31091 wrote:

Credit card companies are concerned with liquid assets, money that you can access right here and right now. A house has a certain value but it is not guaranteed, same with a car. It's not the same as cash in an account. Amex (or whoever) is worried about the money available to you to repay debts. You aren't likely to sell your house to pay off a CC.

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I agree that most wouldn't sell their house to pay off a CC... but I think many WOULD sell their house if they lost their job, were unable to obtain another form of income and couldn't pay any of their bills.  I would choose that avenue prior to plunging into debt.  But that's me, and I'm sure others would handle that situation differently.

[DrZoidberg]

Put your house down.Problem solved.

Quoting your OP, "Assets include savings accounts, checking accounts, retirement accounts and other investments (stocks, bonds, brokerage accounts etc)." I'm curious how you call this vague and wondered if you could use your house.

[Anonymous]

Quite simply because "investment" is a very loose term.  People "invest" in real estate all the time.  In fact, many will argue that over time it's a more sound investment than some other forms such as stocks that Amex includes in their mini blurb about what constitutes total assets.  Therefore, by definition, it can be considered an investment.  I was curious if people used paid off real estate that could easily be liquidated as part of their total assets.  In your opinion it shouldn't be used, I get that.   

[Anonymous]

Amex wants to know what, if any, cash (read: potentially garnishable) assets you have.

In most states, a house you live in is your homestead, and is exempt from such things in the event you run up a large Amex bill and don't pay it.  Likewise a car is a depreciation-bound liquifiable asset, but they cannot seize it to pay your Amex bill.  These types of assets are things that hold value, but are not liquid like cash, stocks, etc.

They'd need a court order to force you to sell that house, which would be much harder (or possibly impossible, again depending on the state laws in question) to get than one allowing them to garnish your bank accounts to satisfy a cash judgment, which is fairly simple in most jurisdictions.  

They are not likely to go after retirement accounts, again  because it is difficult to do, but they use this asset number as a gauge of where you stand re: financial stability for the future, so having you include those accounts in the figure gives them a full picture.  Plus, as mentioned before, it is fairly simple to get money out of a retirement account to use in an emergency, even though it costs in fees and such to do so.

[DrZoidberg]

A house simply isn't an investment even if paid. It makes you no money. You pay taxes, insurance and repairs. When you sell it, you have to spend the money to find other living arrangements. 

A good finacnial planner would exclude a house and car from total assets. 

[driftless]

I can't see how a house fits in terms of the Amex question about liquid assets. The reason for the question is obviously apparent.

[CreditDunce]

Some really good points have been made in this thread.

I own my home free and clear, too.  The place to enter that is zero for mortgage/rent payments.    Counting zero for your mortgage payments plus adding it to your assets would be double dipping.   If you own rental properties, then you are getting credit for the income.