We’re back…… Using home equity as ATM’s!!!!

[an]

ER, the way I see it, at least these “investors” are trying to get themselves financially independent or at least increase their spending pot. I would say they’re one step better than those who just use credit card to buy junk.

[Coronita]

delete

[earlyretirement]

[quote=AN]ER, the way I see it, at least these “investors” are trying to get themselves financially independent or at least increase their spending pot. I would say they’re one step better than those who just use credit card to buy junk.[/quote]

Wait. Are you actually saying you don’t find anything wrong with small time retail investors using their credit cards to fund their investment accounts and stock purchases or the speculative currency markets????

It sounds like the Commodities Futures Trading Commission is also probably going to ban credit cards so it sounds like it’s an issue there as well.

AN, do you find anything wrong with the case I listed of a guy using credit card cash advance checks depositing these into his margin trading account and using it to trade and buy/sell stocks?

Everyone in life is trying to get themselves “financially independent but most reasonable people don’t gamble like this. I mean, what limits do you have on how far is too far? I didn’t expect anyone to try to justify someone using their credit cards to sink it in the stock market so I have to admit this surprises me.

What about someone that takes out a HELOC and sinks it in the stock market? If this guy is trying to “increase his spending pot” is it ok or justified?

[UCGal]

I read that article yesterday, also, ER. And had the same gut reaction you did.

But at least they’ll be able to BK out of it when it collapses. Unlike if they were borrowing against home equity (cash out refi’s or helocs) to get the money to wager in the market. With cram down off the table – you will have to lose your house (short sale or foreclosure) if you get your gambling money from that source… But with credit cards… BK can wipe out your “investment mistakes”.

Real investing doesn’t happen anymore. Investing is where you put down money on companies that have good long term growth potential. Now it’s all day (or week) trading… buying on the rumor, selling on the news… Hoping for short gains. It seems to be a lot closer to gambling that investing.

[earlyretirement]

[quote=UCGal]I read that article yesterday, also, ER. And had the same gut reaction you did.

But at least they’ll be able to BK out of it when it collapses. Unlike if they were borrowing against home equity (cash out refi’s or helocs) to get the money to wager in the market. With cram down off the table – you will have to lose your house (short sale or foreclosure) if you get your gambling money from that source… But with credit cards… BK can wipe out your “investment mistakes”.

Real investing doesn’t happen anymore. Investing is where you put down money on companies that have good long term growth potential. Now it’s all day (or week) trading… buying on the rumor, selling on the news… Hoping for short gains. It seems to be a lot closer to gambling that investing.[/quote]

Yeah, UCGal. I had a bit of dejavue with the feeling I had during the last bubble. The thing that worries me is I think the number of people doing this must be really high. I just mentioned earlier in this thread about meeting a guy and him doing this. Then I see it in the WSJ.

And this guy wasn’t some loser. He was a professional with a good stable job, a family with kids and an educated guy. A guy who should know better. If guys like him are doing it then that means many others are (also evidenced by the fact that they are trying to ban use of credit card use to invest).

If people are using their credit card cash advance checks to sink it in the stock market then I would HAVE to believe they are also going to use their HELOCS to sink it into the market as well.

Yes, I guess they can write it off in bankruptcy but it just makes me shake my head that people are doing this so quickly after the last crash. And the scary thing is these people REALLY think they are “investing”.

So true UCGal. Many people are mistaking this for “investing”. Oh well…

[spdrun]

If the dumbfucks wipe themselves out in the stock market, go BK, and ruin their credit, there will be more opportunities for calculating vultures like us. They should be applauded, not execrated.

[Coronita]

[quote=earlyretirement][quote=AN]ER, the way I see it, at least these “investors” are trying to get themselves financially independent or at least increase their spending pot. I would say they’re one step better than those who just use credit card to buy junk.[/quote]

Wait. Are you actually saying you don’t find anything wrong with small time retail investors using their credit cards to fund their investment accounts and stock purchases or the speculative currency markets????

It sounds like the Commodities Futures Trading Commission is also probably going to ban credit cards so it sounds like it’s an issue there as well.

AN, do you find anything wrong with the case I listed of a guy using credit card cash advance checks depositing these into his margin trading account and using it to trade and buy/sell stocks?

Everyone in life is trying to get themselves “financially independent but most reasonable people don’t gamble like this. I mean, what limits do you have on how far is too far? I didn’t expect anyone to try to justify someone using their credit cards to sink it in the stock market so I have to admit this surprises me.

What about someone that takes out a HELOC and sinks it in the stock market? If this guy is trying to “increase his spending pot” is it ok or justified?[/quote]

Depends if he can beat the APR.

Funny you should mention this.

About a year ago I was chatting with my former coworker at a large stable company… We were talking about the financial mess people are in and somehow we talked about returns and open enrollment on ESPP (employee stock purchase plan). He mentioned that he wishes he could participate, and I asked him why he couldn’t.

He mentioned his spouse went back to school, he has a mortgage, a new kid, and if that it would be a very tight short term cash flow issue if he were to use is post-tax dollars and contribute to the ESPP plan deferral.

I jokingly said “dude, you’re way to financially prudish…Why don’t you adopt some of the more creative american financial ingenuity and get a balance transfer from a credit card you don’t use for 1%, and use that balance transfer for your day to day bill, and meanwhile withhold more of your paycheck toward your ESPP. You work at a stable company, for which your company stock is virtually dead as a doorknob in terms of volatility regardless of what the market is doing, and you get 20% off of the FMV of the stock between the 6 months offering period…And the time it takes for the shares to vest and when they end up in your account is at most a 2 day trading period, and the shares will be granted after any planned earnings announcrment….so it’s unlikely you’ll see a -20% within that 2 days…”
Dead silence… I thought I offended the guy by going too far, so I changed the subject and that was the end of it…So I thought.

6 months later, he calls me back up and says, “hey, I ended up getting my ESPP shares and just sold them for 20% minus costs…”

I was like, I thought you said you would have cashflow issues, and didn’t want to do it. What did you do, max out your CC?

He was like “No. Even better…I thought about what you said…So I went to schwab and took out a no cost Heloc @ 4%, and withdrew enough to cover my day to day bills while I contributed the maximum I could to my ESPP… 6months later, I sold the shares the day after I vested when the shares were deposited into my account for 20% on the spot gain, and immediately I paid off the small Heloc balance the next few days…And for this period I have some cash to cash flow until closer to the end of this period, and I’ll draw from my Heloc again for about 3 months and pay it back..Next year I won’t have to anymore…And you know what, I think I might even be able to report my interest charges on my Heloc as an investment interest expense…”

Lol….

[an]

[quote=earlyretirement]Wait. Are you actually saying you don’t find anything wrong with small time retail investors using their credit cards to fund their investment accounts and stock purchases or the speculative currency markets????

It sounds like the Commodities Futures Trading Commission is also probably going to ban credit cards so it sounds like it’s an issue there as well.

AN, do you find anything wrong with the case I listed of a guy using credit card cash advance checks depositing these into his margin trading account and using it to trade and buy/sell stocks?

Everyone in life is trying to get themselves “financially independent but most reasonable people don’t gamble like this. I mean, what limits do you have on how far is too far? I didn’t expect anyone to try to justify someone using their credit cards to sink it in the stock market so I have to admit this surprises me.

What about someone that takes out a HELOC and sinks it in the stock market? If this guy is trying to “increase his spending pot” is it ok or justified?[/quote]
Do I think it’s a wise thing to do? No. Would I do it myself? No. But again, it’s their freedom to do whatever they want with the opportunity available. I don’t see them as any different than the millions who spend well beyond their means through credit.

Not everyone in life is trying to get themselves financially independent. The vast majority goes to work and spend every dollar they make and use credit card to spend even more.

Keep in mind that my limit is different than yours which is different than these people. I’m not going to say my limit is the right limit and everyone else’s limit is wrong. They have to decide for themselves what their limit is.

I think you fail to see most don’t have the kind of pot you have. Most don’t have a pot at all. I’m not trying to justify anyone else’s behavior. I simply state those who borrow $ from credit card to invest is not that different that those who borrow $ from credit card to buy junk. I’m sure you wouldn’t borrow $ from credit card to buy junk that you can’t afford. But Millions of Americans do.

[Coronita]

[quote=spdrun]If the dumbfucks wipe themselves out in the stock market, go BK, and ruin their credit, there will be more opportunities for calculating vultures like us. They should be applauded, not execrated.[/quote]

Feel free to laugh until you make your first bad choice.

[an]

[quote=flu][quote=spdrun]If the dumbfucks wipe themselves out in the stock market, go BK, and ruin their credit, there will be more opportunities for calculating vultures like us. They should be applauded, not execrated.[/quote]

Feel free to laugh until you make your first bad choice.[/quote]
He’s too smart to make any bad choice.

[an]

flu, I totally agree. I too used credit card to “invest” in the past. around 2004-2006ish, I got about $30-50k in 0% balance transfer and stuff that in a 1 year CD that makes 6%ish at the time. So, after a year, I have $1800-3k to spend. When the balance transfer deal expire, I just return that money and keep the $1800-3k.

[spdrun]

Feel free to laugh until you make your first bad choice.

I’m actually relatively conservative money-wise, and have made good choices thus far.

[Coronita]

[quote=spdrun]

Feel free to laugh until you make your first bad choice.

I’m actually relatively conservative money-wise, and have made good choices thus far.[/quote]

Feel free to laugh until you make your first bad choice.

[spdrun]

I’ve made bad choices before. I still laugh at the people who made WORSE choices.

[earlyretirement]

[quote=AN]flu, I totally agree. I too used credit card to “invest” in the past. around 2004-2006ish, I got about $30-50k in 0% balance transfer and stuff that in a 1 year CD that makes 6%ish at the time. So, after a year, I have $1800-3k to spend. When the balance transfer deal expire, I just return that money and keep the $1800-3k.[/quote]

But buying a GUARANTEED 6% one year CD is much different than putting this money into an investment account to actively trade stocks or currencies/commodities.

[quote=AN]
Do I think it’s a wise thing to do? No. Would I do it myself? No. But again, it’s their freedom to do whatever they want with the opportunity available. I don’t see them as any different than the millions who spend well beyond their means through credit.

I think you fail to see most don’t have the kind of pot you have. [/quote]

Ok..I’m glad that you don’t think it’s wise to do this. Sure, it’s their freedom to do it but that’s not what I’m talking about. I put the people that spend beyond their means through credit in the same ignorant category and in the same class as these ignorant people that are using their credit cards and sinking it into the stock/currency markets.

Also, you talk like somehow I always had this “pot”. That is totally false. My dad and mom came to this country with a few suitcases and were poor. It wasn’t through some magical “pot” that my parents put all my brothers and sisters through private school. It was through very hard work and very long hours, lots of overtime, limited vacations, sacrifice and making prudent and intelligent financial decisions.

I had no magical “pot” either. I graduated from college with six figure student loan debt. Neither my parents nor I ever resorted to using our credit cards to sink in the stock market.

[quote=flu]

Feel free to laugh until you make your first bad choice.[/quote]

Absolutely I think we all have made some mistakes and hiccups in life and investments. I’m not disputing that. Anyone that tries to deny they haven’t made any mistakes is absolutely lying. The key is to learn from those mistakes.

But still, if I was doing something stupid or ignorant, I’d sure appreciate someone pointing it out. Which is what I think I’m doing mentioning this whole credit cards in the stock/currency markets thingy.

[Author]

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