Tell Me Your Debt Ratio Is Not This Bad…

By: ispeculatornew
Date posted: 09.06.2012 (5:00 am) | Write a Comment  (2 Comments)

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I thought this chart was fascinating. The most striking part obviously is that Canada’s numbers look incredibly bad. It seems pretty basic doesn’t it? Dividend investing is all about creating passive income, or cash flows that enable us to live without worrying about working for every dollar, to not be forced to start using our retirement funds but rather simply live off of our passive income. I’ve recently started writing about where I currently stand in terms of passive income and while I look like I’m very far, things will actually be improving very fast and I’m confident that I’ll get there, especially with a solid plan and a dedication to improving my cash flows. It’s not about hitting a homerun but rather about constant and never ending improvement, buying more dividend shares, reinvesting whatever cash flows that you can and looking for long term sustainable dividend stocks.

Debt Can Be A Huge Part Of The Equation

I often talk about dividend income because it’s that first part of the issue, the top line if you will. As important though is the bottom part where you’ll find expenses and reducing your debt, especially in terms of your disposable income is an obvious key to being able to live off of your passive income.

There’s no doubt that the US number looks much better than its North American counterpart but even though it’s off of its high, it’s still much higher than it was 15 years ago and I’d argue that both numbers are way too high.

If you were to do this chart for your own situation, what would it look like?

I personally bought a house recently, so there is no doubt that I’m near the top but I’m putting as much focus (and money) into paying down debt every month as I save for my investment buckets so my chart will likely have peaked at 30 years old or so and should be coming down over the years, especially in terms of % of assets.

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  1. Comment by Bryan — September 7, 2012 @ 6:48 pm

    My debt to income ratio is around 450-500%, but I’m single, under 30, and just bought a house. My debt is going down and my income is going up, so hopefully this is the highest I see it. And yes I’m Canadian.

  2. Comment by IS — September 9, 2012 @ 3:00 pm

    @Bryan – Yes, that is what you’d expect and clearly most homeowners under 30 have high ratios but hopefully that comes down over the years.

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