How much is your debt level?

virgo · 2nd May, 2012

Hiya

In these very interesting times, i thought it would be a good idea to see how interest rate sensitive you are...it would seem logical that the bigger debt you have, the more sensitive you are...

So, how much are your debt levels : debt would include your own residence, your IPs (investment properties), your share margin loans, car loans etc etc etc
(and for simplicity, we would ignore LVRs!)

virgo · 2nd May, 2012

Poll

Sorry ignore this post i will try again

virgo · 2nd May, 2012

Poll

Hiya

All's good now....feel free to post (and not to lie!

)

Rob Williams · 2nd May, 2012

If I had $10m in debt but $200k cash buffer, I would be less rate sensitve than if I had $500k debt and $10 in the bank.
I don't believe there is a relationship between the size of the debt and the sensitivity to rates.
With risk mitigation strategies in place, the sensitivity shouldn't change too much as the debt grows, should it?

HotRod · 2nd May, 2012

If I told friends and family how much my wife and I owe, we'd be carted off to the loony bin.

Aaron Sice · 2nd May, 2012

how about - more than what i care to have?

i think you've created a stale topic already.

Aaron_C · 2nd May, 2012

I think LVR has a higher correlation to interest rate sensitivity than debt level per se.

virgo · 2nd May, 2012

Sensitivity

Rob Williams said:
If I had $10m in debt but $200k cash buffer, I would be less rate sensitve than if I had $500k debt and $10 in the bank.
I don't believe there is a relationship between the size of the debt and the sensitivity to rates.
With risk mitigation strategies in place, the sensitivity shouldn't change too much as the debt grows, should it?

Hiya

Not trying to compare the two; but either way, you would still be sensitive, no?

i would

HotRod · 2nd May, 2012

Rob Williams said:
If I had $10m in debt but $200k cash buffer, I would be less rate sensitve than if I had $500k debt and $10 in the bank.
I don't believe there is a relationship between the size of the debt and the sensitivity to rates.
With risk mitigation strategies in place, the sensitivity shouldn't change too much as the debt grows, should it?

Agreed.

We have $5M+ in loans and about a $100K buffer.

virgo · 2nd May, 2012

Debt levels

Geez...judging from the response so far, am i the only one who feels i should pump up my debt levels?

Those debts look huge

oracle · 2nd May, 2012

virgo said:
Geez...judging from the response so far, am i the only one who feels i should pump up my debt levels?

Those debts look huge

Just remember one thing about debt....It will work 99% of the time....1% of the time it won't work...you need to decide the 1% when it won't work will you be able to survive or be wiped out?

Cheers,
Oracle.

Sunfish · 2nd May, 2012

virgo said:
Those debts look huge

A "sort of" average of $2 mil. I could never convince myself to commit so heavily into a single asset class.

Good luck fellas.

Didn't vote. There was no "debt free" option.

HiEquity · 2nd May, 2012

Sunfish said:
A "sort of" average of $2 mil. I could never convince myself to commit so heavily into a single asset class.

Virgo's question as I understood it was the debt level across all asset classes?

Aaron_C · 2nd May, 2012

virgo said:
Geez...judging from the response so far, am i the only one who feels i should pump up my debt levels?

Those debts look huge

This isn't one of those 'my weenie is bigger than yours' contests is it?

Sunfish · 2nd May, 2012

HiEquity said:
Virgo's question as I understood it was the debt level across all asset classes?

There I go jumping to conclusions.

Ideo · 2nd May, 2012

Sunfish said:
There I go jumping to conclusions.

We all do it

I just tick over into the 500k bracket. By about $1200.

Booked a holiday on my credit card which will be paid off tomorrow

The Y-man · 2nd May, 2012

Sunfish said:
Didn't vote. There was no "debt free" option.

I assumed that came in on the <200K option?

The Y-man

aussierogue · 2nd May, 2012

agree with sunfish....zippo debt here...

Player · 2nd May, 2012

Aaron_C said:
I think LVR has a higher correlation to interest rate sensitivity than debt level per se.

Bingo.

Portfolio LVR and stress testing one's own servicibility combined with some buffers enhances chances of survival and flying under the bank's radar in times where offsets are needed to service unexpected sudden rate rises.

The higher the LVR, the less time the buffer(s) will last and, the greater the chance of fire sales being needed to remedy the preserve as much of the portfolio as possible.

My borrowings are lean these days and in a falling interest rate environment edging on the deflationary, excessive debt isn't my friend. Horses for courses really depending on each persons age, life situation, portfolio status, etc.

agent007 · 2nd May, 2012

virgo said:
Hiya

In these very interesting times, i thought it would be a good idea to see how interest rate sensitive you are...it would seem logical that the bigger debt you have, the more sensitive you are...

I'd say it'd make more sense to know LVR against liquidity ratio.

How much is your debt level?

How much is your debt level?

<200K

200 - 500K

500-1 million

1 -2 million

2-3 million

3 - 5million

> 5 million

More options

virgo

virgo

virgo

Rob Williams

HotRod

Aaron Sice

Aaron_C

virgo

HotRod

virgo

oracle

Sunfish

HiEquity

Aaron_C

Sunfish

Ideo

The Y-man

aussierogue

Player

agent007

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