As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

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Monday, 4 February 2019

Having RESIDENTIAL housing debts on negative net worth in your late 40s or 50s???

Read? Clearing debts early for a "Peace of Mind" is Overrated - Here's why???

Uncle8888 has seen through major recessions and retrenchment in his ex company and had seen his ex-colleague crying in front of him eyes when he lost his job.

Meederka generation could have easily being debt free; but most love the idea of second bite or more of the cherries. 

Huge difference between "Having debts" and "Having debts on negative net worth"

Having debts doesn't means negative net worth. Know the difference!

Having debts on negative net worth is potentially troubled mind when you are retrenched in your late 40s or 50s. OMG! I am retrenched!


  1. Quote...Huge difference between "Having debts" and "Having debts on negative net worth"

    But hor, having high debt is also risky. So, what is the gearing ratio that make you comfortable?

  2. For me no debt if possible because i like to have my assets growing as fast as possible.

    We are able to do it till now i think because we are simple in our needs.

    We can afford a fancy car but we always opt for a simple no bells & whistles car.

    We don't envy others having all the bells & whistle toys.

    We go for utility if it meets our basic needs it is more than enough.

    Now we own a 13 year-old Honda Civic which we think it's a kind of "extra luxury" (not that we can't afford it but because there is no market for such car, i decided to keep it).

    Why it is a Luxury?

    i think it's a Luxury because DTL is just down stair.

    Besides if we really need a car, there is always GRAB (Aka paying the peak fare once in a while, i think it's better than "wasting money" on a car, now that we are retired).

    We used the car for NTUC shoppings and finding makans at HDB Hawker Centres only)


  3. Yes, debt free is v important. I can sleep with peace of mind. Additionally, you are in control if you have FU money readily available.

  4. Back in the mid-2000s I intuitively had a thought that one should be free of large debts by mid-40s. This was after seeing the effects of AFC, dotcom bust, 9/11, SARS on older colleagues around me.

    Especially more so in a place like S'pore where we don't have much job protection, or safety nets & welfare. ;)

    Now some ang mohs also got same thinking?!? I think he's gonna get plenty of flak ... just like Suze Orman who said need US$5M to FIRE. :P

    Positive net worth, but large debts & large debt servicing also pain in the ass if retrenched & unable to get similar paying replacement job. Particularly if most of the large debt is due to the family home.

  5. We need to define what is debt? Most people are not clear on it.

    Take for eg. Mortgage.
    Most of us think that as long as you have a mortgage debt, it is debt. Consider if you do not have a mortgage debt, but go on renting a house. When crisis struck and you lost your income and have no savings, you are left with no place to stay...then in this case, even if you have no debt, you are still left with no roof.

    Actually mortgage debt is not really a debt when you are able to repay your monthly loan on time. It becomes a debt when your liability is rising faster than your income, such that you are unable to repay your monthly loan on time and accumulate interest-bearing debts. And also, you must make sure that each month, you are paying down your principal and not just paying your interest because of the huge loan. My rule of thumb, is different age group should have diff percentage of mortgage loan to market sale value.

    E.g a property with market value of $1mil. If your mortgage debt is 500k, your net is 500K. Even when crisis come n ur prop reduce 30%, your net still 200K.
    Eg. a prop with mkt value $500K. If your mortgage debt is 250K, your net is 250K. Crisis come with 30% reduction, prop value is 350K now, your net is 150K.

    When we talk about debt, we also need to talk about income. You have no debt. But your ability to earn is very low. Hence its always two sided. Income must rise faster than debts. And we must increase our ability to earn while reducing our debt.

    Hope it makes sense. There are still many considerations but no time to explain here. :-)


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