Advice you wish you had gotten in your early 20s

Discussion in 'Psychology' started by Sikhinvestor, Mar 7, 2007.

  1. Hey Chaos, how can you make sure your personal WACC is never out of WACK?

    What is a good % of credit card debt with respect to your net worth?
    #31     Mar 7, 2007
  2. Never get married.

    #32     Mar 7, 2007
  3. Why not John.. ?

    plz more details... what's wrong with having some lovin' in this world..

    I mean, there has to be a particular kind of girl that is marriage material... If so, who would be her?
    #33     Mar 8, 2007
  4. Rough estimate without knowing your finances...

    Heres a framework to work with..12-15% of total debt vs. networth, this is taking into account income producing assets that are currently financed as longterm debt.

    Talking specifically about current short term liabilities like credit card debt, should try for 6% or lower vs. your total portfolio of assets.

    Hope that helps.

    #34     Mar 8, 2007
  5. I don't know.. it just doesn't add up.

    So, If someone has $1,000,000 Net Worth of investable $$$, then they are only to take on a leverage of $150,000 at the max?

    Seems like a bit too conservative to me.
    #35     Mar 8, 2007
  6. Some of those assets might be a securities portfolio, or realestate, or a % stake in a business... You are not going to want to create excess debt off these types of assets.

    Chances are they are already leveraged and incorporated into your net worth. You would be creating a house of cards if any one defaulted. That 150K is correct. That number would be the amount you could utilize to service existing debt, or further finance other investments without rocking the existing boat.

    In actuality if you look at the whole pie it should probably be 60/40 longterm short term debt, and then that all being 12-13% of the larger total debt to total assets pie.

    So at first glance it seems conservative, but in reality its meant to balance it all out.

    #36     Mar 8, 2007
  7. What's the correlation here? :confused:
    #37     Mar 8, 2007
  8. Hey Chaos,

    So, what is the difference between putting down 20% to buy a house... you are taking on a leverage factor of 80% and what you are talking about, which is taking on a leverage of 15% at the max so that you will be in a position to cover the loss and move on.
    #38     Mar 8, 2007
  9. ElCubano


    aboslutely...but the problem is that only experience will teach the above...isnt life a bitch...youngsters dont head warnings and dont litsen to advice; why should they. At 20 you should be living, f**king, drinking , and watching ass..
    #39     Mar 8, 2007
  10. buylo


    Go act like an idiot for a few years. Ski bum in CO or travel in Europe.
    #40     Mar 8, 2007