...or in market techno-speak, x interest cover
In this market, the maturity profile of debt is even more important.
Alex
Debt
- Thread starter aussierogue
- Start date
In this market, the maturity profile of debt is even more important.
Alex
Bad debt worse.
i have >$500 on my CC with a $35k limit.
CC's = bad debt.
i have over half a mil in housing debt.
a roof over your head = good debt.
i have a business car under finance.
the car helps me earn a living and is a tax write-off = good debt.
CC's = bad debt.
i have over half a mil in housing debt.
a roof over your head = good debt.
i have a business car under finance.
the car helps me earn a living and is a tax write-off = good debt.
I'm not even sure if that's the correct technical term for it, but I'm talking about when and how much debts are due.
e.g. you have debts of $1m. It's very different if the $1m is on a 25 year mortgage, compared to if 800k was on a 25 year mortgage and 200k was on a personal loan that has to be repaid next year.
Centro et al went down not because they couldn't make the interest payments, but because they had loans due and couldn't renew them. So even if you have enough earnings to make your interest payments, if you can't renew your loans, you're still stuffed.
Alex
Doing a renovation and funding half of it using CC (instead of using cash reserves), until I re-finance afterwards. Bad debt maybe....more equity later, without eating into available cash..
Thanks Alex.
Talking about debt. I saw a fin planner this morning (recommended by a friend) he was very uncomfortable with my debt eventhough my lvr is <50% and I also have a large LOC as buffer. Seemed he only looked at the debt amount not LVR. His recommendation for me is not to get into more debt (which meant no business for him). I think he is very genuine but a bit too conservative ?
Talking about debt. I saw a fin planner this morning (recommended by a friend) he was very uncomfortable with my debt eventhough my lvr is <50% and I also have a large LOC as buffer. Seemed he only looked at the debt amount not LVR. His recommendation for me is not to get into more debt (which meant no business for him). I think he is very genuine but a bit too conservative ?
Is he an investor in property? That could be clue.
Interesting to see there is a large percentage of respondents with a 7 figure debt.
Slightly off tangent. If everyone is fairly comfortable with their LVR's then there a big chance we have a very high number of millionaires (equity minus debt)compared to the general population. I think the last figures was that the average Aussie's net worth is around 400,000k. Which at the time struck me as quite high. So generally our net worth is 8 times higher than our average income. I wonder how this compares with the rest of the world. I reckon it must be the highest or thereabouts.
But I digress - this thread is about Debt in absolute terms.
Slightly off tangent. If everyone is fairly comfortable with their LVR's then there a big chance we have a very high number of millionaires (equity minus debt)compared to the general population. I think the last figures was that the average Aussie's net worth is around 400,000k. Which at the time struck me as quite high. So generally our net worth is 8 times higher than our average income. I wonder how this compares with the rest of the world. I reckon it must be the highest or thereabouts.
But I digress - this thread is about Debt in absolute terms.
You are right he is not a prop investor as I came to him seeking professional advice more on the equity market. Still, he thought I had enough debt and advised not to get into anymore debt, IPs or equity.
Reasons are the usual what if rate goes up very high etc.
Also probably my fault because my "goals" are vague, along the line of "make the most / do the best/ what I can with my fin situation".
His main point was if I can achieve what I need now (to spend) and also when retirement comes with the current portfolio then I should not take on any more "risk". I can understand his view, and appreciate his honesty, just think the advice is a bit conservative for "greedy investors".
Also probably my fault because my "goals" are vague, along the line of "make the most / do the best/ what I can with my fin situation".
His main point was if I can achieve what I need now (to spend) and also when retirement comes with the current portfolio then I should not take on any more "risk". I can understand his view, and appreciate his honesty, just think the advice is a bit conservative for "greedy investors".
I am surprised there isn't a higher % of SS investors have higher debt level than couple of $mil.
Last edited:
$2.5 mil, I consider myself inexperienced when compared to you or many other investors on SS. The reason I said I was surprised is because there are so many seasoned investors on SS and many will have massive debt (in a good way). I read somewhere Ed Chan has a net worth of $35 mil.
Last edited:
Well , 12 SS members have debts >2M . You just don't know how much greater than 2M !!
35 M still fits into the > 2M cat
