What's your debt limit?

[Deleted]

Our debt limit is probably right around $310,000. I don't think I would want to go too much higher than that at the moment.

[zibazinski]

If I can't pay it off at the end of the month, I am over my limit.

[resolution]

Our debt limit is whatever a lender is willing to give us, as long as we have it balanced with an asset and some income. Right now we owe $70k on our house and 40K on our rental, but at the end of the year we are planning to refinance and pull the equity out of the rental and start shopping for another one. We would like to keep the new one under 100k, but I don't really see it as a hard and fast limit depending on what deals we find. For debt that is not balanced by an asset, it would have to be within our ability to pay off or be necessary for health and safety, like medical treatment. Once you get into something like medical I would go into whatever debt is needed.

[Deleted]

Apr 9, 2011 6:46:54 GMT -5 zibazinski said:

If I can't pay it off at the end of the month, I am over my limit.

Same here. Debt is a chain I don't want around my neck. I'm stuck with the mortgage for now, but there will be no consumer debt. If I can't afford to pay cash then we do without.

[Bluerobin]

My debt limit is $0 also. If we don't have the money to pay for it, we don't get it. Including cars - years ago, the bride kept "making" car payments to our bank account after the car loan was paid.

[Deleted]

Our current debt limit is about $160,00 and when we were thinking about buying a house earlier this year the bank approved us for about $240,000

So I guess to them our debt limit is $400,000.00

[Deleted]

Our debt limit is whatever we can afford that month.

Some months having $500 of debt bothers me, even though it will be paid in full that month.

This month, we bought a bunch of season tickets (football, baseball, symphony) AND we will start a kitchen remodel. So I have about $10K on the Discover (that will be paid in full within a few weeks). For some reason, that does not bother me.... probably because it was all planned.

[alabamagal]

I don't think it is reasonable to have a $0 debt limit. That would mean you would never take on any debt for anything worthwhile. $0 debt should be a goal and especially if you are older and nearing retirement age. If you are young and want to buy a house, you likely will have to take on debt. Cars maybe. These would be reasonable debts. Large cc debts would be bad debt. For a young person starting out, you may need to take on some student loan debt in order to get your degree and earn more. It would also be nearly impossible to start with nothing and save up enough for a house.

Also, as a small business owner, if you want to expand, you likely will have to take on debt. We have business debt (relatively small compared to income) that was used to expand our business. Since expansion, sales have increased. We are paying off debt.

Personnally, our debt is around $100k, mostly in mortgage.

[Nazgul Girl]

Our debt limit is dependant on what our wants/needs are versus our cash flow and savings. Right now, we have a house mortgage of $118,900, cc debt of $900, an loan of $ 4000 at 0 % which must be paid off by Nov. 30th, my husband's student loans of $47000 which are almost all amortized at 4.7 percent over 30 years, and I have a car loan of $14000, which I am paying off so fast that I "technically" don't have to make another payment on until August. Of course, I am making the payments on it, plus, plus on the balance. We have savings of $ 11,000 in a mm, (emergency fund ), $ 3500 in various checking accounts, $120,000 or so in CD's paying 5.5 & 3.7 percent, $20,000 in Scottrade account, and about $500,000 in retirement savings vehicles, plus our paid-off rental worth about $ 185,000 in today's vicious r.e. market. We also have good cash flow. So, I am personally comfortable about paying cash for another rental. If I could find a company which would write a $25000 mortgage at 6.5 percent or so, I would finance the rental instead of buying it for cash. As it is, I can't see any point in taking out a $50K mortgage on a $27500 house, because $50K is as low a mortgage amount as I have been find anyone willing to write around here. Debt can be a tool to make one's life better, or it can be a form of serious slavery.

[debtheaven]

We owe 29.5K on a rental loan and 9.5K on a reno loan from when the renter trashed it in 2009 (34K of damages, insurance paid 20K). In May we close on another rental and we will owe another 41K. So that'll soon be 80K in rental debt.

We also owe 1535e on our new boiler / furnace. Now that our car is paid off we are paying extra on the boiler loan. My goal is to have only rental debt.

[Deleted]

Well we're finally under $1M! ;D

Less than $600k is in our name, the other $400k is a loan on my late mother's condo. Since all three loans are under 5% and secured by real property that has equity I don't really feel like we're debt slaves...

We do have the ability to pay everything off but I'd rather stay diversified.

[debtheaven]

Well we're finally under $1M!

Yay Bonnap LOL!

[Tiny]

Do you really have 0 debt? The balance you are floating for the grace period on your credit cards, no mortgage?

My credit card(s) had a balance that hovered around 5K over the last two months (car repair, house stuff, dental work, prepaid vacation bills, season tickets). I paid the bill in full each month so I didn't pay interest - but I had some scary looking (to me) credit card debt for 2 months. My typical monthly CC debt is between $800 and $1200.
I've also got a HELOC with a balance. I've got a mortgage.

I can easily handle up the $1500 in short term monthly debt (credit cards) it's more or less in my 'budget'. The big yearly jumps of CC debt in Feb/mar/apr are handled by saving each month so I can pay them in full when the bill comes.
I could handle up to 30K in mid term debt (the HELOC). If I had no intentions/plans of paying it off/down I could go as high as 100K and take the debt the full 20 years by paying only the interest and then hope to refiance. ::shudder in fear:: If I added another mortgage (on additional property) I could probably handle up to another 70 -80K.

If I were to top out all of those 'debts' I'd have to start 'belt tightening' and start to drop savings rates. And my life would become pretty awful for years on end. ICK.

A snapshot as of today - I've got about 56K of debt.... I could be comfortable with as much as 76K of outstanding debt (with the additional 20K NOT being CC debt - but either HELOC or Car Loan debt...) I could stretch to 150K but that would impact my 'lifestyle'. And I'm not sure I want to give up lifestyle at this point.

[TheOtherMe]

I do my best not to charge more than I can pay off next month. As of today, I have nothing on my charge cards to pay off in May.

I have an old car. I have a savings account where everything extra is going to save for a new car. I want to pay as much down or even pay cash if possible. Depends on how long the car holds will stay alive.

I do have a mortgage. As of now, that is my only debt.

[Apple]

My goal is to not have debt, other than my mortgage and property payments, unless it is 0% (and then I pay off the balance before interest comes due). Right now, building the house, I know I will have to take on some short-term debt until it is finished enough to put a mortgage on it. At that time I'm hoping I'll only NEED to finance less than 50% of it's value, but I may finance more if I get a good rate in order to invest the rest. At 32 I have a credit score of 790-810 (depending on source and scale) and that's important for me to keep so I can get the best rates.

[Sum Dum Gai]

We're at about $325k. The asset column is over $400k though, so I guess we're doing alright.

[Tiny]

Would a monthly utility bill be considered 'debt' - it's an outstanding $ amount until you make the payment.

[midjd]

Between the mortgage and my SLs, our total debt is hovering just around $280K. Our net worth is -$12K and should hit $0 by the end of the year ( ;D), but once we get out of negative-net-worth-world, I don't want to go back!

[DVM gone riding]

well since I currently have 300k in debt I guess it is pretty high. Now that I am out of school I won't take on any debt that isn't balanced with an asset that has the pot to generate income-rentals ok, boat loan not. But there is nothing I can do about the fact I have 65k in SL which have only my higher income to balance them

[zibazinski]

Funny enough, DF paid cash for our new home. I actually thought it was a dumb move with interest rates so low but now I think I am glad. My primary residences haven't had mortgages on them since 1997 and it is such a relief. Rentals, yes, I mortgaged some to buy others but as I sold, I paid off the notes so now they are all f&c. But I am thinking about getting a duplex in Michigan and renting it out so will have a mortgage there if I can buy both sides of the duplex.

[ilovedolphins]

I have no debt. No mortgage. no car payment, no credit cards. If I can't pay for it in cash I don't need it. It is such a relief to have no debt.

[formerexpat]

My debt limit would be the amount that banks would lend me that I could turn around and apply towards appreciating assets earning a spread on that debt. Hell, I even fully finance depreciating assets (cars) when the rates are right to avoid removing money from the market. We just bought a Sienna and I financed the total purchase price.

[cronewitch]

Mine depends on the interest rates I am happy now to owe about 165K but no interest rates over 3.5%. I might go farther in debit if I could get that low of rates since it is only about 700 a month and the money invest makes more than 3.5% I am in no hurry to be out of debt. If I was to buy a new house I might go as high as 250K on a really low interest mortgage.

[ameiko]

Apr 9, 2011 6:46:54 GMT -5 zibazinski said:

If I can't pay it off at the end of the month, I am over my limit.

Same here. And I try to limit what I put on my card to expected expenses like cleaners, gas, grocies, etc...

The more fun items I will save up for. So pay off within the month and my mortgage, that's it. I have a solid car that I hope to own 10 more years, within which that time I should pay off my house.

[debtheaven]

Would a monthly utility bill be considered 'debt' - it's an outstanding $ amount until you make the payment.

Not to me. To me that's a bill too. A bill is something due on a specific date and hopefully paid off in full on that date.

A debt is a sum of money that I know is greater than I can pay off in a month, which is why I willingly signed a contract to pay that greater amount off in X monthly installments. Like a mortgage, or a car loan, or a boiler / furnace loan.

Caveat to my last post: Like Snerdley, I may decide to take on some SL debt for my DD who starts college in September. I'd rather not, but depending on how things go with my income, I may. I won't have to do it for her first year, but I can't exclude deciding to do it for her second and / or third years (college is three years here).

[Malarky]

Apparently my debt limit is my mortgage plus the $10,000 I'm planning on pulling out of my heloc for some renovations.

[debtheaven]

Still no Helocs here All these years later, the French gov't is still saving me from myself LOL.

Malarky karma to you for your great avatars!

[mesquite77]

I'm going to have to raise mine soon - from $1MM to $1.5MM!

[Malarky]

Thanks, DebtHeaven ;D

Last I checked, I still had an open heloc. It's possible that it was closed without my knowledge. I haven't used it in years. I have all the money in the bank for my projected renovations but I'm reluctant to cut too deeply into my cash reserves.
Every time I do any pricey project these days I really appreciate all the things I learned from all the posters here. I either can or do pay cash for everything I do.

[debtheaven]

Good for you Malarky! We didn't learn quite so well, but we decided we would only go into debt for one project at a time. That worked for a while but then our only car and the boiler / furnace both died within days of each other.

Our new car is paid off so now I'm trying to pay off the boiler / furnace loan. We still have two projects for our house (double-glazed windows and new kitchen) but both of those are on hold for now. I am fine with reasonable debt on one project, but debt on two projects freaks me out LOL. So we're paying off the boiler loan and then we'll see, hopefully we'll be in a place where we can afford to take on the double-glazing.

We also have rental debt, probably too much. So I want to get that down too before we do anything else in the house.