Leroy bought this house thirty years ago for 40k.The house is paid off.
Leroy worked at the local plant and hid much of his earnings in his mattress.
Leroy bought his car and work truck for cash and even splurged for an 84" flat panel television to watch the games on the weekends.
Since Leroy never went to college, he has no student loans.
Now Leroy is awash in cash in a down market with few outstanding debts.
Biff financed this house four years ago with his excellent credit rating.Biff has Sub-Zero appliances, Kohler bath fixtures, marble, granite and hardwood throughout and contemporary furnishings.
Biff's student loans are paid up (but he still owes about 60k).
Biff's cars are only two years old (but he still owes about 50k total on both loans).
Biff has season tickets to the Cowboys, Rangers and Mavericks.
Biff invested heavily in his company's 401k and has accounts at his local Charles Schwabb broker.
Both men lost their jobs today.
Who is in a better position to make all the right moves?
8 comments:
The man who can take care of himself in good and bad times is the best. To answer your question guy number is more survival oriented and guy number two is more successful oriented. Too bad they couldn't be both but that is where the line is often divided between taking your money off of the craps table and saying I don't want to push it and letting it all ride on someone else continuing to roll 7's.
The answer is tough because guy 1 seems to be afraid to succeed while guy 2 is afraid to realize his own mortality. So I'll just leave it at that..... but in this recession it's the guy who is paid off with money in his pocket who will thrive while the guy who lost his house to foreclosure and credit default bankruptcy who will have to rent for the next 7 years!
It is true that Leroy is in a better position, but if I had to live in a little town like Leroy and then lost my job on top of that, I would go crazy, kill Biff, and squat in his house until I got caught! :)
has anyone actually met someone named "Biff"?
Leroy lives at or below his means. It's the great American secret that no one talks about. Living at an affordable rate is not sexy. I'm not mad at Biff but maybe he could've bought a smaller home. And the season tickets... They have package deals (weekend, weekday etc). Honday Certified Used Cars are always a good bet. But please tell Leroy to take his money out of his mattress!!!!
@ FreeMan - Balance is the key. A little bit of both would have been the best case scenario.
@ DJ - I had to ask about this scenario because the small town in which I now live has many "Leroys" and a few "Biffs".
But we are hardly even effected by the recession.
Now I'm questioning my intentions of helping others to get out of the hood. Many of these people (in the hood) are in a better financial situation than others who over borrowed.
But yes, living in "Leroy's" town sucks sometimes. It seems that the Internet is one's only way of keeping in touch with modern life.
@ brohammas - Yeah... twice. One in high school in Cali. and one in college in Hawaii.
@ Ojo - I had an uncle who was always saving money for "The hard times".
His home, rentals, cars and trucks were all paid off.
His children's college debt was paid off.
When he died, he had about 1.5 million in HIS MATRESS for the "Hard Times".
When old school cats don't trust people, you can't convince them otherwise.
I guess you can hide money in your house but what if it burns down? I always think about that....
@ Ojo - I'm not saying that it's smart to put money in a matress, just that it happens sometimes.
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