We all have a sense that more income and less debt are both good things. But what's the ideal ratio between income and debt?
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We all have a sense that more income and less debt are both good things. But what's the ideal ratio between income and debt?
It really depends on your goals. For me I do not like a lot of debt. 1% of my net worth or less would be ideal for me. Of course it's not yet that way, I do owe college loan debt.
I don't believe in getting a mortgage or taking out a business loan. If I don't have it then I don't deserve because I haven't really earned it. Borrowing based on what I might earn is risky because what happens if I can't earn it somehow?
I know what it's like to owe much more than I'm able to earn. I've had the ratio so bad that I owed more than x10 what I earned for the year. It's a shorter lifespan if you're under the kind of stress debt brings and the worse the ratio the greater the stress is.
If you have large debts, it's likely that you'll be suffering from stress and my debt is large :)