Poll: what is your debt to total asset ratio?

[mrfeh]

Had been 0% for the last 13 years or so, but couldn't pass up 0% financing on new car purchase last month, so now about 1%.

 

[nash031]

~24%...

Mortgage, small credit card debt that's entirely paid off monthly and shouldn't even count for this, small student loan, and a recent car loan. The mortgage makes up almost 95% of this.

vs.

Investments/retirement accounts, cash, and estimated value of home (no cars included).

 

[HadEnuff]

4.6%

all at 2.75% interest

 

[boaski]

Just credit cards that are paid in full every month.

 

[Freedom56]

Zero debt. Paid mortgage off on primary home 9 years ago (8 years before retirement). Paid cash for our second home. We always pay cash for our cars and keep them as long as we can. We never buy anything unless we have the cash to pay for it when the bill is due. So far this strategy has worked out well for us.

 

[niven]

I'm still driving my old Honda I paid off right before I retired. I hope to drive it a few more years... then pay cash for a new one.

I've heard it is better not to tell the car dealership in advance that you are paying cash. Is that right ??

I don't know if it's right or not, but I'm coy when car shopping and they ask if I'm financing. I usually just say I might finance with them if I can get a good deal, and then just write a check instead.

 

[BreathFree]

I do this so they never can hit me with a failed to make minimum payment in case I ever forget to pay.

+1

I make two payoffs a month as well, another trick is to have an automatic payment scheduled to the credit card account every month for the minimum. They got me once about 15 years ago, but they won't get me a second time.

 

[SumDay]

4.76%, all mortgage. We'd been debt free for ~10 years, but needed to get into a smaller, maintenance free home due to some health issues.

I could pay it off today, but like having cash, just in case. We got a great rate and should have it paid off in 10 years, even though it's a 30 year note.

I pay our credit card balance twice a month. That's how I "budget". When it gets close to the magic number, I don't order from Amazon.

 

[Tom57]

0% since 1991

Yes I use credit cards that I pay off in full every month.

I do not understand the people who also pay off their credit cards in full monthly but claim any unpaid unbilled credit card balances are debt.

If you believe unbilled credit card charges that you will pay off in full when billed are debt , please explain why you are not including unbilled electric, gas, water, sewer, cable TV, cell phone, etc as debt also. I see no difference in having an unbilled electric/gas balance of $100 (partial month usage) or an unbilled credit card balance of $100.

What am I missing besides some deep fear/hatred of using credit cards?

 

[Amethyst]

I thought it was because a credit card charge is actually a short-term loan. The credit rating agencies consider your unpaid CC balance to be debt, even if you pay it off every month. I noticed, when I pull our credit scores, that there is a statement to the effect that if you pull your score after placing a $10,000 charge on your card(s), it will be considered as $10K debt.

I do not understand the people who also pay off their credit cards in full monthly but claim any unpaid unbilled credit card balances are debt.

What am I missing besides some deep fear/hatred of using credit cards?

 

[Options]

Zero


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+1
I own everything. The bank owns nothing.

 

[jimnjana]

I don't know if it's right or not, but I'm coy when car shopping and they ask if I'm financing. I usually just say I might finance with them if I can get a good deal, and then just write a check instead.

When we bought our last car (certified used not new) we told the dealer we were paying cash up front. We negotiated our deal and finalized it with the sales manager. When we sat down the the finance guy doing the contract he said something about financing it and I said unless he's gonna give me something in return I'd just write a check. He said he would give us the 250 bucks the credit union(lender) would give them and he'd settle for the incentive points from the lender. He said they get 1% from the lender and are eligible for additional money based on volume of loans written. Seemed upfront, but who knows.

 

[mickeyd]

Voted 0% and use CC all of the time. I consider CC as debt when the payment is due this month. We pay it off automatically. The balance of CC debit after cut off date will be included in next month's statement. And it goes on and on and on.

 

[GTFan]

Having taken masters level courses in accounting and finance, I get so frustrated when everyone wants to impose their own definitions.

We don't run households under GAAP. I use CCs every month but it's not debt to me, just like a water and electric bill is not debt. No one here that said zero answered the poll correctly under accounting definitions, but that's NOT common usage of the term for personal finance.

It's very simple - under commonly accepted everyday usage by consumers, CC debt is a balance after the due date that you're paying off over time. And I'd argue that's the common usage for most personal finance gurus out there. You are certainly welcome to claim that's a wrong definition in the strictest sense as long as you accept that you're in the minority here.

 

[CaliKid]

When we bought our last car (certified used not new) we told the dealer we were paying cash up front. We negotiated our deal and finalized it with the sales manager. When we sat down the the finance guy doing the contract he said something about financing it and I said unless he's gonna give me something in return I'd just write a check. He said he would give us the 250 bucks the credit union(lender) would give them and he'd settle for the incentive points from the lender. He said they get 1% from the lender and are eligible for additional money based on volume of loans written. Seemed upfront, but who knows.

That is very interesting. Thanks for sharing. I never knew what they get. That sounds reasonable.

 

[GTFan]

If you believe unbilled credit card charges that you will pay off in full when billed are debt , please explain why you are not including unbilled electric, gas, water, sewer, cable TV, cell phone, etc as debt also. I see no difference in having an unbilled electric/gas balance of $100 (partial month usage) or an unbilled credit card balance of $100.

Exactly. That's why zero debt in this poll is always the wrong answer if you go by that argument, even if you pay cash for everything. The only way you wouldn't be lying is if you said you prepaid all your utilities AND taxes upfront before the liability is incurred. And I mean all taxes.

Which of course no one does, so we're all answering wrong if you buy that.

 

[Gumby]

This is why I voted less than 10%, even though my only bills are credit cards and other bills paid in full each month, and my real estate taxes. As Meadbh said, it is the most accurate answer.

 

[RobbieB]

Oh yeah, when I add up the estimated credit card balances, the property taxes, the utility bills and the health insurance I get about 5 grand.

 

[gayl]

No debt other than USAA MasterCard that's paid off in full each month.

 

[GTFan]

This is why I voted less than 10%, even though my only bills are credit cards and other bills paid in full each month, and my real estate taxes. As Meadbh said, it is the most accurate answer.

Accurate yes but as most people understand and use the term, no. This isn't an exercise in accounting/legal/financial definitions, it's one of personal finances.

 

[RobbieB]

That's obvious as 126 people here have no debt whatsoever.

None. Zero.

 

[RobLJ]

<2% actually. I took a small mortgage when I retired to Reno. It's about 25% of what rent would be. Should pay it off, but I prefer the cash, just in case. (3% interest and essentially the equivalent of financing a car.)

 

[RobLJ]

In accounting terms I suppose this is correct.
Practically, to me (you are free to disagree) it doesn't matter whether I'm paying monthly costs from a credit card, cash in my wallet, a bank check, barter labor or flattery. . . . I get points from the CC I use to travel to check on my Aged Parental Unit every 3 months--not sure how to account for that. I suppose that's debt.
I'll stick with my response, even if it offends definitional OCDs.

I think many here have too much free time on their hands to quarrel about whether paying by check or paying a monthly credit card by check is debt or not. I'm not an accountant, though (DW is). Whatever!

In fairness, many people who said they had "no debt" admit to having credit cards that they pay off each month. I would call that current debt. But whatever. I am also surprised at the overwhelming majority of respondents to date who say their debt ratio is <10%. I suspect that if more young people responded, that picture might change.

 

[dallas27]

Exactly. That's why zero debt in this poll is always the wrong answer if you go by that argument, even if you pay cash for everything. The only way you wouldn't be lying is if you said you prepaid all your utilities AND taxes upfront before the liability is incurred. And I mean all taxes.

Which of course no one does, so we're all answering wrong if you buy that.

This is a very strange view. Debt is generally defined where interest rates are in affect. A monthly service that 0's out each month with no financing charge is hardly considered a debt by reasonable people.


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[niven]

I think many here have too much free time on their hands to quarrel about whether paying by check or paying a monthly credit card by check is debt or not. I'm not an accountant, though (DW is). Whatever!

I wouldn't be too quick to take an accountant's word on financial matters anyway. Two accountant friends I know and my own brother are not good with their own money - go figure.