Thanks. Just back to my original question and what level of discomfort do people stop at?
LE
I have found that the level of comfort is not relevant to the zeros on the end of the debt.
The level of comfort for me has always been related directly to the serviceability of the debt at the time.
For eg:
In 1980, when I was 19 years old and doing my apprenticeship, the engine in my car failed and I had to get a loan to repair it - $900. I could barely afford it on my wage but I needed a car for my work. I ended up taking a job as a barman at nights as well to keep afloat.
The stress from worrying if I could keep up the repayments on both the car and the loan for the repairs was intense....
Fast forward to 2010. In this year I bought my mechanical workshop, and we had to borrow money to do it - mostly equity in our own home and a business loan for the rest.
From that day on, we were over $1mill in debt due to the IP's and the workshop loan, but in the first year of the workshop, we were as happy as Larry - the servicability was really good.
Now, our servicability is cr@p, but the debt is much the same (have reduced the LVR a bit which is good).
The feeling of worry and stress between the two scenarios is almost identical.
I don't feel more stress because the zeros on the end have increased. You get more comfortable with increasing debt as time goes by.
I suspect that if the zeros doubled again, as long as the servicability was there, it would be no problem.
