Author spookie Posted February 26, 2012 Author Posted February 26, 2012 (edited) Argue with the dictionary! As far as your parents having a mortgage, are you suggesting they have no equity in their home that exceeds the balance of their outstanding mortgage? That they have an upside-down mortgage? NAV! Their home depreciated in value since they purchased it a few years ago, so yes, like many Americans, they have an upside-down mortgage ATM. Which I am not arguing would not disqualify them from being "financially stable" - just more stable than me, solvent as I am. Edited February 26, 2012 by spookie
threebyfate Posted February 26, 2012 Posted February 26, 2012 Their home depreciated in value since they purchased it a few years ago, so yes, like many Americans, they have an upside-down mortgage ATM. Which I am not arguing would not disqualify them from being "financially stable" - just more stable than me, solvent as I am.So if you add in all their assets including liquid and non-liquid, they're in the red?
Author spookie Posted February 26, 2012 Author Posted February 26, 2012 So if you add in all their assets including liquid and non-liquid, they're in the red? Probably not. But I'm still not convinced that it's as simple as stable = solvent. Or that solvency is even necessarily a requirement. I will have to ponder this tomorrow.
threebyfate Posted February 26, 2012 Posted February 26, 2012 Probably not. But I'm still not convinced that it's as simple as stable = solvent. Or that solvency is even necessarily a requirement. I will have to ponder this tomorrow.You're hysterical!
denise_xo Posted February 26, 2012 Posted February 26, 2012 I've down prioritised money at many points in my life because I wanted to pursue various objectives that involved travelling/ studying/ working in countries with low wages/ working in jobs I loved but which didn't pay well. I've never been in financial trouble, though (in the sense of really not meeting my financial obligations), I've just not had any savings and also been in various situations where it's been a headache to make things meet. At this point in my life, I am placing more priority on creating a situation where I don't have any worries about paying basic bills, where I can put money in a saving account and a pension scheme, where I know I'm working towards a situation where I won't have to worry about getting old, and where a big dentist bill or a broken washing machine doesn't equal a small disaster. I have always been financially independent in that it would never occur to me to rely on a partner or family members to get by. I was the bread winner for a long period in my marriage, and I don't have a problem with that. I think financial compatibility is very important, though. For me, that means that I want a partner who isn't materialistic, who spends responsibly, and who has similar attitudes to e.g. not wanting to live off a credit card.
johan Posted February 26, 2012 Posted February 26, 2012 (edited) A synonym of financially stable is solvent. The definition of solvent is that your assets exceed your liabilities. That doesn't make sense to me. Assets vs liabilities (i.e. net worth) is a snapshot. But financial stability to me is a matter of how protected will the net worth be over time, and whether it is enough. If I said my assets are $10000, and my liabilities are $9900, then I meet your definition of financially stable. How stable can I really feel though if my monthly expenses are $1000 and my job security is in doubt? If I sell everything, if I could, I would have $100. I can live on that for three days. Maybe a positive net worth is necessary, but you can't reasonably argue that it is sufficient. If I said my assets are $1 million and I have no liabilities, you would probably say I'm financially stable. I invested the whole $1 million split between my kid brother's startup telegraph repair company and some small international stocks my Kazakh uncle's friend recommended. As of today, the entire $1 million is still on the books. My monthly expenses are about $10k. I have no cash in the bank. I'm thinking about getting a job. Am I stable? You would say no, I'm sure. You would recommend a lottery winner, for instance, get qualified financial advice, because having assets and a huge positive net worth is great, but.... the diversification, quality and liquidity of those assets matters. We find lottery winners and pro athletes often going broke. In spite of their incredible riches, they proved to be financially unstable. Edited February 26, 2012 by johan
veggirl Posted February 26, 2012 Posted February 26, 2012 God people are SO obsessed with other peoples money, other peoples spending, other peoples assets. My man can take care of himself, all his bills are paid, he is happy and not living in squalor or anything of the sort, and has enough to do fun stuff he wants to do. Perfect. Money is just not a huge priority for me. I'm not driven by it, I'm not impressed by it.
fortyninethousand322 Posted February 26, 2012 Posted February 26, 2012 I don't care how much someone makes but it would worry me if someone was more than say 15-20 thousand in debt (excluding a home mortgage). I would find it lovely though if "princess charming" swept me off my feet and took me back to her palace.
irc333 Posted February 26, 2012 Posted February 26, 2012 What does financial stability mean to you? Is it an equation based on salary, bills, and savings? If so, what do you consider to be "financially stable"? Is it contingent on age? Do you require your partner to be financially stable? Is it something you bring to the table? It means no one that's in debt up to their eyeballs, people who don't squander their money foolishly, and can even do without in their lives. That's financial stability. You don't want to get involved with someone who squanders their money.
johan Posted February 26, 2012 Posted February 26, 2012 God people are SO obsessed with other peoples money, other peoples spending, other peoples assets. My man can take care of himself, all his bills are paid, he is happy and not living in squalor or anything of the sort, and has enough to do fun stuff he wants to do. Perfect. Money is just not a huge priority for me. I'm not driven by it, I'm not impressed by it. I think as you get older, it starts to matter more. Paying the bills today is great. Will you be able to pay them tomorrow? When you're young, you can say "who cares" because you know you'll have time to recover from whatever kind of shock comes in life. As you get older you find that time window you have to recover shrinks, and the flexibility to change goes away.
sweetjasmine Posted February 26, 2012 Posted February 26, 2012 I think as you get older, it starts to matter more. Paying the bills today is great. Will you be able to pay them tomorrow? When you're young, you can say "who cares" because you know you'll have time to recover from whatever kind of shock comes in life. As you get older you find that time window you have to recover shrinks, and the flexibility to change goes away. I think this makes sense, though there are some people who manage to maintain the "who cares" point of view and succeed at it somehow, anyway. Financial stability is important to me, and my fiance and I are both financially stable as of now. We're going to be taking some risks, including professional school for me with a good chunk of debt, and to be honest, it's pretty terrifying. If I were older, I would likely forgo the degree and choose another path, but we're young enough where it can still be a good risk. It's still very frightening, especially for me, since I've had the very good fortune of never having had to take out any loans or go into debt. *crosses fingers*
veggirl Posted February 26, 2012 Posted February 26, 2012 I think as you get older, it starts to matter more. Paying the bills today is great. Will you be able to pay them tomorrow? When you're young, you can say "who cares" because you know you'll have time to recover from whatever kind of shock comes in life. As you get older you find that time window you have to recover shrinks, and the flexibility to change goes away. Well i'm about to be 29, so I'm not sure how young I'm considered. I see your point though. I don't worry extensively about any of that stuff right now. I've got some savings, 401k and whatnot, but I am not too worried about having enough to easily live for 9 mos if I lost my job or something. Then again I am not in the upper echelon of income, so if I lost my job it wouldn't be AS difficult to find another to equal the income I currently pull in and live comfortably off of.
zengirl Posted February 26, 2012 Posted February 26, 2012 What does financial stability mean to you? Is it an equation based on salary, bills, and savings? If so, what do you consider to be "financially stable"? Is it contingent on age? Do you require your partner to be financially stable? Is it something you bring to the table? First of all, I don't think anyone but the VERY rich (think the 1%) actually have true financial stability in our country, since there is no socialized means to remain middle class in poor times. In a true Depression, a lot of us would feel the effects, regardless of what we do. Therefore, we are not really 100% financially stable. So I think of it more as "how financially stable can you get and are you comfortable with." The spectrum of answers on here makes sense to me---what do you sacrifice for greater, but never TOTAL, financial stability? How much do you need? It's interesting. Factors I think matter: *Career dexterity and flexibility -- the ability to find a job, keep a job, and be a strong commodity on the job market, even as it evolves or worsens *Savings (short and longterm) *Debt (less being better, of course) *Financial setup and lifestyle --- marriage makes you more financially stable (it's unlikely both parties would lose their jobs at once) in many cases, as does having a reliable family 'net.' Financial independence and financial stability are NOT factors that reinforce each other, IMO, but instead actually chip away at each other. The greatest stability generally requires giving up some independence. The level I strive for is pretty close to what Johan cites, with the additional caveat that I've tried to make my career not reliant on living in any particular place (city, state, country) and develop skills and a resume that will allow me to work under many different circumstances. Granted, it depends on how bad it gets, but I've made my career more bullet-proof than many. That, to me, provides me with more security (the knowledge that I can get a job if I lose mine) than the money I have in the bank. So does having people I know who would help -- hubby, parents, etc -- because money in the bank (and I save A LOT!) is going to run out someday if I'm not earning and I could never save fast enough to have enough of a cushion to truly feel secure with just that. Age matters---in that it's easier to change careers/build dexterity/get a job when you're younger but also harder to have strong savings built up.
threebyfate Posted February 26, 2012 Posted February 26, 2012 That doesn't make sense to me. Assets vs liabilities (i.e. net worth) is a snapshot. But financial stability to me is a matter of how protected will the net worth be over time, and whether it is enough. If I said my assets are $10000, and my liabilities are $9900, then I meet your definition of financially stable. How stable can I really feel though if my monthly expenses are $1000 and my job security is in doubt? If I sell everything, if I could, I would have $100. I can live on that for three days.All the terms you're using are subjective in nature. What does "protected" mean, particularly when juxtaposed against 2007/8/9? What is "enough", since lifestyles are also subjective in nature? Perhaps $100 would solely last you for three days but for someone with less requirements, it might last them much longer. As far as job security, this is a fiction. The only people with some semblance of job security would be union workers and only for the duration of their bargaining unit agreement and only if they abide by terms and conditions, which include but isn't exclusive to, abiding by the law. Even business owners have fictional job security, albeit more control over the daily viability of their business. But if the economy takes a nose dive, if their product(s) become redundant, pretty much any manner of "if-ism", their job security is also at risk. Maybe a positive net worth is necessary, but you can't reasonably argue that it is sufficient.Valid point to some degree, albeit magnitude of net worth can negate your point, particularly liquid assets. If I said my assets are $1 million and I have no liabilities, you would probably say I'm financially stable. I invested the whole $1 million split between my kid brother's startup telegraph repair company and some small international stocks my Kazakh uncle's friend recommended. As of today, the entire $1 million is still on the books. My monthly expenses are about $10k. I have no cash in the bank. I'm thinking about getting a job. Am I stable?Refer to bolded. Response = No and not because of the financial situation. The person in your example needs psychiatric assistance to stabilize. You would say no, I'm sure. You would recommend a lottery winner, for instance, get qualified financial advice, because having assets and a huge positive net worth is great, but.... the diversification, quality and liquidity of those assets matters. We find lottery winners and pro athletes often going broke. In spite of their incredible riches, they proved to be financially unstable.Are you now arguing that your own previous definition is also insufficient? Each person can nitpick each other's definitions by taking extreme stances but I think that pretty much everyone has the ability to understand the generalized concepts of what others are stating.
johan Posted February 26, 2012 Posted February 26, 2012 Financial stability is about more than having more assets than liabilities.
fortyninethousand322 Posted February 26, 2012 Posted February 26, 2012 Financial stability means nothing if the Earth was hit by a comet.
johan Posted February 26, 2012 Posted February 26, 2012 Financial stability means nothing if the Earth was hit by a comet. Exactly. Of course, dating, marriage, career, friends, family, leisure time, and health are also pretty meaningless if the Earth gets hit by a comet.
threebyfate Posted February 26, 2012 Posted February 26, 2012 Financial stability is about more than having more assets than liabilities.Or maybe there's no objective measure for financial stability and it's a matter of "good enough" per individuals involved. 1
Art_Critic Posted February 26, 2012 Posted February 26, 2012 The ability to survive several months without a job. And even then not drawing down savings too far or having to break into retirement funds. Steady, consistent employment. No living paycheck to paycheck, but instead being able to save each month. Little debt except for a mortgage. Always being aware of what is in the bank accounts. And being able to do these things without living like a miser: still having nice things, but not extravagant. I definitely bring it to the table. I'm not sure I expect my partner to be as stable, but I'm not going to be happy about marrying into a lot of debt or fighting with bad spending habits. A compulsive shopper would drive me crazy. I agree with this.... I have practiced it most of my life because it was drilled into me by some very expensive financial consultants kept on contract each year. I also agree that age brings on putting the importance of it in your life. I have already discussed with them that I don't have another Dow. And up cycle of the market/economy left it me as retirement looms.
johan Posted February 26, 2012 Posted February 26, 2012 Or maybe there's no objective measure for financial stability and it's a matter of "good enough" per individuals involved. I'm sure this is true. People get to choose their standard of living and make their own assessment of the risk of disruption. A friend of mine made good money, but decided to go without health insurance. In my mind he put his assets in jeopardy by doing that, and sacrificed some financial stabilty. Total stability can't be the goal. Even Bill Gates can't claim that. But eliminating needless risks is smart.
reallyhotguy Posted February 26, 2012 Posted February 26, 2012 It is definitely relative and that makes it tough. I'm battling with the issue myself. I'm 6 figures in student loan debt; however, my profession has allowed me to make 6 figures basically right out of the gate. I hate delayed gratification and student loans don't get passed off onto to your kids, so part of me is content to just pay the bare-ass minimum until my 50s and just make peace with that, while living decently and accruing savings just like anyone else. If I can handle the cost and it doesn't bother me, and I always have the option of deferring, what does it matter in the end? I mean, governments do it, right? Why should debt necessarily a sign of instability, even if it's monstrously high? Everyone has bills to pay, and as has been stated by the genuinely bright minds in this thread, everyone's a job less or comet away from a total disaster.
threebyfate Posted February 26, 2012 Posted February 26, 2012 I'm sure this is true. People get to choose their standard of living and make their own assessment of the risk of disruption. A friend of mine made good money, but decided to go without health insurance. In my mind he put his assets in jeopardy by doing that, and sacrificed some financial stabilty. Total stability can't be the goal. Even Bill Gates can't claim that. But eliminating needless risks is smart.There's a cost factor associated to eliminating what you deem as "needless risk". If viewed from a statistical perspective, health insurance could be viewed as having little return for substantial annual cost when individuals are below the age of 40, particularly if the individual has always lived a healthy, low-risk lifestyle (encompassing activities, physical condition and consumption patterns). But as people age, the risk of having a serious medical condition increases, hence it's arguable that individuals over 40 are taking unnecessary risk, if they don't have health insurance. It's very much subjective in nature, as to people's risk tolerance and cost/benefit analysis. Nothing is guaranteed, including monetary coverage by insurance companies for medical conditions even if people have unstintingly paid their health insurance for decades.
fortyninethousand322 Posted February 26, 2012 Posted February 26, 2012 Exactly. Of course, dating, marriage, career, friends, family, leisure time, and health are also pretty meaningless if the Earth gets hit by a comet. Well I'm putting all my money into building my sail boat, that way when the comet does come the rising water levels won't affect me that much. I may or may not serious here.
Nightsky Posted February 26, 2012 Posted February 26, 2012 More debt I can go into the better. I only believe in spending power. As long as I see life long spending power I could care less if I die 100 billion in debt as long as my life insurance policy etc. passes outside that debt and I know my family is well off. I think Sheeple believe in paying off debt and not taking advatage of it in every way possible.
Crusoe Posted February 26, 2012 Posted February 26, 2012 I think Sheeple believe in paying off debt and not taking advatage of it in every way possible. Or maybe people believe in being self sufficient and providing for themselves as they work through life. I worked every daylight hour for three years to clear my mortgage. Hated the knowledge I owed someone money. And guess what, no debt means I'm free. I wonder, what kind of an animal would willingly enslave itself by refusing to provide for itself?
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