"Good" debt, bad debt, net worth ...

iVillage Member
Registered: 01-25-2009
"Good" debt, bad debt, net worth ...
3
Sat, 08-29-2009 - 11:29am

I have been thinking about the debts I have and why I have them.

When I first got divorced, I had around $8000 on my credit cards, but it has long been paid back.

The mortgage is a no brainer, it is about the same as what I would pay to rent a similar places. As far as the student loans, the interest rates run from 3.25% to 6.75%, and at that time the market was doing well so my mutual funds and stocks were averaging 8% to 15% return. It made sense to keep the money in the market and take out loans. (Of course it is a different story now).

I kind of play around with this net worth calculator found on the web. It is interesting because it does not only look at the amount of debt, but the amount of equity. In a way not that different than income and expenses, it is not only the absolute amount that matters, but more so to maintain a positive balance.

Someone else may be interested to plug their numbers and see:

http://www.bygpub.com/finance/NetWorthCalc.htm

edited because I cannot spell and type before the first cup of coffee




Edited 8/29/2009 2:56 pm ET by marie_1229
iVillage Member
Registered: 04-12-2007
Sat, 08-29-2009 - 1:18pm

Thanks for the link, Marie.

iVillage Member
Registered: 02-01-2008
Sun, 08-30-2009 - 12:26pm
Thanks, Marie -- I feel better now! My net worth is not a negative number!
Mary Jo








iVillage Member
Registered: 08-04-2008
Sun, 08-30-2009 - 1:41pm

Interesting take on things. I have been keeping a tally of my net worth in a book with semi annual balances back from 1986. At one time it was over $250k! LOL

Divorce, housing prices, moves, all took their toll and it is now only about half that, mostly in 401k.

By the way, I hope everyone kept their 401ks in the market this year (I started putting mine back in last October 2008, but I took it all out in 2007 before stocks started to fall and put it in treasuries, that ended up giving me a 7% return in 2008.) I have had my best year ever making over 31% on average in the many mutual funds I have.

Driving to our cabin this week, I noted 1 out of at least every 5 houses for sale along the Lake Huron shoreline, with lots of signs saying, REDUCED, NEW LOWER PRICE, etc.

I thought one way to cure the housing bust was to allow people over 45 to take their 401k money and have no penalty to invest in retirement property (they would get a 20% penalty for taking a 401k out now, plus the taxes paid on the money.)

Now that would be a great stimulus, it would help the economy, the government would get more money based on the taxes of that money and some people could actually buy retirement property in down areas, lifting the real estate market up a bit.

-Marie