What is your current Debt to Asset ratio?

[vi edit]

Yeh like others it depends on how you want to figure it. If I sold my house I'd have enough equity to cover my wife's student loans. I'm at break even point on my van and could sell it back at wholesale for it's payoff value. My shitbox Malibu is owned straight up. And then I've still got my retirement accts and savings which are decent sized.

Plus all material goods in my house which are worth a good 20k or more if I needed to liquidate in a hurry.

But if you just look at loans at value to equity it's around 2:1.

 

[Golgatha]

About 0.6 assuming (debt/assets).

Debt is mortgage. Most assets are tied up in untouchable accounts (e.g. IRA, Missouri 529 college savings, company 401k).

 

[The-Noid]

Mine is weirder.

I have a $3000 a month mortgage (max conforming which was $450,000 in our area after downpayment and p and i escrowed) and $2000 a month in car payments (0 interest for 48 months on two cars with roughly 2.5 years to go, so idk another $60,000 in auto debt).

In a sense I have a lot of debt but could pay them off and have considerable money left over on any given day.

Why the sense that debt is automatically intrinsically bad? I would rather have the fixed cash flows at weighted average cost of capital of ~2% after mortgage deduction and keep money in the investment account.

There is inappropriate debt and appropriate debt, I don't think this idea that having no debt automatically makes sense, but I also don't count my cars and house in my net worth because they are encumbered assets.

 

[TheSlamma]

Zero debt, all assets owned

Paid off Mortgage May 2010

 

[ShawnD1]

zero debt, about $30,000 in assets

It will change when I buy a house.

 

[roguerower]

Debts:
$8k on motorcycle
$3k for skydiving gear
$13k federal student loans

Assets:
$8k for motorcycle
$3k for skydiving gear
$3k for civic

Not too bad.

 

[edro]

3:1
not counting equity or possessions
counting retirement

 

[gevorg]

Pretty bad, but I'm planning to do strategic default on my mortgage, so the debt/assets ratio will get much better.

 

[DrPizza]

Less than 1.

How are you calculating "asset"? I have a lot of items that are insured for full replacement value. But, if I had a television that was $1000 yesterday, do you want me to consider the value of it to be $1000, or should I depreciate it for the first year's hit in value? Or what I can sell it for on craigslist, if I had to sell it within a week? And, what about things that I've already depreciated to nothingness, but actually still have some value?

 

[ShawnD1]

Less than 1.

How are you calculating "asset"? I have a lot of items that are insured for full replacement value. But, if I had a television that was $1000 yesterday, do you want me to consider the value of it to be $1000, or should I depreciate it for the first year's hit in value? Or what I can sell it for on craigslist, if I had to sell it within a week? And, what about things that I've already depreciated to nothingness, but actually still have some value?

I think you're supposed to base it on what it's worth if you sold it right now OR the cost to replace it if it cannot be sold. Today you can say your house is worth $400,000. Then later you can say it's worth $200,000 when the revolution starts and nobody wants your house. It doesn't matter how much you initially paid for it.

 

[Dr. Detroit]

Zero -

Almost bought a home at the near peak of May 2006 but fortunately came to the reality we did not want to get saddled to a massive payment for 30yrs.

 

[HardcoreRobot]

0.53822629969418960244648318042813

owe around what the house is worth, rest is savings + retirement

 

[Texashiker]

Debt to asset, somewhere in the range of 1:10 or 1:12

About $1,000 of debt to every $10,000 - $12,000 of assets

I know its not much, but my wife and I are working on it. Maybe in the next 10 years we can get that to a 1:20 or more range.

 

[The-Noid]

WTF is a strategic default, is that I made a bad decision and will now saddle the elderly ladies trust account, her husband left her, on a house I can afford because it went down in a value and I made a bad decision?

There is no such thing as a strategic default.

Call it what it is, "The easy way out." Don't get me wrong either, banks lent moeny to people that couldn't afford it and manipulated the system to the nth degree, but this idea that a default is a strategy is a bunch of hogwash.

 

[shortylickens]

Over 9000.

 

[gevorg]

The fact that I can easily continue to pay my mortgage but refuse to do so to save big $$$ (just because I can) is what makes it "strategic". Call it whatever you want, but I treat Wall Street the same way they treat Main Street.

 

[Golgatha]

WTF is a strategic default, is that I made a bad decision and will now saddle the elderly ladies trust account, her husband left her, on a house I can afford because it went down in a value and I made a bad decision?

There is no such thing as a strategic default.

Call it what it is, "The easy way out." Don't get me wrong either, banks lent moeny to people that couldn't afford it and manipulated the system to the nth degree, but this idea that a default is a strategy is a bunch of hogwash.

No, banks lent out money assuming home values would increase or at least stay stable. They made a bad business decision by extending credit to people with very little down payment to put down. Now those people don't want to pay into a highly negative equity asset just because it's the "honorable thing to do", so they declare bankruptcy (or short sale/deed in lieu/etc), and the banks are left with a glut of extra houses on the market which negatively effects the prices of the houses of people actually own.

The era of governments handouts and incentivizing people to make poor financial decisions is still in full swing and fully maintained.

 

[Acanthus]

11:1

Likely 25-50:1 by the time i finish grad school.

 

[ShawnD1]

Call it what it is, "The easy way out." Don't get me wrong either, banks lent moeny to people that couldn't afford it and manipulated the system to the nth degree, but this idea that a default is a strategy is a bunch of hogwash.

Being able to walk away from shit is why the US is able to have boom periods in the first place. If there was no possible way to get out of debt even after selling everything, people would be a lot more reluctant to borrow money. That's somewhat bad because the US economy heavily relies on debt. Almost everyone has some form of debt but is also lending money to someone else.

If you want people to be held accountable, you should move to Dubai. There, you go to jail if you don't pay your debts. Understandably, people aren't too keen on borrowing money over there. When they do borrow money and they can't pay it back, they end up abandoning things in terrible condition rather than just giving it back. The airport at Dubai has hundreds of abandoned cars. They are left behind by people who can no longer pay their bills and have permanently left the country to avoid jail time.

 

[NAC]

1:2.

Only debt is mortgage, and occassionally during the year a cc balance when I can't pay it promptly. Oh, and occassionally I'll use a 0% CC deal like Lowes had recently and pay it off within the 12-18 months required. Both disappear in the rounding of mortage and savings amounts.

I'm a big proponent that you should always save X% of your salary - each and every month. And X should be a large double digit number, even if you have CC debt.

I prefer to only touch savings for designated very large purchases like a car, or home improvement. And I'll use CC's, and even pay some interest on them, to avoid touching savings - as long as debt is not rising, and I'm saving a good portion of income.

 

[The-Noid]

Being able to walk away from shit is why the US is able to have boom periods in the first place. If there was no possible way to get out of debt even after selling everything, people would be a lot more reluctant to borrow money. That's somewhat bad because the US economy heavily relies on debt. Almost everyone has some form of debt but is also lending money to someone else.

If you want people to be held accountable, you should move to Dubai. There, you go to jail if you don't pay your debts. Understandably, people aren't too keen on borrowing money over there. When they do borrow money and they can't pay it back, they end up abandoning things in terrible condition rather than just giving it back. The airport at Dubai has hundreds of abandoned cars. They are left behind by people who can no longer pay their bills and have permanently left the country to avoid jail time.

The fact that I can easily continue to pay my mortgage but refuse to do so to save big $$$ (just because I can) is what makes it "strategic". Call it whatever you want, but I treat Wall Street the same way they treat Main Street.

Again for people who can't pay. They should be able to default that is the point of defaulting.

The idea you default on your house because you took it out and it didn't appreciate is not a strategy, it is cowardly. I make bad investments, I eat them that is life. Also you aren't screwing Wall Street, look up CDS, you are screwing your neighbors and grandma's savings account, as the bank sold her the accrual and pac tranche to bring in higher income.

 

[yh125d]

~1:2, if im doing it correctly

 

[ShawnD1]

The idea you default on your house because you took it out and it didn't appreciate is not a strategy, it is cowardly. I make bad investments, I eat them that is life. Also you aren't screwing Wall Street, look up CDS, you are screwing your neighbors and grandma's savings account, as the bank sold her the accrual and pac tranche to bring in higher income.

It's not like it's free money. Walking away from it means nobody will lend you anything for the next decade. Your credit score is slashed down to the lowest rating.

 

[Zebo]

I don't know how you guys can figure this.. it would take me 10 years to ebay all the shit in this house.

 

[The-Noid]

It's not like it's free money. Walking away from it means nobody will lend you anything for the next decade. Your credit score is slashed down to the lowest rating.

You can recover in 3 years...