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I did not get that assumption from "The more debt you have, the less financially resilient you are". Debt is an absolute value, and debt-to-asset ratio is...not

by mym1990 2y ago

I did not get that assumption from "The more debt you have, the less financially resilient you are". Debt is an absolute value, and debt-to-asset ratio is...not. You can also evaluate debt loads by debt-to-income ratio, which is not to be overlooked as most homeowners buy homes based on their income, rather than their savings. As others have said, debt-to-asset is also not a golden ratio, because if your assets are not liquid and you get called for your debt, you still have a bad situation.

triceratops 2y ago
> You can also evaluate debt loads by debt-to-income ratio, which is not to be overlooked Debt to income is literally the first thing I wrote in my comment. I didn't overlook it. The absolute value of a debt is a meaningless number so "more debt" should always be evaluated in that context. And that's how I took the comment I originally responded to. Some extremely obvious things are being rehashed for no apparent reason in this thread. When evaluating relative debt load, asset values should have a multiplier to reflect both liquidity and volatility.