Even the wealthy need instant money sometimes

Golf Course

Even the golfing and country club crowd runs into financial trouble. Image From Wikimedia Commons.

Recessions take a toll on every social class, believe it or not. Some of the wealthiest of the wealthy do pay cash for everything and carry very low debt loads. However, some wealthy people simply take out way bigger bank loans. Some people would rather risk debt and disaster to have the biggest house and flashiest car, and it is showing. Foreclosures on large properties are increasing, as even the wealthy lack the instant money to pay the mortgage. Even rich people could use loan modification.

Recessions affect even the rich

There have been some high profile tumbles for some incredibly wealthy people. Just look at Nicolas Cage; he wound up losing more than one property, among them a $35 million mansion which was foreclosed. The home is listed for only $11.5 million. Granted, millionaires aren’t worried about their credit scores. That said, too much debt is bad. People should aim to have the fewest encumbrances, even of low interest loans, as possible at a time. Remember also that banks can sue delinquent homeowners for the difference in foreclosure sales. Three families from the “Real Housewives” series nearly lost their homes. Jim and Alexis Bellino, from the “Orange County” show of that series had to get mortgage modification after they defaulted.

Aren’t rich people supposed to be good with money?

According to ABC, the Los Angeles County area has exploded with foreclosures on incredibly expensive properties. In fact, the number of foreclosed on properties worth $1 million or more in that area has gone up 300 percent since April of this year. However, it isn’t so much that rich people are careless with their money. In fact, it’s the opposite. People who are more plugged into the realm of finance know that there’s a time to cut your losses and walk away.

Is real estate still a good investment?

The question of whether real estate is a good investment is becoming more pertinent. Plenty of people put a lot into houses for years, even decades, only to lose more than half that value thanks to the market tanking.



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