AmiSight 11/12: How Much Would You Be Willing To Pay To Double Your Liquidity?
If you were allowed to double the size of your line of credit tomorrow, what would you be willing to pay for it?
One answer might be: I am not willing to pay a penny as I don't need it. I would encourage you to think again. Liquidity provides leverage and insurance, especially in an unsettling world. It would help if you thought about your line of credit like an insurance policy. How much life insurance do you have – and what premium do you pay for it? It would be best if you thought about your line of credit in the same way.
Almost everyone I know suffers from a short memory. When things are going well, we think it’s going to be that way forever. But if COVID taught us anything, the world can change on a turn of a dime – often in ways we can't predict or expect. So don't think about your line of credit around today's situation. Instead, look into the future, and consider the unexpected.