Seven Secrets to Money Success - Number 6

Equity is not the same as cash
Many people think that equity is the same as money. It’s some kind of accumulated bank account that they can draw on when they need to. I have personally met people who build up the equity in their family home and then find that if they stopped working they would have no money to spend. They still have plenty of equity but no money to spend. Imagine going down to the bank and saying, “I need to withdraw 10 % of the equity in my home.” I’m sure the bank teller would look very blankly at you. Of course the lending part of the bank would support the thinking that equity is money and they can give you the illusion that it is true. Because when you draw on your equity by borrowing from the bank, you end up with money to spend. But remember, the money you get to spend is BORROWED money on which you are going to pay INTEREST and when you have spent the money you still have to pay it back or go on paying the interest for the rest of your life.

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