Thank you so much for checking out the Real Estate Today podcast. Maybe you’ve got a little extra spending cash. What do you do with it? Let’s find out.
Bob Nelson: I’m Bob Nelson, Eugene commercial real estate investment broker with Pacwest Real Estate Investments.
Marcia Edwards: And I’m Marcia Edwards, residential broker with Windermere Real Estate. After that recession, those of my generation who just for the first time really felt the blow of the scary times when the lights go out in the economy at such a large scale, that has provoked, I think, a huge sense of, “I’m not gonna let that happen to me again. I’m going to have the liquidity and the staying power I need to endure such a shift in the market.”
Bob Nelson: Exactly. Right now, people are doing very well. Now, if you’re without a job and you’ve been without a job for a while, you’re saying, “Hey, who’s he talking about?” Well, in general, people are doing well. They’re employed. They have incomes that are coming in, that are in excess of their immediate cash needs. What do you do with the money? What do you do with the “surplus money”? I agree, some of you are gonna say, “There’s no such thing as surplus money.” But yes, there would be …
Marcia Edwards: Well, that’s-
Bob Nelson: Beyond what you need to live.
Marcia Edwards: What you’re saying in my opinion, Bob, is recognize first that there is excess money, and I need to do that myself. We need to take a look at what we need to have versus what we have. Because you can expand and contract easily, seamlessly. When I have more money, I can spend more money. That’s easy to do.
Bob Nelson: Oh, absolutely.
Marcia Edwards: So you’ve got to really define what excess over need is.
Bob Nelson: It would be an interesting process right now if you have the opportunity … as an example, a mortgage on your house requires a monthly payment. What would happen if you got two payments ahead? Now, be careful. If you just send them two payments’ worth of cash, they just simply call it a prepayment, with the next month’s payment still due. But if you have an opportunity with either mortgage coupons or an arrangement with the lender, I’m going to make two payments in advance. I’ll continue to make payments next month, and understand that the payment next month would’ve been for that third month. If I can get that far ahead, now if I were to hit a tough situation and needed to miss a mortgage payment for any given reason, I’m not in trouble.
Marcia Edwards: I love that. You said that in a real … We’ve been doing these too long, maybe three or four years ago, and I started applying that to myself. It’s a mind game. You know that the money could be held in the bank, or you could make that advance payment. But it does give a security for the single-family residents, saying, “Well, I won’t be losing my home in the next three months.” That’s a good baseline. But in addition to that, we want to talk next program about how to start considering when it’s smart to move that cash to another place. I’m Marcia Edwards, Windermere Real Estate.
Bob Nelson: And I’m Bob Nelson, Eugene commercial real estate investment broker with Pacwest Real Estate Investments.
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