Bottom Line With Brad: House Rich and Cash Poor
Written by North Carolina Treasurer Brad Briner
Last week, I went into a local coffee shop in desperate need of a midday jolt of caffeine. Just as I was about to place my order, I was told their credit card machine was down, so I would need to pay in cash. As I don’t generally carry much, if any, cash, I knew the double espresso I’d been thinking about just wasn’t going to happen. It wasn’t a great start to a long afternoon of meetings.
We all run into situations like this from time to time, and my coffee example didn’t really matter much to my life (though it was a tough afternoon!). But in personal finance, the fact that sometimes you have the money to buy something, but can’t because your money isn’t immediately accessible, is important. This concept is called “liquidity.”
One of the phrases you sometimes hear regarding liquidity (or being “liquid”) is “house rich and cash poor.” This refers to people who own nice houses but have little or no extra money for things like furniture, a car, or other necessities of life. It’s not the biggest problem out there, but it is a problem.
The World Series just ended, and baseball is front of mind for many. A related item to liquidity is Shohei Ohtani’s most recent contract. Baseball fans might know he signed the largest contract in the history of baseball in 2024 (since exceeded by Juan Soto): $700 million over 10 years. While the size of the contract is certainly worth noting, what’s interesting is that Ohtani deferred 97% of his payments for more than a decade. So, while Ohtani is undoubtedly rich by any standard, depending on how he chooses to spend his money in the coming years, he could end up short of cash. It’s a “first world problem” for sure, but a potential problem nonetheless. If you are interested in more details, the Poole Business School team at N.C. State wrote an interesting article about it last year.
For those of us closer to average in compensation—which is just about everyone—the lesson is simpler: building wealth and having access to that wealth are related, but different, things. We need to pay attention to both.
Most financial guidance suggests setting aside up to three months of income in a rainy-day fund once you are in your working career. But starting with whatever you can save today and working it up slowly to at least $500 over time is a good goal to get going. Keep that money accessible in a checking or savings account at a bank—and maybe even keep some in cash, just in case. It doesn’t really do you any good for this purpose if you invest it in either illiquid investments like real estate, or volatile assets like stocks or cryptocurrency.
Liquidity is an issue you will face your entire lifetime. That’s why we’ve added a new, recurring section to this newsletter aimed at folks planning for or starting out in retirement called Golden Guidance. We want to thank the N.C. Division of Aging for partnering with us on this new monthly article.
For all of us, ensuring that you can meet essential expenses when things go wrong is an important part of financial well-being—and a key, but underappreciated, way to have an even happier life. I certainly would have had a happier day with some rainy-day cash in my wallet at the coffee shop!
**About the Author:**
Brad Briner was elected North Carolina Treasurer in 2024 after serving as the co-chief investment officer for Willett Advisors. He has also held positions at Morgan Creek Capital, the UNC Management Company, ArcLight Capital, and Goldman Sachs. He started writing “Bottom Line with Brad” as a way to educate North Carolinians on complicated financial matters in the Department of State Treasurer’s monthly “Finance Fridays” newsletter.
**Note:**
The column is published in partnership with Chapelboro and is not a sponsored series. Stay informed on community information by signing up for our newsletter.
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