What is a healthy debt/ income ratio?

DamnYankee

DamnYankee

Loyal to the end
Desh actually brought up a good point in another thread: some national debt is good as it helps the nation build infrastructure. Makes sense, as permanent improvements can be financed easily, since the improvement creates wealth and the ability of citizens to function more efficiently and effectively. "You have to spend money to make money: is an applicable statement. The analogy with personal finance to buy a home is likewise a good analogy.

What she fails at though is that the massive federal debt is not due to spending on infrastructure, but spending on entitlements. These entitlements are not improvements that allow us to function more effectively. Plus they are ongoing- unlike infrastructure which creates a permanent feature from a one-time payment, entitlement spending is ongoing.

The other massive Desh-fail is that she doesn't consider federal dept as a percentage of federal income. Some politicians may sweat about our high debt/ GDP levels, but this number is really useless, since FedCo doesn't have access to all the money made in the country. A useful number to gauge the financial health of a country is the debt/ income ratio.

Again the household analogy is applicable.
For a family, debt that exceeds three times your annual earnings is starting to become quite worrisome.
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While the US is well over that, and
has a debt to income measure of 408 percent.
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"Quite worrisome" has turned to "potential disaster".

source
 
people are also part of what we invest in



education is part of the ingredients to make a healthy economy

health also


to make life decent for all people is the best way to make our economy hummmm


its all about people dude.


that is the whole reason our country exists
 
Zero debt for a household is the way to be. That is how I live. Having business debt makes sense but for reasons Desh wouldn't understand.

People who claim that the government has to have debt to run properly are the same economic illiterates who say you can't run the government like a business.

Anyone who says you should buy a house for "the deduction" is a fool who has never looked at amortization table. 30 year mortgages subsidized by taxpayers were the biggest boons to the bankstas there ever was.


Sent from my iPhone using Tapatalk Pro
 
evince said:
people are also part of what we invest in



education is part of the ingredients to make a healthy economy

health also


to make life decent for all people is the best way to make our economy hummmm


its all about people dude.


that is the whole reason our country exists
Click to expand...

You can have free health insurance.

Work out and eat right. It's free

Don't smoke crack
 
Alice in Liberaland said:
Zero debt for a household is the way to be. That is how I live. Having business debt makes sense but for reasons Desh wouldn't understand.

People who claim that the government has to have debt to run properly are the same economic illiterates who say you can't run the government like a business.

Anyone who says you should buy a house for "the deduction" is a fool who has never looked at amortization table. 30 year mortgages subsidized by taxpayers were the biggest boons to the bankstas there ever was.


Sent from my iPhone using Tapatalk Pro
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I've had several long discussions with my paid financial advisor and he is adamant that I need to have a 30 year mortgage. It's at 4.25% fixed. Since my investments are growing at least twice that rate his arguments are hard to beat.

The other way I justify it is that I should have more debt than cash and liquid assets, is the hyper-inflation scenario. With FedCo playing chicken with its huge debt hyper-inflation is a very real possibility. If that happens I'll simply use my liquid assets to pay my debts.
 
DamnYankee said:
I've had several long discussions with my paid financial advisor and he is adamant that I need to have a 30 year mortgage. It's at 4.25% fixed. Since my investments are growing at least twice that rate his arguments are hard to beat.

The other way I justify it is that I should have more debt than cash and liquid assets, is the hyper-inflation scenario. With FedCo playing chicken with its huge debt hyper-inflation is a very real possibility. If that happens I'll simply use my liquid assets to pay my debts.
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Look at the amortization table. Refinance to a 15 if you can afford it. The tax break loses its oomph over time.

I am sure your financial guy is a good guy. But I suspect he reads the same books every financial advisor follows.

I love the freedom of being debt free
 
Alice in Liberaland said:
Look at the amortization table. Refinance to a 15 if you can afford it. The tax break loses its oomph over time.

I am sure your financial guy is a good guy. But I suspect he reads the same books every financial advisor follows.

I love the freedom of being debt free
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I have two homes, a big ark that I raised my kids in and a smaller vacation home in the mountains, both about 24 years left on the mortgages. Both are in a trust since it will make dispersion of my estate according to my will much easier. Banks won't finance a trust, although they have no problem with it after the closing. So to refi means taking out of the trust, refi, then putting back in. Too much money to lawyers, too much hassle.

Right now for me refi doesn't make sense for another reason as well. I'm going to retire in 8 years. When I do, I'll sell the big house and use the equity to pay off the mortgage on my second, smaller home. My wife and I checked the math on this the other day and the whole deal should zero-out out near-perfectly. Then my vacation home becomes my debt-free retirement home.
 
evince said:
people are also part of what we invest in



education is part of the ingredients to make a healthy economy

health also


to make life decent for all people is the best way to make our economy hummmm


its all about people dude.


that is the whole reason our country exists
Click to expand...

I do invest in people when it comes to education. MY children. When it comes to someone else's child, if that child's parent doesn't think their own child is worth providing an education, that says it's not a good investment for me either.
 
all debt is bad. infrastructure and investment can be made, effectively, without debt. it's a simple matter of conscience and will power to recognize that the money government is using comes from the people. it's not government debt, it's OUR debt. all debt is bad.
 
CFM said:
I do invest in people when it comes to education. MY children. When it comes to someone else's child, if that child's parent doesn't think their own child is worth providing an education, that says it's not a good investment for me either.
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they are your future

you are short sighted
 
SmarterthanYou said:
all debt is bad. infrastructure and investment can be made, effectively, without debt. it's a simple matter of conscience and will power to recognize that the money government is using comes from the people. it's not government debt, it's OUR debt. all debt is bad.
Click to expand...

you are just wrong


debt was how I built my life


car loans and house loans


without them I would still be poor


someone sold you a bag of shit
 
DamnYankee said:
I have two homes, a big ark that I raised my kids in and a smaller vacation home in the mountains, both about 24 years left on the mortgages. Both are in a trust since it will make dispersion of my estate according to my will much easier. Banks won't finance a trust, although they have no problem with it after the closing. So to refi means taking out of the trust, refi, then putting back in. Too much money to lawyers, too much hassle.

Right now for me refi doesn't make sense for another reason as well. I'm going to retire in 8 years. When I do, I'll sell the big house and use the equity to pay off the mortgage on my second, smaller home. My wife and I checked the math on this the other day and the whole deal should zero-out out near-perfectly. Then my vacation home becomes my debt-free retirement home.
Click to expand...

That sounds like a good plan. I am speaking in generalities. 30 years mortgages are a new thing. Debt was frowned upon to in the past. I would rather collect interest than pay it.

The so called income tax deduction is a scam. Let's assume a 25% tax bracket. It is like paying me a dollar so you get a quarter back. It makes no financial sense.
 
evince said:
you are just wrong


debt was how I built my life


car loans and house loans


without them I would still be poor


someone sold you a bag of shit
Click to expand...

You are saying debt made you rich? What a novel concept. You should write a book

Now I know you are saying that going into debt to buy rental properties is how you made money and that is a completely different prospect and not comparable to ones personal life.

All of my rental properties were financed with tremendous amounts of debt with very little down. It increased my ROI.

All of my personal finances are debt free.

Two different concepts and they should not be confused.
 
Can a people tax themselves into prosperity? Can a man stand in a bucket and lift himself up by the handle?

Churchill, 1904, Free Trade Hall, Manchester (cited in Langworth, Churchill: In His Own Words)
 
can you use the bucket you cant afford to buy in full unless you can finance it while you use it to pay it off ?


debt is a tool


if you refuse that FACT you are dommed to poverty
 
you've been sold, and happily bought, a ticket to financial slavery to the government. it's their intent to keep as many people indebted to them as possible. it's the second best way to control them.
 
evince said:
can you use the bucket you cant afford to buy in full unless you can finance it while you use it to pay it off ?


debt is a tool


if you refuse that FACT you are dommed to poverty
Click to expand...

I have no debt nor do I live in poverty. That's because I have no debt.
 
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