tag:blogger.com,1999:blog-5465015914589377788.post2522555593303527805..comments2024-03-20T09:32:16.592-04:00Comments on Michael James on Money: Ratios to Rate Your Personal FinancesMichael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-5465015914589377788.post-18567107294715350052013-08-09T16:49:36.786-04:002013-08-09T16:49:36.786-04:00We're having a bit of a flood of liquidity. I ...We're having a bit of a flood of liquidity. I think we need to find something worth investing in sometime later this year. With an older home, though, it's tempting to keep quite a bit on "standby."Bet Crookshttp://financialcrooks.comnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-17620393781607326412013-08-08T11:27:09.574-04:002013-08-08T11:27:09.574-04:00@Greg: It sounds like you're doing well. I p...@Greg: It sounds like you're doing well. I prefer to have some liquidity in case of the small chance of very tough times (loss of job combined with stock market crash and the bank closing our line of credit). I was actually surprised that my housing expense ratio was so high. I did amortise things like replacing windows, roof, flooring, etc.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-18304086262707405522013-08-08T10:31:23.548-04:002013-08-08T10:31:23.548-04:00This is an interesting exercise. For me:
Liquidi...This is an interesting exercise. For me:<br /><br />Liquidity Ratio: I'm with you, I try to keep all my cash invested and rely on available credit lines and liquidating investments if necessary. But I have never had to liquidate or dip into the credit line for unexpected expenses, cash flow from taking a break from savings has always buffered unusual expenses. So my intended liquidity ratio is zero but I wait until I have enough cash built up to justify the transaction costs. <br /><br />Savings Ratio: I've always tried to go with 1/3 savings, 1/3 spending and 1/3 taxes so I'm usually at 50% by your definition with after tax income in the denominator. More spending on taxes than all other spending combined, grrr!<br /><br />Housing Expense Ratio: I'm too lazy to calculate this one precisely, in the 5-10% range. Maybe more depending on how major maintenance expenses and home improvements are amortized. <br /><br />Non-Mortgage Debt Ratio: 0- at high marginal tax rates paying interest in after tax dollars is a big wealth destroyer. <br /><br /><br /><br />Gregnoreply@blogger.com