What is your percentage of debt to NW?

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GoFish
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Re: What is your percentage of debt to NW?

Post by GoFish »

11%, give or take. Most of the debt is 30-yr mortgage, which I don’t expect to retire before shuffling off to the old folks’ home. Rate is 3.4% and I expect that our VWIAX arbitrage investment will continue to outperform. This is a risk I’m comfortable taking.

Also have 0% 4-yr auto loan. Made enough down payment so shouldn’t get underwater before it’s paid off. Plus, we still have a few months to go on a small 0% note for window replacements.

Finally, I’ll owe John Deere for some green and gold equipment for 6 more years, again at 0%.

We could elect to pay off all debt tomorrow, and it would not affect lifestyle. The monthly debt service is comfortably covered by our income+SWR.

I was in the no-debt/no-way camp until about 2 years ago. But low interest rates and well-defined income and expenses have pulled me to the dark side. :twisted:

I have become fond of using other people’s money when they undervalue it.
wander
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Re: What is your percentage of debt to NW?

Post by wander »

Zero debt.
macheta
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Re: What is your percentage of debt to NW?

Post by macheta »

0% for one year now. This was a major task for me to achieve.
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ruralavalon
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Re: What is your percentage of debt to NW?

Post by ruralavalon »

Age 75, retired, we own our home, zero debt.
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SGM
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Re: What is your percentage of debt to NW?

Post by SGM »

Retired 6+ years. Paid off last mortgage almost 30 years ago. Zero debt. We use credit cards for convenience, not borrowing. I keep track of portfolio. I do not calculate net worth. I have a notional idea of the value of our real estate. We may sell a rental house that is in another state.

Am considering gifting a percentage of real estate yearly to heirs as allowed by law without triggering gift tax. It adds some mild complications of record keeping for us and less estate tax risk in the future. But the heirs are pretty much set for success without it so why complicate anything at all. I just want to kick back and enjoy what we worked for.
Golfaddict
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Re: What is your percentage of debt to NW?

Post by Golfaddict »

19% debt is mortgage and like $10k left on a car loan. 45 years old. Number might increase in the next few years as we’re looking for a bigger house.
Doctor Rhythm
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Re: What is your percentage of debt to NW?

Post by Doctor Rhythm »

Returned from darkness,
A zombie thread, eight months dead
But no debt, okay?
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Marmot
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Re: What is your percentage of debt to NW?

Post by Marmot »

I'll bite. .0125%. Loan on a rental property...
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Just sayin...
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Re: What is your percentage of debt to NW?

Post by Just sayin... »

0% - don’t owe nobody nothin’! And, pay off the credit cards every month and collect the rebates at the end of the year.
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Will do good
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Re: What is your percentage of debt to NW?

Post by Will do good »

Zero.
MathWizard
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Re: What is your percentage of debt to NW?

Post by MathWizard »

This is highly age dependent. As time goes on, most people reduce debt and increase assets.

When I graduated for grad school, my NW was negative, so the ratio would be negative.

10 years later, I bought a house, my debt/NW was 50%
10 years later, at the worst of the great recession, debt/NW=10%
10 years later, debt/NW = 0.

I will admit that this view may be somewhat biased by the fact that I do not believe in using leverage in investing.
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Lee_WSP
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Re: What is your percentage of debt to NW?

Post by Lee_WSP »

Doctor Rhythm wrote: Sat Jul 31, 2021 10:00 am Returned from darkness,
A zombie thread, eight months dead
My thoughts exactly. Not to mention the fact that the question itself is flawed since net worth subtracts debt to arrive at net worth.

Although I'm not entirely sure what the term the original poster from last year was searching for... Total worth perhaps? Debt to wealth ratio? Debt to assets?
Ivygirl
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Re: What is your percentage of debt to NW?

Post by Ivygirl »

24%, all mortgage.

I saw when calculating that the value of my home has gone up 34% in the four years I've owned it - 4% in the last 30 days. Amazing.
cogito
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Re: What is your percentage of debt to NW?

Post by cogito »

Early 30s.

Assets: 1.6M
Liabilities: 800k

So, 50%. Wish it was higher. Trying to get there. Honestly, is 1% debt even debt?
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StevieG72
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Re: What is your percentage of debt to NW?

Post by StevieG72 »

Doctor Rhythm wrote: Sat Jul 31, 2021 10:00 am Returned from darkness,
A zombie thread, eight months dead
But no debt, okay?
The Walking Thread
Fools think their own way is right, but the wise listen to others.
vested1
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Re: What is your percentage of debt to NW?

Post by vested1 »

StevieG72 wrote: Sun Aug 01, 2021 5:39 am
Doctor Rhythm wrote: Sat Jul 31, 2021 10:00 am Returned from darkness,
A zombie thread, eight months dead
But no debt, okay?
The Walking Thread
+1

Both will eat you if you don't watch out. No debt, so only zombies to worry about now. :shock:
Vanguard User
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Re: What is your percentage of debt to NW?

Post by Vanguard User »

Renter.

$0 debt.
40 Years' Gatherin's
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Re: What is your percentage of debt to NW?

Post by 40 Years' Gatherin's »

Zero debt here. Mortgage paid off in 2019 :beer
harrychan
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Re: What is your percentage of debt to NW?

Post by harrychan »

15%
$350k mortgage left on $2.3M NW
41 years old
This is not legal or certified financial advice but you know that already.
sharx
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Re: What is your percentage of debt to NW?

Post by sharx »

30% - $1.2M mortgage on $4M NW
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Taz
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Re: What is your percentage of debt to NW?

Post by Taz »

Zero. We are both 58. No car loans. Paid off remaining $29k of our mortgage last month with money market cash earning close to zero.

I have a military pension. Waiting for DW to retire this year and wanted to lower monthly expenses to do Roth conversions beginning next year. Recent retirement contributions have been to bond funds due to market growth (currently sitting at 58% stock / 42% bond). Made sense to us and gives us flexibility.
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sureshoe
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Re: What is your percentage of debt to NW?

Post by sureshoe »

Like a couple mentioned, I think it's age dependent, and the type of debt matters.

I also look at it more as cashflow and less as a percentage. Do I have the cashflow needed to fund all my tax optimizations? If a young person (or older) does that, then as long as you're not taking on unsecured debt, I think your risk is mitigated. Obviously there is depreciation or devaluation risk in a house, car, etc. but I just don't see the point in paying off a mortgage at 2.75% or a car at 1%.

I like my house expense to be 10-15% of my gross income. I like my car expense to be less than 3%.

So I guess my answer is in the 15-18% range. I think it would be hard to save properly if you beyond.
TNWoods
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Re: What is your percentage of debt to NW?

Post by TNWoods »

0%

No mortgage.

TNWoods
sadie wess
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Re: What is your percentage of debt to NW?

Post by sadie wess »

ZERO percent.
OpenMinded1
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Re: What is your percentage of debt to NW?

Post by OpenMinded1 »

We paid our mortgage off a few days before I retired 10 years ago, and went to 0% debt. Have been there ever since. Paid a little extra on our mortgage each month, so it would work out that way. Never carry a balance on our credit cards. Subtracting emotions from the equation it probably didn't/doesn't make complete sense, but it feels good, simplifies things, makes it easier to know how we are doing, how much we can afford to spend on vehicle purchases etc.
orange12
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Re: What is your percentage of debt to NW?

Post by orange12 »

Just because everyone else is posting zeros, figured I’d put my numbers in to break the trend :D
$1.1 million net worth
$2.350 million debt (~65% LTV rentals plus primary mortgage)
So….. 213% right?
knowledge
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Re: What is your percentage of debt to NW?

Post by knowledge »

We're around 25%, the mortgage and a car note that I always consider paying off.
Ramjet
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Re: What is your percentage of debt to NW?

Post by Ramjet »

Debt/NW: 15%
Reason: Mortgage
chazas
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Re: What is your percentage of debt to NW?

Post by chazas »

12.5%, mortgage. I had to start over on home equity after divorce.
broncocountry25
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Re: What is your percentage of debt to NW?

Post by broncocountry25 »

1.53 M Assets
403K Debt
1.13 M Net Worth

36% Debt To NW
Getting ready to move it up when we acquire our next home. 31 and wanting to grow my assets responsibly still (using cheap mortgage debt).
Exchme
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Re: What is your percentage of debt to NW?

Post by Exchme »

Give OP credit, he started the thread in November because he thought housing was going to "take off like a rocket". He got that right!
broncocountry25
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Re: What is your percentage of debt to NW?

Post by broncocountry25 »

orange12 wrote: Tue Aug 03, 2021 9:10 am Just because everyone else is posting zeros, figured I’d put my numbers in to break the trend :D
$1.1 million net worth
$2.350 million debt (~65% LTV rentals plus primary mortgage)
So….. 213% right?
Now were talking!
Oddball
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Re: What is your percentage of debt to NW?

Post by Oddball »

orange12 wrote: Tue Aug 03, 2021 9:10 am Just because everyone else is posting zeros, figured I’d put my numbers in to break the trend :D
$1.1 million net worth
$2.350 million debt (~65% LTV rentals plus primary mortgage)
So….. 213% right?
$2.0 mil in assets
$1.2 mil in debt
NW of ~$800k
And I sleep very well at night.
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Meg77
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Re: What is your percentage of debt to NW?

Post by Meg77 »

I've tracked this ratio for years and finally have a use for it! :P Real estate investor here.

In 2013 when I got married and bought a new home, total debt peaked at $1.4MM (a car loan, a student loan, and 8 mortgages). NW was $924K for a debt/nw ratio of 152%.

In 2014 we didn't make much debt progress - added a $34K car loan and $20K in 0% credit card debt to finance home improvements. That was more than offset by mortgage amortizatin and paying down our home mtg to get rid of PMI though, plus assets rose $200K. 128% debt/NW ratio.

In 2015 we paid off the $67K remaining on the student loan and paid off the $42K in car loans. Assets barely ticked up as the market wasn't great, but ratio finally was under 100% at 97%.

In 2016 I sold a rental (my former homestead) and amortizations continued to gain steam (added a $30K car loan though). Assets only increased $80K though. We were maxing retirement but not much else those first few years. Debt down to $1,034,478. 65% debt/NW.

In 2017 I sold my crappiest rental and we also finally had enough income to invest more outside retirement. We also paid off our last car loan for good.
Assets climbed $300K and debt droped below the 7 figure mark. 49% debt/NW.

In 2018 we left debt alone but amortizations dropped us to $905K. Assets rose $239K. 40% ratio.

In 2019 we left debt alone and ever since have just let normal amortizations run their course. We had five mortgages totaling $853K. Assets rose a whopping $577K with the help of some RE syndication sales and a good market. 30% debt/NW.

In 2020 the market continued its run and assets rose $566K. Debt ended the year at $831K. debt/nw ratio 24%.

Today debt/NW ratio sits at 20%. Assets are already up over $500K for the year, and debt is ticking down gradually - it's under $800K now. No plans to accelerate debt payoff as all loans are at 2.75%. We save $250K or so a year into mostly stocks and some RE syndications so the ratio should continue to creep downward.

Thanks for prompting me to look at this! No idea why I started tracking this metric in the first place...as a banker at some point it must have seemed relevant to something.
"An investment in knowledge pays the best interest." - Benjamin Franklin
Nivek
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Re: What is your percentage of debt to NW?

Post by Nivek »

0%, debt free since I was 35 and got a little lucky in timing of our house sale and new home purchase. Sold at the height of the housing bubble (new home was a new build so was purchased a year and a half before the bubble). Prior to that, only debt was a mortgage but been mortgage free since (50 now).
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CardinalRule
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Re: What is your percentage of debt to NW?

Post by CardinalRule »

Darn Netflix. A monthly credit card charge occurred this weekend, and now our total debt is $15.40. Percentage definitely still rounds to zero. :P
texasdiver
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Re: What is your percentage of debt to NW?

Post by texasdiver »

I never made this calculation before for some reason.

$2.75 million total assets, $2.3 million net worth (depending on if you believe zillow)
$430K mortgage on $950K primary residence (no other debt)
So our percentage of debt to total assets is about 15.5%
Our percentage of debt to net worth would be 18.5%

We are early 50s, about 8-10 years out from retirement and probably waiting for the youngest to graduate college for completely pulling the plug.
mw1739
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Re: What is your percentage of debt to NW?

Post by mw1739 »

9% - no rush to payoff the 2% interest rate mortgage.
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Blister
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Re: What is your percentage of debt to NW?

Post by Blister »

Debt to NW ratio 0%
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Van
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Re: What is your percentage of debt to NW?

Post by Van »

No debt, so 0%. 79 years old and retired.
flyingaway
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Re: What is your percentage of debt to NW?

Post by flyingaway »

0%. Paid off the mortgage long time ago.
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nisiprius
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Re: What is your percentage of debt to NW?

Post by nisiprius »

I have to check the current balance on our credit cards. I don't track my net worth because I can't think of any good reason to, but I'll add our account totals to our assessed house value from memory and mental arithmetic.

About 0.07%.

But as long as I have the credit card account open on my screen anyway I might as well pay off my card right now.

About 0.03%.
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tryingtogetahead
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Re: What is your percentage of debt to NW?

Post by tryingtogetahead »

Just under 1.5mm debt on just under 5mm NW so about 30%. All of the debt is mortgage debt on rental properties.
namajones
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Re: What is your percentage of debt to NW?

Post by namajones »

0 debt since I paid off my dwelling about 15 years ago.
Iporante
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Re: What is your percentage of debt to NW?

Post by Iporante »

At 51, our debt to net worth ratio is 0.22 (debt is 16% of total assets). We don't have any consumer debt - it's all a 15-yr mortgage @ 2% - and plan to be debt free well before retirement.
airborne
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Re: What is your percentage of debt to NW?

Post by airborne »

4.6%.

I keep around a low-balance, low-interest (2.1%) student loan as I can make more than 2.1% in something as safe as Series I Bonds, and I feel that keeping some installment loan payments helps boost my credit score in the event I decide to look into a mortgage (currently a renter). The latter logic may be faulty, I don't know.
JS-Elcano
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Re: What is your percentage of debt to NW?

Post by JS-Elcano »

5%

it will go up to 10% as I am doing some home renovations in the next 6 months.
Cashking
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Re: What is your percentage of debt to NW?

Post by Cashking »

42%. I have a mortgage on my house (30 year at 2.375). I don’t intent to pay it down early.
Pu239
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Re: What is your percentage of debt to NW?

Post by Pu239 »

Debt to net worth percentage is a big fat 0, thank god, after decades north of 0. No debt and >$1 NW makes it easy.
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StevieG72
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Re: What is your percentage of debt to NW?

Post by StevieG72 »

0% and own my house / mortgage paid.
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