What do you consider "cash"?

What do you consider "cash"?

  • Money from savings, no other debt

    Votes: 45 54.2%

  • Money from savings, only a mortgage as debt

    Votes: 21 25.3%

  • Extending morgage (AKA remortgage, AKA "one" account)

    Votes: 0 0.0%

  • Money that was in your account despite having a mortgage and loans

    Votes: 13 15.7%

  • Money that was in your overdraft despite having loans, credit cards etc

    Votes: 4 4.8%

  • Other

    Votes: 6 7.2%
  • Total voters
    83
  • Poll closed .
lustyd

lustyd

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Hi all, I'll freely admit I'm terrible with money - I'm like a magpie in the chandlers and will pick up anything shiny and new! The recent thread about how people pay for their boats got me interested in what you all consider a cash purchase.
  • Money from savings, no other debt
  • Money from savings, only a mortgage as debt
  • Extending morgage (AKA remortgage, AKA "one" account)
  • Money that was in your account despite having a mortgage and loans
  • Money that was in your overdraft despite having loans, credit cards etc

While I don't claim to be making cash purchases, the things I buy tend to fall in the last category. This is probably because I buy too many things but I have yet to work out how to not buy things :D
 
Not sure I understand the question. Is it specifically about buying something big like a house, boat or car, or about any purchases (like nick-nacks at the chandler's)? I don't really see what relevance one's style of (home? boat?) mortgage has, especially in the latter case.

For what it's worth, if someone said they bought a house "for cash", I'd take it to mean buying without taking out (or increasing) any kind of loan or mortgage. For a smaller purchase, I'd assume they meant "with actual folding money". Cars and boats could go either way - if someone bought a brand new Merc "for cash" I'd assume they meant not on dealer finance etc, but a £500 Ford I'd take it to mean a wad of 20s.

Pete
 
You are making it over complicated. Cash is cash. When people are offering to pay "cash" it usually means one of two things. Either they are offering the opportunity to the seller to avoid having a trace on the money - for example to avoid tax if the seller is in business - or even with a private person to hide it from his wife. Or more commonly it is a belief that they can get a lower price, or be a preferred buyer because there is no delay in arranging finance from a third party. In reality a seller should try to ensure that the buyer already has the finance in place before starting the transaction.

From your personal perspective, draw up your personal balance sheet. On the one side you will have all your liabilities (loans, credit card balances, mortgages etc) and on the other all your assets (house, cars, boats, collectibles, investments and of course cash in savings) Attach a realistic monetary value to each of your assets, sum them and take away your liabilities and you get your net asset value.

Of course in practical terms most of this is not available in the form of instant cash to swop for another asset (eg a new boat), so you may choose to convert some into cash (sell some assets or cash in investments) or take on more liabilities to acquire the new asset (borrow the money). Does not matter how you do it when the transaction is carried out as the buyer wants cash and is not bothered about how you got it (provided you did not steal it).

Does not help your problem of giving into temptation to buy things without incurring more liabilities. That is a personal choice and largely governed by your ability to meet your liabilities as they fall due.

Basic commonsense really.
 
It was sparked by the other thread where almost everyone claimed to have "paid cash" for their boats. Assuming some of them have boats worth more than a couple of thousand I don't take this to mean they turned up with a briefcase full of fifties, therefore one of the above must be true?

It's just idle curiosity really, I wasn't trying to pry into everyone's finances. That said the other thread did highlight that quite a few on here are very knowledgable about investments etc :)
 
lustyd said:
It was sparked by the other thread where almost everyone claimed to have "paid cash" for their boats. Assuming some of them have boats worth more than a couple of thousand I don't take this to mean they turned up with a briefcase full of fifties, therefore one of the above must be true?
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OK, understand now.

I'd say that the first two and the fourth are "cash" for this purpose, the fifth isn't but I know some people would treat it that way.

That said, even though "Money that was in your account despite having a mortgage and loans" counts as cash, using it to buy a boat probably isn't a very sensible idea. If I had loans (other than mortgage and student loan) outstanding, any money in my current account beyond normal living expenses would be going towards paying it off.

Pete
 
Wads of notes is rarely used these days. Just electronic digits!

Think you will find that most people who pay "cash" in the sense of not needing to borrow, do so from converting some of their other assets into cash. So it is proceeds of business sales, downsizing houses, redundancy payments, selling investments, pension lump sums, inheritances and so on. In other words things you are able to do later in life, which is why many new or expensive boat buyers also have bus passes!

Not sure this will carry on as the younger generation today are unlikely to be able to build up that kind of asset base - although I never imagined when I was younger that I would ever have the kind of assets I ended up with, very little of which is inherited.
 
From a buyer and sellers point of view, at the time of the transaction, and in the context of buying a boat, (or a house), I take cash to mean the ability to pay with liquid funds immediately available.

If someone offers to buy a house from us for "cash", we generally ask for proof by way of a bank statement, or similar. If they resist showing such proof, or can't, we tend not to believe them, and assume they need to arrange finance of some kind.... Which is not as attractive as available cash. They also make themselves less attractive as a buyer because they have shown they are prepared to lie to get a deal.

Whether the cash is from other borrowings, or whatever, would not be an issue in my book.

On the other hand, if you are looking at your own balance sheet, you will know whether the cash you can buy things with is actually available because you have borrowed elsewhere.... I know mine is!!
 
As a Yorkshireman, its a non question. Neither a borrower nor a lender be" was drilled into me in my youth. I genuinely now find it hard to buy things, always putting it off, looking for a better deal, thinking I dont really need it. Even got a collection of money boxes.

And I'm not sure that is any better than the live today pay tomorrow approach of many.
 
Bosun Higgs said:
And I'm not sure that is any better than the live today pay tomorrow approach of many.
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The big difficulty is in doing the annuity calculation. Easy for insurers because they can work on averages. With your own pot the chances of getting it just right are small. No problem if you actually plan to leave some for others ....but if not? Perhaps that's why some underestimate their life expectancy and then just fall back on the State?
 
VicMallows said:
The big difficulty is in doing the annuity calculation. Easy for insurers because they can work on averages. With your own pot the chances of getting it just right are small. No problem if you actually plan to leave some for others ....but if not? Perhaps that's why some underestimate their life expectancy and then just fall back on the State?
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Exactly right or end up with too much and the govt takes a chunk anyway, so much better to try and use it for your benefit while you can. Trouble is the capacity to use it for pleasurable things declines the older you get. Remember trying to persuade my mother to take the trips she always wanted to do after my father died - but she was too worn out from nursing him to cope and would not have got the same pleasure as when they did things together.
 
As you are perhaps discovering cash means different things to different people at different times. Most of the time to me cash is exactly that, the folding stuff and coin.
When I bought my present house I was described as a cash buyer as I didn't need a mortgage, though I did need to sell my previous house to raise the cash. On the other hand if I engage a tradesman and agree to pay in cash for a discount he really does expect the folding stuff.

So as ever we need a cleared understanding of your specific cash
 
maxi77 said:
When I bought my present house I was described as a cash buyer as I didn't need a mortgage, though I did need to sell my previous house to raise the cash.
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Who by?

In 25 years of selling houses, nobody I know in the business has ever described someone with a house to sell as a cash buyer. It's a fairly illiquid asset, particularly when most people have an inflated perception of their homes' true value, and particularly if a quick sale is required.

In the current market, if someone makes an offer but has a house sell, we suggest getting their house at least under offer, before we suggest a seller considers getting serious with them. This applies whether they are selling with us, or not.
 
Tranona said:
Wads of notes is rarely used these days. Just electronic digits!

Think you will find that most people who pay "cash" in the sense of not needing to borrow, do so from converting some of their other assets into cash. So it is proceeds of business sales, downsizing houses, redundancy payments, selling investments, pension lump sums, inheritances and so on. In other words things you are able to do later in life, which is why many new or expensive boat buyers also have bus passes!

....
Click to expand...

... and why Stannah are introducing a new line of stair lifts to fit companionways...
 
webcraft said:
I paid for our boat with £50 notes. That's cash.

- W
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The trouble there is that money laundering laws now prevent this for anything over about £4k otherwise the recipient of the cash has a hard time putting it into the bank.
 
'Cash' really can have a lot of meanings.

When I bought my present house 8 years ago I offered the vendor what I considered cash.

There was no estate agent involved and in a direct phone conversation with the seller (Who lived in the states) I said no survey, no conditions, fixed price, fixed entry date, immediate payment. (obviously the price was very right)
I had the funds available as I had just sold my previous house and it was just a case of phoning my solicitor and instructing him to complete all the legal details and pay the sellers solicitor.
I consider that was a 'cash' transaction.

For more normal day to day transactions of up to a few hundred pounds, a cash transaction is the passing over a wad of notes or pocket full of coins to the seller without the use of a plastic card/cheque to actually pay for the item.

The source that the buyer get's the cash from does not really enter into it as from the sellers point of view it is still a 'cash' transaction.

Iain
 
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