Poll: what is your debt to total asset ratio?

[jabbahop]

5% until house sells next year then zero.

[COcheesehead]

4% mainly due to a note I have on a commercial property.

[EastWest Gal]

0.17%. Took out a HELOC in September 2014. Used part of it to put in a new deck and swim spa last year.

I don't count credit cards which are paid off every month.


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[Car-Guy]

I can't vote since the poll doesn't allow for total credits owed to me but only total debts.

My logic is that I do use a credit cards for convenience and for the cash back but I pay them off each month. I guess technically that's debt, but not the way I think of it. The 1.5%+ the credit card companies pay me for using their credit card is a "credit coming to me", not a debt.

I "think" the last time I had any real debt was sometime in the mid to late 90's.

[Totoro]

Sure wish I had a cashback credit card available to me.

For us pedantics: the definition intended sounds more actually like total liabilities, not debt. Disclaimer: not an accountant, just read some annual reports.

Debt is typically defined as money loaned from institutions. If your credit card is paid off every money automatically it's actually a deferred debit card, and doesn't qualify as debt normally (but is included in liabilities). Bills outstanding is account payables. There are also things like net debt (debt - cash equivalents).

Not that I really care, it's zero gross debt for me whichever way you go

[RetiredGypsy]

I have two cards that offer introductory periods of 0% interest, but have 2-5% cash back rewards. So I'm deferring the cash in paying them back to a savings account that earns .75% until the month the intro period ends. 2.75% interest in my favor on money I'm spending, so woohoo.

2.75% interest sounds a lot better than 2.75% discount. Interesting.

But since I have CC debt, but the same amount of cash as the debt just deferred in paying the bills, where does that put me?

<10%?

0% but just ignore the no CC bill part?

[gauss]

~ 1/2% based on the HEL that we obtained to payoff the main mortgage.

At 1.99% I will let it run it course until DW FIRES. The idea was partially to smooth out the cash flow change in our household when DW stops w*rking.

[Meadbh]

Quote:

Originally Posted by Totoro Sure wish I had a cashback credit card available to me. For us pedantics: the definition intended sounds more actually like total liabilities, not debt. Disclaimer: not an accountant, just read some annual reports. Debt is typically defined as money loaned from institutions. If your credit card is paid off every money automatically it's actually a deferred debit card, and doesn't qualify as debt normally (but is included in liabilities). Bills outstanding is account payables. There are also things like net debt (debt - cash equivalents). Not that I really care, it's zero gross debt for me whichever way you go

Semantics.

What is the difference between liability and debt? | AccountingCoach

Note that I did not ask anyone to include future tax liabilities, because it's just too difficult to estimate what they might be.

I did not include bonds that people own, because bonds represent debt that other people owe you. I am interested in debt that you owe other people.

[Totoro]

If you want liabilities: ignore the cash set aside, add in CC balance

For gross debt: same thing. You have credit, just an intention to pay it off.

For net debt: subtract all cash equivalents.

On the asset side: everything you have, including the net present value of any pensions Although I think Meadbh would probably exclude that last bit.

[prototype]

No debt. (Except CC charges which are auto payed each month on due date). So I also voted no debt.

[frayne]

Pretty amazing stat that 90% who answered the poll have little to no debt. Wonder if there is a correlation between FIRE and debt, wonder no more !

[RockyMtn]

Debt=zero, zip, nada!

[GTFan]

Debt? What's that? Haven't had a loan in at least 15 years.

[Meadbh]

Quote:

Originally Posted by frayne Pretty amazing stat that 90% who answered the poll have little to no debt. Wonder if there is a correlation between FIRE and debt, wonder no more !

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.

[MichaelB]

Quote:

Originally Posted by Meadbh 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.

Sounds like a good question for a poll http://www.early-retirement.org/foru...ml#post1784340

[Mulligan]

I am never amazed at how any discussion here can get down to the absolute minutia of detail. It depends on "what is, is" minutia, ha! To a dummy like me, if it is paid off each month there is no debt... Otherwise everyone is in debt. When you get your cable or phone bill in the mail and open it up, you are in debt. You owe and you haven't paid yet.

[W2R]

Quote:

Originally Posted by Mulligan I am never amazed at how any discussion here can get down to the absolute minutia of detail. It depends on "what is, is" minutia, ha! To a dummy like me, if it is paid off each month there is no debt... Otherwise everyone is in debt. When you get your cable or phone bill in the mail and open it up, you are in debt. You owe and you haven't paid yet.

Oh, good point. I hadn't thought of it that way. Before reading your post I thought it was debt if you owed anything on your credit card, even if you were paying it off in full every month. But now, after reading your post, I'm not so sure.

[Meadbh]

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

Debt ratio means the sum of current and long term debt, divided by total assets:
What is Debt Ratio? definition and meaning

Current debt is anything you owe that you must pay back within a year:
What is Current Debt? definition and meaning

Therefore, if you understand that credit card debt, whether incurred yesterday or last month, is something you must pay back within a year, you must include it in current debt. If you believe that credit card debt need not be paid back within a year, what are you doing on this forum?

[Meadbh]

Quote:

Originally Posted by Mulligan I am never amazed at how any discussion here can get down to the absolute minutia of detail. It depends on "what is, is" minutia, ha! To a dummy like me, if it is paid off each month there is no debt... Otherwise everyone is in debt. When you get your cable or phone bill in the mail and open it up, you are in debt. You owe and you haven't paid yet.

Yes, Mulligan, everyone is in debt. Just look at what happens when you die. Your executor's first job is to pay the bills that you owe.

[Mulligan]

Quote:

Originally Posted by Meadbh Having taken masters level courses in accounting and finance, I get so frustrated when everyone wants to impose their own definitions. Debt ratio means the sum of current and long term debt, divided by total assets: What is Debt Ratio? definition and meaning Current debt is anything you owe that you must pay back within a year: What is Current Debt? definition and meaning Therefore, if you understand that credit card debt, whether incurred yesterday or last month, is something you must pay back within a year, you must include it in current debt. If you believe that credit card debt need not be paid back within a year, what are you doing on this forum?

I have been in some type of credit card debt (long term, not paid off monthly) since 1987 and retired at 45 seven years ago. I am here! It may get all paid off in 2 years, or maybe not. The 2% I pay them yearly is less than my 6% income generated from money I would have to pay it off with, so my desire level isn't high.