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Old 07-05-2013, 08:03 AM
32vld 32vld is offline
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How much debt is safe to carry?

How much debt is safe go carry?

New truck costing $600 a month. Making $6,000 month.

I would guess that if business dropped ten percent. I would continue to guess that the truck payments could still be made.

At what point is holding on to too much debt?
  #2  
Old 07-05-2013, 08:22 AM
Pierre2013 Pierre2013 is offline
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A better way to look at it is; how many months could you go with zero income and still be fine? That's the way I have always approached life.

If you can have 12-18 months of saving, then you are fine and have plenty of time to react to almost anything that could happen to you. Just my 2 cents.
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Old 07-05-2013, 09:11 AM
Stars & Stripes Landscaping Stars & Stripes Landscaping is offline
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I don't know if that is a question anyone else but yourself can answer... Like you had mentioned in a alternate thread, if the market tanked for 5 years will you still have the monthly payment and still be able to provide those who rely on you with the necessities?
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Old 07-05-2013, 09:16 AM
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dKoester dKoester is online now
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I refuse to have any debt. Owe no man anything.
  #5  
Old 07-05-2013, 09:27 AM
Stars & Stripes Landscaping Stars & Stripes Landscaping is offline
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I will be financing a mower, the only way I am doing this is if it is the 0% for XX amount of months...why? Because you're not losing any money, nothing goes to intrest.
  #6  
Old 07-05-2013, 02:03 PM
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monoshock monoshock is offline
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Maybe get a cheaper used truck. Just an idea.
I haven't had a car/truck payment in over 35 years.
I couldn't imagine paying $600 a month.
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Last edited by monoshock; 07-05-2013 at 02:08 PM.
  #7  
Old 07-05-2013, 03:25 PM
Jaybrown Jaybrown is offline
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How much debt is safe to carry?

I had 0% interest and I missed my second payment by one day because I did it online. Now my interest is 29.9% which is another $12000 I have to pay now.
  #8  
Old 07-05-2013, 04:07 PM
larryinalabama larryinalabama is online now
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Quote:
Originally Posted by 32vld View Post
How much debt is safe go carry?

New truck costing $600 a month. Making $6,000 month.

I would guess that if business dropped ten percent. I would continue to guess that the truck payments could still be made.

At what point is holding on to too much debt?
In my opinion debt is dumb, especially when used to cut grass.

A 600$ per month truck is a redicilouse purchase to use in this business.

I have leveraged some debt in the past for my realestate business, but seldome do anymore. Im currently looking at a house that Im 7k short on the deal and may not due it, that's how sick of debt ive become.
  #9  
Old 07-05-2013, 05:00 PM
Will P.C. Will P.C. is offline
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Quote:
Originally Posted by Jaybrown View Post
I had 0% interest and I missed my second payment by one day because I did it online. Now my interest is 29.9% which is another $12000 I have to pay now.
This is a good point for people just getting into carrying some debt with a loan of CC. These places will jack up your interest rate in a major way for just one late payment. They say it once in the fine print, but not many people read fine print.
  #10  
Old 07-05-2013, 05:57 PM
seabee24 seabee24 is offline
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Quote:
Originally Posted by Pierre2013 View Post
A better way to look at it is; how many months could you go with zero income and still be fine? That's the way I have always approached life.

If you can have 12-18 months of saving, then you are fine and have plenty of time to react to almost anything that could happen to you. Just my 2 cents.

That's how I would do it after making a ton of mistakes and learning. If you are taking on debt like a truck payment I would ask myself the following.

1. Is there any other method of getting the same thing? Can I buy used and still have good results?

2. If I purchased it today, and took a hit, had to sell it tomorrow, can I pay it off the note knowing I will loose 30% the day it's purchased

3. Can I stop all operations, stop working, and make all my current fixed payments plus this new one?

4 do I really need it?


If you can answer yes to at least 3 of these, and your currently profitable, have savings, Then yes I would buy it.

In my mind- bad debt is when you can't afford it. You think you need it, must have it, but you can't afford it, and would be screwed on the re-sale

Good debt- you have the money to pay for it cash or most of it cash but rather than clearing out your bank accounts for the purchase to leave you with liquid funds to spare which can be used for other savings in business like bulk discounts, or time/labor saving tactics.
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