I thought virgins only wear white?

[CHEEZY17]

Here is what Grok AI says on the matter:
"Wealthy people use lines of credit instead of paying cash for several strategic reasons:
Liquidity Preservation: Keeping cash available allows them to seize investment opportunities, cover unexpected expenses, or manage cash flow without liquidating assets, which could incur taxes or losses.
Leverage for Investments: Borrowing at a lower interest rate to invest in opportunities with higher returns (e.g., real estate, businesses, or stocks) can amplify wealth. This is often called "using other people's money."
Tax Advantages: Interest on certain loans (e.g., mortgages or business loans) may be tax-deductible, reducing the overall cost of borrowing. Additionally, holding appreciated assets avoids capital gains taxes.
Asset Protection: Using credit instead of selling assets can protect wealth from market fluctuations or forced sales, especially for illiquid assets like real estate or private equity.
Convenience and Flexibility: Lines of credit provide quick access to funds without the need to liquidate investments or navigate complex financial transactions, offering flexibility for large purchases or projects.
Low Interest Rates: Wealthy individuals often secure lines of credit with favorable terms due to their strong credit profiles or relationships with financial institutions. If the interest rate is low, borrowing can be cheaper than the opportunity cost of tying up cash or selling assets at a loss.

In summary, using lines of credit allows wealthy individuals to optimize cash flow, leverage investments, gain tax benefits, protect assets, and maintain flexibility, all while taking advantage of low-cost borrowing."

where do they get the money to repay the loan?

I asked Mrs. Cheezy this exact question.
She says that most treat the line of credit payment like a normal bill.
Some pay monthly from their regular income
Some pay via dividends
Some use bonuses they may receive
Some sell a losing stock position
Some take from a savings or money market
Some will use the proceeds gained from the use of the money initially (think of "flipping" a house or property.)

I think the flexibility is the key here.

[Animal]

Here is what Grok AI says on the matter:
"Wealthy people use lines of credit instead of paying cash for several strategic reasons:
Liquidity Preservation: Keeping cash available allows them to seize investment opportunities, cover unexpected expenses, or manage cash flow without liquidating assets, which could incur taxes or losses.
Leverage for Investments: Borrowing at a lower interest rate to invest in opportunities with higher returns (e.g., real estate, businesses, or stocks) can amplify wealth. This is often called "using other people's money."
Tax Advantages: Interest on certain loans (e.g., mortgages or business loans) may be tax-deductible, reducing the overall cost of borrowing. Additionally, holding appreciated assets avoids capital gains taxes.
Asset Protection: Using credit instead of selling assets can protect wealth from market fluctuations or forced sales, especially for illiquid assets like real estate or private equity.
Convenience and Flexibility: Lines of credit provide quick access to funds without the need to liquidate investments or navigate complex financial transactions, offering flexibility for large purchases or projects.
Low Interest Rates: Wealthy individuals often secure lines of credit with favorable terms due to their strong credit profiles or relationships with financial institutions. If the interest rate is low, borrowing can be cheaper than the opportunity cost of tying up cash or selling assets at a loss.

In summary, using lines of credit allows wealthy individuals to optimize cash flow, leverage investments, gain tax benefits, protect assets, and maintain flexibility, all while taking advantage of low-cost borrowing."

where do they get the money to repay the loan?

I asked Mrs. Cheezy this exact question.
She says that most treat the line of credit payment like a normal bill.
Some pay monthly from their regular income
Some pay via dividends
Some use bonuses they may receive
Some sell a losing stock position
Some take from a savings or money market
Some will use the proceeds gained from the use of the money initially (think of "flipping" a house or property.)

I think the flexibility is the key here.

the point is, you get a line of credit. Say you get $1,000,000. That's tax free money!!! Yay! Now you begin to pay it back at $10,000 a month with taxable income. Not so yay!!! After 120 months you have it paid off with taxable money. What did you really gain other than a few bills from your CPA and some interest on the loan? And if you really want a negative yay, pay it off with some losing stock investments where the only money you got from selling them was what was left that had already been taxed before you bought them with it.

[CHEEZY17]

I'm sure these people that are worth 100's of millions with professional money managers handling their finances don't know what they're doing.

[B-Tender]

I'm sure these people that are worth 100's of millions with professional money managers handling their finances don't know what they're doing.

I feel like this strategy is more for people who have large trusts, or C corporations. Someone with a high salary, or even an S corp will still have high income tax, and this may not be the strategy for them. Just my guess though.

[CHEEZY17]

I'm sure these people that are worth 100's of millions with professional money managers handling their finances don't know what they're doing.

I feel like this strategy is more for people who have large trusts, or C corporations. Someone with a high salary, or even an S corp will still have high income tax, and this may not be the strategy for them. Just my guess though.

Sure, it probably doesn't work for everyone but it clearly works for some or they wouldn't do it.

[Animal]

I'm sure these people that are worth 100's of millions with professional money managers handling their finances don't know what they're doing.

I feel like this strategy is more for people who have large trusts, or C corporations. Someone with a high salary, or even an S corp will still have high income tax, and this may not be the strategy for them. Just my guess though.

Sure, it probably doesn't work for everyone but it clearly works for some or they wouldn't do it.

I have no doubts that it works, I just don't understand how it works or what the benefit is. I just don't believe that there are any loopholes in the tax codes like people think there are.

Although, being able to step up an asset value after someone dies is about as close to a loop hole as I have seen. Actually, that might be a good example of one.

[nerd_alert]

Things must be getting tight for Bezos. Sold 3.3M shares for $737M. I guess everyone needs some pocket change

https://www.cnbc.com/2025/07/01/jeff-be ... hares.html

[CHEEZY17]

I'm sure these people that are worth 100's of millions with professional money managers handling their finances don't know what they're doing.

I feel like this strategy is more for people who have large trusts, or C corporations. Someone with a high salary, or even an S corp will still have high income tax, and this may not be the strategy for them. Just my guess though.

Sure, it probably doesn't work for everyone but it clearly works for some or they wouldn't do it.

I have no doubts that it works, I just don't understand how it works or what the benefit is. I just don't believe that there are any loopholes in the tax codes like people think there are.

Although, being able to step up an asset value after someone dies is about as close to a loop hole as I have seen. Actually, that might be a good example of one.

I really think we're over thinking it here.

I believe this would be a typical scenario:

Person wants to buy 100 widgets at a cost of 300k
Rather than liquidate securities or use their cash, person uses their LOC to acquire the widgets at a very favorable interest rate
1 year later person sells 100 widgets for 400k uses proceeds to pay off LOC
Even after taxes person nets "X" dollars without ever using a single dollar of their own money....all while their money, in its entirety, continues to earn dividends, interest etc. at, presumably, a good rate.

[Animal]

I'm sure these people that are worth 100's of millions with professional money managers handling their finances don't know what they're doing.

I feel like this strategy is more for people who have large trusts, or C corporations. Someone with a high salary, or even an S corp will still have high income tax, and this may not be the strategy for them. Just my guess though.

Sure, it probably doesn't work for everyone but it clearly works for some or they wouldn't do it.

I have no doubts that it works, I just don't understand how it works or what the benefit is. I just don't believe that there are any loopholes in the tax codes like people think there are.

Although, being able to step up an asset value after someone dies is about as close to a loop hole as I have seen. Actually, that might be a good example of one.

I really think we're over thinking it here.

I believe this would be a typical scenario:

Person wants to buy 100 widgets at a cost of 300k
Rather than liquidate securities or use their cash, person uses their LOC to acquire the widgets at a very favorable interest rate
1 year later person sells 100 widgets for 400k uses proceeds to pay off LOC
Even after taxes person nets "X" dollars without ever using a single dollar of their own money....all while their money, in its entirety, continues to earn dividends, interest etc. at, presumably, a good rate.

That works when you are buying widgets that go up in value. But people do that all of the time. The concept of flipping houses is entirely based on using borrowed money and paying it back with profits left over. But that doesn't generate just spending money like it takes to rent hotels and pay credit cards and buy cars etc. People say tht Bezos goes some entire calendar years without paying income taxes. so he's not pulling out any money to repay any loans during those years. And even in your example, he would have to pay income tax on 100k.

If this is being overthought, then I would suggest the right answer is this scenario:

Person wants some money to live a rich lifestyle. Person sells $2 billion in stock and pays income taxes (capital gains) on the $2 billion. Person would put the $1.6 billion that is left into the bank and uses it to spend for the next 10 years. In those 10 years Person never has to pay any taxes because they already paid the taxes on the money they are using. If person runs out of money before 10 years is up, then they start this process all over again.