Is cash really king?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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dkeller0716
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Is cash really king?

Post by dkeller0716 »

I remember buying bait from an “old timer” as a college kid and he always would tell me that cash is king.

Recently I went to help my mother-in-law buy a car where the game plan was to pay In cash thinking We’d get a better deal. It was informed to us that this dealership gets kick backs from the banks where they direct borrowers to and that paying in cash won’t discount the car.

So, is the old adage of cash is king really just “old”, or do you feel it’s still true?
fareastwarriors
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Re: Is cash really king?

Post by fareastwarriors »

Cash discounts are still often times available at small businesses, assuming the owner is there.
Olemiss540
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Re: Is cash really king?

Post by Olemiss540 »

Cash is still king unless you are buying something where the seller gets kickbacks from a loan provider.

Fixed!
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
MotoTrojan
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Re: Is cash really king?

Post by MotoTrojan »

Just finance the car and then pay it off right away. Sometimes there are terms saying you have to pay a minimum number of months, or even an early payment fee, but in my experience with Chase auto-loans at-least I was able to pay it off right away even though dealer so I had to wait 3 months.
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whodidntante
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Re: Is cash really king?

Post by whodidntante »

Cash can be used to buy poker chips. But it is not very king-like here in America. It's mostly dead presidents, with few exceptions.
ChinchillaWhiplash
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Re: Is cash really king?

Post by ChinchillaWhiplash »

It is more like “credit is king” nowadays.
Katietsu
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Re: Is cash really king?

Post by Katietsu »

MotoTrojan wrote: Wed Aug 26, 2020 6:09 pm Just finance the car and then pay it off right away. Sometimes there are terms saying you have to pay a minimum number of months, or even an early payment fee, but in my experience with Chase auto-loans at-least I was able to pay it off right away even though dealer so I had to wait 3 months.
The dealer lost their kickback because you paid it off in less than 3 months. Some of the honest dealers will ask you to wait and tell you why.
000
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Re: Is cash really king?

Post by 000 »

It was for the one or two days in March when the T-bill market froze up.
Samueul
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Re: Is cash really king?

Post by Samueul »

Well, the FED said they were keeping interest rates near zero for the next five years so I don’t know...
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lthenderson
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Re: Is cash really king?

Post by lthenderson »

Cash is still king in many aspects of life, but not in purchasing cars since dealerships started getting more money if they could finance it instead. It's probably been like that for over a decade now. I just refuse to discuss how I plan to pay for the vehicle until the final price has been agreed upon.

I had a small repair done on my driveway earlier this year. The concrete guy gave me 20% off if I paid in cash. I find this is quite often the case for small jobs that I hire out.
MotoTrojan
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Re: Is cash really king?

Post by MotoTrojan »

Katietsu wrote: Wed Aug 26, 2020 6:48 pm
MotoTrojan wrote: Wed Aug 26, 2020 6:09 pm Just finance the car and then pay it off right away. Sometimes there are terms saying you have to pay a minimum number of months, or even an early payment fee, but in my experience with Chase auto-loans at-least I was able to pay it off right away even though dealer so I had to wait 3 months.
The dealer lost their kickback because you paid it off in less than 3 months. Some of the honest dealers will ask you to wait and tell you why.
Nice. I don’t feel that bad as they bait and switched me with some door trim protection strips I didn’t ask for that were multiples of what they’re worth. Honest they were not
Doctor Rhythm
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Re: Is cash really king?

Post by Doctor Rhythm »

Sometimes cash is king. Sometimes cash is trash. You can never know until after the fact. But I know with certainty that you are the first person on this forum that said they got financial advice from the bait & tackle shop.
:sharebeer
Last edited by Doctor Rhythm on Wed Aug 26, 2020 7:18 pm, edited 1 time in total.
UpperNwGuy
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Re: Is cash really king?

Post by UpperNwGuy »

Cash is no longer king. In fact, it is quickly becoming obsolete.
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whodidntante
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Re: Is cash really king?

Post by whodidntante »

Doctor Rhythm wrote: Wed Aug 26, 2020 7:16 pm Sometimes cash is king. Sometimes cash is trash. You can never know until after the fact. But I know with certainty that you are the first person on this forum that said they got financial advice from the bait & tackle shop.
:sharebeer
Would you settle for someone who posted about advice received at a bait and tackle shop?
viewtopic.php?t=88705
stoptothink
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Re: Is cash really king?

Post by stoptothink »

MotoTrojan wrote: Wed Aug 26, 2020 7:15 pm
Katietsu wrote: Wed Aug 26, 2020 6:48 pm
MotoTrojan wrote: Wed Aug 26, 2020 6:09 pm Just finance the car and then pay it off right away. Sometimes there are terms saying you have to pay a minimum number of months, or even an early payment fee, but in my experience with Chase auto-loans at-least I was able to pay it off right away even though dealer so I had to wait 3 months.
The dealer lost their kickback because you paid it off in less than 3 months. Some of the honest dealers will ask you to wait and tell you why.
Nice. I don’t feel that bad as they bait and switched me with some door trim protection strips I didn’t ask for that were multiples of what they’re worth. Honest they were not
When we bought our last car in '16 the finance manager tried to tell me I would have to repay the financing rebate if I paid off the loan before I amde six payments. Like, they were going to somehow come after me. I chuckled and paid it off shortly after getting the financing paperwork.
av111
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Re: Is cash really king?

Post by av111 »

OP

Cash is king when liquidity is low. Warren Buffet was able to make tremendous amounts of money during 2008 to 2010 when he had cash and companies needed liquidity

Till 2014, we bought assets at 50 to 80% discount to pre housing crash prices, because we were paying 100% in cash no loans

Today fed is back stopping all loans so cash is not attractive. But if policy changes...
AV111
adamthesmythe
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Re: Is cash really king?

Post by adamthesmythe »

If you mean- are there still businesses that will give you a discount for cash because they are going to cheat on taxes and not declare the income?

Yes, there are still a few of those.

Are there businesses that will give a discount for cash instead of a bounceable check?

Yes, I knew one of those.

Will a cash buyer for real estate be preferred over a buyer with a mortgage?

Sure, absolutely.

Now when buying a car- sometimes cash gets a better price, sometimes not.
Thegame14
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Re: Is cash really king?

Post by Thegame14 »

"In GOD we Trust", all others MUST pay cash!!!
flaccidsteele
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Re: Is cash really king?

Post by flaccidsteele »

dkeller0716 wrote: Wed Aug 26, 2020 6:03 pm I remember buying bait from an “old timer” as a college kid and he always would tell me that cash is king.

Recently I went to help my mother-in-law buy a car where the game plan was to pay In cash thinking We’d get a better deal. It was informed to us that this dealership gets kick backs from the banks where they direct borrowers to and that paying in cash won’t discount the car.

So, is the old adage of cash is king really just “old”, or do you feel it’s still true?
Cash is trash

Cash flow is king
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
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susa
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Re: Is cash really king?

Post by susa »

Since so many referenced car purchase, these are worth the watch

https://www.youtube.com/c/KevinHunter/videos
bberris
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Re: Is cash really king?

Post by bberris »

Are aphorisms really truth?
sandan
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Re: Is cash really king?

Post by sandan »

dkeller0716 wrote: Wed Aug 26, 2020 6:03 pm I remember buying bait from an “old timer” as a college kid and he always would tell me that cash is king.

Recently I went to help my mother-in-law buy a car where the game plan was to pay In cash thinking We’d get a better deal. It was informed to us that this dealership gets kick backs from the banks where they direct borrowers to and that paying in cash won’t discount the car.

So, is the old adage of cash is king really just “old”, or do you feel it’s still true?
Cash is king if you have good credit. There are just gimmicks out there to make people without cash feel like they are getting as good a deal as everyone else (maybe there is also a implicit tax on foreigners and people with poor credit as well). Either way, you had the option to get the lowest price by immediately paying off the loan because you had the cash. Same goes for credit card rewards. People with cash can pay off the balance monthly.
conservativeinvestor
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Re: Is cash really king?

Post by conservativeinvestor »

I don't think so anymore. It seems like with credit card rewards, car financing, most things you can get a much better deal using credit.

Once in a while, while traveling I'll see a gas station that give a cash discount but I haven't done the math to see if it outweighs credit card rewards.

Credit is more convenient and can get goods cheaper than cash just about everytime these days.

I can't remember the last time I bought anything over $10 with cash.
Topic Author
dkeller0716
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Re: Is cash really king?

Post by dkeller0716 »

Doctor Rhythm wrote: Wed Aug 26, 2020 7:16 pm Sometimes cash is king. Sometimes cash is trash. You can never know until after the fact. But I know with certainty that you are the first person on this forum that said they got financial advice from the bait & tackle shop.
:sharebeer
Haha your right. I’ve wised up (I hope) since college. I think he liked sharing what he felt was important with us “young kids” at the time.
mindboggling
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Re: Is cash really king?

Post by mindboggling »

Doctor Rhythm wrote: Wed Aug 26, 2020 7:16 pm Sometimes cash is king. Sometimes cash is trash. You can never know until after the fact. But I know with certainty that you are the first person on this forum that said they got financial advice from the bait & tackle shop.
:sharebeer
I hope it was a fee-only bait & tackle shop.
In broken mathematics, We estimate our prize, --Emily Dickinson
tiburblium
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Re: Is cash really king?

Post by tiburblium »

Cash is trash but bonds are worse
LittleMaggieMae
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Re: Is cash really king?

Post by LittleMaggieMae »

When you are young and starting out - "cash is king" is not bad advice - as it implies don't get into debt (specifically consumer debt). If you can't pay cash for that new geegaw or vacation - maybe you can't buy it just yet.

So, I think it depends on where you are in your financial life.
7eight9
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Re: Is cash really king?

Post by 7eight9 »

It is in Japan according to Reuters.

Nearly 20% of Japan households using e-money but cash still king
TOKYO (Reuters) - Almost a fifth of Japanese households use electronic money for small purchases, a survey by a central bank-affilated research institute showed, up from a year ago and a sign the country’s cash-hoarding culture is changing. ,,,
Despite the growth in electronic payments, Japan’s “cash-is-king” mentality remains entrenched with the survey showing 84% still use notes and coins for small purchases.
And for payments exceeding 10,000 yen and up to 50,000 yen, 48.5% of households said they pay by cash and 3.4% by electronic money, the survey showed.

https://www.reuters.com/article/us-japa ... y%20showed.
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Helo80
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Re: Is cash really king?

Post by Helo80 »

No, cash is not king and anybody who tells you that clearly is working on decades old myths and likely rarely buys cars. Yes, it "cash is king" has been repeated in the BH forum many times and it's about as accurate as saying that you can market time stocks.

Cash was king back int he 70s and maybe early 80s when people saved up to buy cars and pulling credit and taking bank loans was a royal PITA. In the olden days, we did not have this new technology called the Internet and instant credit approval systems to determine lending eligibility. So, if somebody showed up with a cashier's check and was willing to buy a car that day, dealerships would bend over backwards to make that deal, as opposed to taking a risk on somebody and going through the credit approval process that was not instant.

$20,000 in cash = $20,000 cashier's check = $20,000 CU check = $20,000 Captive lender check

The dealership gets their money either way. Also, there are likely incentives in the back-end between the captive lender and the dealership to steer customers to the lender.

It's unfortunate people don't understand this, but I guarantee you that BHs will perpetuate this myth for the next couple of decades.

That being said, in Real Estate, Cash can still definitely be king when dealing with all cash offers and offers that have contingencies about selling existing assets. But in cars, you're honestly stupid if you believe cash will get you a better deal. Literally nobody is impressed that you can pay cash for a car. I mean, maybe if you're 20 and you show up to the Ferrari dealership with all cash from your YouTube earnings and/or legal side hustles, they will be impressed.... but not Toyota, Honda, Ford, etc.
Doctor Rhythm
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Re: Is cash really king?

Post by Doctor Rhythm »

dkeller0716 wrote: Thu Aug 27, 2020 4:37 pm
Doctor Rhythm wrote: Wed Aug 26, 2020 7:16 pm Sometimes cash is king. Sometimes cash is trash. You can never know until after the fact. But I know with certainty that you are the first person on this forum that said they got financial advice from the bait & tackle shop.
:sharebeer
Haha your right. I’ve wised up (I hope) since college. I think he liked sharing what he felt was important with us “young kids” at the time.
Maybe you can be the old guy one day, offering advice on what kind of bait to use and how to create a diversified portfolio of low cost index funds.
flaccidsteele
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Re: Is cash really king?

Post by flaccidsteele »

Cash was king when buying rental real estate during the Great Recession because credit was frozen
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
Independent George
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Re: Is cash really king?

Post by Independent George »

dkeller0716 wrote: Wed Aug 26, 2020 6:03 pm Recently I went to help my mother-in-law buy a car where the game plan was to pay In cash thinking We’d get a better deal. It was informed to us that this dealership gets kick backs from the banks where they direct borrowers to and that paying in cash won’t discount the car.
It's not a question of kickbacks (which in many states would be illegal) - it's that dealerships make far more money off of financing than they do from the sale of inventory (even moreso if they can roll over some negative equity from your previous vehicle).

This is a great primer on it from a former car salesman:

https://www.youtube.com/watch?v=0S9cQOPxzfg
Xrayman69
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Re: Is cash really king?

Post by Xrayman69 »

Pre-pandemic, local restaurant gave 10% discount if paying with cash. I’m certain they were not tax evading, but trying to build the habits of local regulars to use cash and the loyalty factor.

Every swipe (especially Amex) costs merchants a percentage. The credit card companies are not giving us rebate because they like us, it’s because they charge the merchant more than they give back. I suspect everyone has just built his into the cost of Doug business.

We try to tip our hairdresser, and other service team members for the household (housekeeper, landscapers, tutors etc) with cash.
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wander
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Re: Is cash really king?

Post by wander »

UpperNwGuy wrote: Wed Aug 26, 2020 7:17 pm Cash is no longer king. In fact, it is quickly becoming obsolete.
Many Asian stores (especially small ones) take cash only. You want to have cash handy sometimes.
fourwheelcycle
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Re: Is cash really king?

Post by fourwheelcycle »

dkeller0716 wrote: Wed Aug 26, 2020 6:03 pm I remember buying bait from an “old timer” as a college kid and he always would tell me that cash is king.

Recently I went to help my mother-in-law buy a car where the game plan was to pay In cash thinking We’d get a better deal. It was informed to us that this dealership gets kick backs from the banks where they direct borrowers to and that paying in cash won’t discount the car.

So, is the old adage of cash is king really just “old”, or do you feel it’s still true?
Scanning the posts in answer to your question, it is interesting to see many perspectives on what this adage means. Whether you are buying bait, a home, or financing a multi-million dollar deal, I think it means you have to have cash to make the transaction work. At a bait shop that doesn't take credit cards and won't "trust you for it" if the old timer doesn't know you, cash is still literally king. If you are shopping for your first mortgage and need to put $40K down on a $200K house you will quickly find that $30K will not cut it and $40K is king - $60K is even better if you want a low monthly payment.

In my career, part of which included participating on the owner's side in bond placements for large construction projects, references that cash is king often came up in discussions about the minimum amount the owner would need to put into the deal to even make a placement feasible, the impact of the owner's finances on the prospective bond rating, and the impact of the owner's expected future cash flow and cash needs on the division of the placement into short, medium, and long term bonds.

Don't let anyone kid you - cash is still king.
Dottie57
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Re: Is cash really king?

Post by Dottie57 »

Cash is great when other assets become illiquid. I have a small stash at home, good size bank account and bonds. Consider the need for liquidity in good and bad circumstances.
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