Debt to Income

[GeoFisher]

We all hear about our national debt being 100% of GDP.

That got me thinking......I bet most folks on this board are close to or passing that.

So, be honest......what is your DEBT to GDP. Include every single penny of debt. You loans, your house, your vehicles, credit cards..everything.

I'm at about 60%, and that is only because my house is nearly paid off.

Finally, I'm not talking about how much your payments add up to as a percentage of monthly income.

Take all your debt.

For instance......say you make 60,000 a year combined income.

Say you owe 60,000 on your house
Say you owe 10,000 on your car
Say you owe 5,000 on your other car.
Say you owe 5,000 on your boat
say you owe 5,000 on various credit cards.

So totally, you have 85,000 in debt......

With 60k in income (GDP), you are at 140% debt/income. You're worse off than Greece.

I only bring this up because I was reading an article that stated that most middle income Americans are over 100%

Later,

Geo

[Netboy Extraordinaire]

796% for me and growing every co-payment

[HURRICANEBOB]

Wait.....wait......I need more time for the math questions.

[Tyme2fish]

Zero. Everything is debt free. I do use a credit card for monthly expenses but pay it off in full at each due date. I figure the credit card pays me for using it with it's reward program giving me cash back on purchases.

[MrSplitshot]

190%

Every bit of that debt is in a 30 year mortgage on a new house that's only 3 years old...and a pair of 2010 model cars...


No credit cards...no other loans...no medical bills at this time, thank God.


Of course this ratio doesnt take equity into account or liquid assets like savings or investment accounts. My rule is that I always have enough cash in my savings account to make a years worth of mortgage payments and utility bills in case disaster strikes.

[bassin_bug]

Zero debt. Everything is paid for....HALLELUJAH!

[kydonky]

Geo, The debt ratio probably needs to be adjusted when considering house debt. The house has a useful life and in most cases is depreciated over a 30 year period.

So you need to amend the anual cost of housing. You cannot really count the entire house loan yearly. May work better if you count all of the interest, insurance costs and taxes for the year and apply this as the true housing debt. Principal can almost be considered savings.

That being said I have $0 credit card $0 car payment $0 boat, and about a $3,500.00 annual house debt.

I would say my debt ratio is < 5% income.

Living expenses (opperating costs), resturants, gas, food, new lures, fishing license, worms, minnows, movies, beer etc. is another issue. Thats another 75% leaving me with 20% savings. (I like to have a good time)

[GeoFisher]

Geo, The debt ratio probably needs to be adjusted when considering house debt. The house has a useful life and in most cases is depreciated over a 30 year period.

So you need to amend the anual cost of housing. You cannot really count the entire house loan yearly. May work better if you count all of the interest, insurance costs and taxes for the year and apply this as the true housing debt. Principal can almost be considered savings.

That being said I have $0 credit card $0 car payment $0 boat, and about a $3,500.00 annual house debt.

I would say my debt ratio is < 5% income.

Living expenses (opperating costs), resturants, gas, food, new lures, fishing license, worms, minnows, movies, beer etc. is another issue. Thats another 75% leaving me with 20% savings. (I like to have a good time)

that is how banks do it.........but I wanted to know how how it relates to this stuff in the news.......

I could see how folks get into trouble........If you look at what a "bank" looks at when you purchase a house, they look on a monthly basis what your debt/income ratio looks like........if it is too high, then getting in trouble for 6 months can put you in the poorhouse, and using their calculations, my debt/income ratio is something like 20%, because nearly all my debt is my house.

Later,

geo

[HURRICANEBOB]

Only thing I owe on is the wife's car, just bought, and its over 60 months with zero interest. So that will wait till month 59 to pay off.

Only other oustanding recurring debts are:
1. At the gas pump
2. At the bait shop
3. And at the local bar

My emergency fund is small with the house paid off, and since I have a hard top boat, and a van, I figure I have the equivalence of a 2 bedroom mobile home in the event somebody takes the house. Since the boat has a washdown pump and a porta potty, I told the wife that counts as a bath room.

Having done so, I'm writing this on my tablet and wi-fi connection from my van's back seat right now. She'll calm down by Sunday I think.