Liquidity
When a person has cash reserves they can take advantage of opportunities that come along. Suppose someone has to sell their car in a hurry and are willing to take $3,000 less that book? With cash, snap it up and resell for a profit. Many times in a persons life they will have opportunities to take advantage if they have cash reserves. Cash is like King Kong!
Tax Information
An individual taxpayer can deduct un-recovered amounts from personal loans that have become totally worthless. Reminder: Claim the write-off as a short-term loss on Schedule D. This information is taken from the Small Business Tax Strategies newsletter, Vol. 2, No. 4 April 2007.