When do you think it's NORMAL to have positive net worth?

[ExtraSlow]

Was having this discussion with a friend the other day, and as many of you know, finances have been on my mind recently.

Anyway, when do you think the normal or "average" person achieves a positive net worth. In case that's not clear enough, that's all valuable assets (house, car, investments and savings) minus your debts (mortgage, car loans, other debts etc).

My friend and I had more than a decade between our opinions, which seems wide.

I'm obviously excluding anyone who was born into a wealthy family, although generational wealth transfer is reasonably common, so I don't know how that changes the average.

[ExtraSlow]

Shit, meant to have that as a poll, but clicked the wrong button.

Anyway, I figure most folks do it between age thirty-five and forty.

[max_boost]

It's hard to say what is average but if one has to borrow money for school, then pay it back before saving, 30 sounds about right. I'm thinking unsecured debt.

With that said, one should always strive to be in the pluses.

[Kloubek]

I guess I had a positive net worth at around 30, but I would actually say that if it wasn't for student loans and struggling earlier on, it should have been earlier than 30. I think considering those who are helped out by their parents, the average age might actually be lower than 30.

[dirtsniffer]

I was positive around age 28, $45K student loan takes its toll.

[ExtraSlow]

I sure helps when your home appreciates in value too. Even in you have hundreds of thousands of dollars of mortgage debt, hopefully, you are in a net positive position on that one for most of your life.

I had a lot of help through university, and some great summer jobs, so I got out of university with zero student loan, which obviously accelerates things.

[Rarasaurus]

Barring significant school debt for a doctor or something I think positive net worth should start from as young as possible. If you buy a car you make monthly payments and the car should be worth more than the debt pretty fast unless you go new. Similar to buying a house, down payment and mortgage payments puts you into a net positive net worth on that fast too.

Negative net worth would happen with unsecured debt which if kept to a minimum would be ideal.

I think 25 to 35 is a safe range.

[Buster]

I think there are only limited types of debt that allow you to get in deep without having an asset attached. Really I only think student loans fit that bill.

[Manhattan]

Never been negative. But I lived at home during university and worked part time jobs during school and full time in the summer. Paid off student loans in full the day I finished school.

Debt is an ugly thing. Sometimes people will say there's good and bad debt. But I just see it as varying degrees of bad. Sometimes debt is a necessary evil but the less the better. Businesses and companies operate similarly - there's nothing more toxic than a heavy debt.

[Buster]

Originally posted by Manhattan
Never been negative. But I lived at home during university and worked part time jobs during school and full time in the summer. Paid off student loans in full the day I finished school.

Debt is an ugly thing. Sometimes people will say there's good and bad debt. But I just see it as varying degrees of bad. Sometimes debt is a necessary evil but the less the better. Businesses and companies operate similarly - there's nothing more toxic than a heavy debt.

Debt of one kind or another is the the lifeblood of the economy. No debt, no economy.

Debt is a tool just like any other. Beneficial with the proper application, and dangerous when used irresponsibly.

[Aleks]

I had minimal student debt and was lucky to buy a home right after university that almost doubled in price in a few years. So positive since then I guess.

[Manhattan]

I don't know anyone who's done really well because they took on a lot of debt. It's almost always the exact opposite - people are drowning in it. But it's a necessary evil.

In the new economy even to start a new small business you need very little capital to start.

[Buster]

Originally posted by Manhattan
I don't know anyone who's done really well because they took on a lot of debt. It's almost always the exact opposite - people are drowning in it. But it's a necessary evil.

In the new economy even to start a new small business you need very little capital to start.

I think you're probably confusing pure consumer debt, with actual business leverage.

You probably have met very few rich people who have not efficiently used leverage at some point. Perhaps even very aggressively.

[max_boost]

^

Like Trump

[ercchry]

Went positive when I first got into real estate... so 23? Probably a similar case to most, but I'd say 25-30 for an average age that people buy their first home, also the age where people would be paying off their first brand new vehicle purchases and having a bump in their careers

[gpomp]

35-40

[Tik-Tok]

Originally posted by ExtraSlow
Anyway, I figure most folks do it between age thirty-five and forty.

I think you're severely over-estimate the average/normal persons monetary competency.

First of all the average first time home owner in Canada is like 30 years old, so that means they just dumped pretty much all their net worth into a house, leaving them in the negative by a large margin.

Then you see what the average household debt is in Canada, and the average retirement savings is (almost nothing).

I would say the number for the AVERAGE person, is more like 50-55 years old.

[Buster]

Originally posted by Tik-Tok


I think you're severely over-estimate the average/normal persons monetary competency.

First of all the average first time home owner in Canada is like 30 years old, so that means they just dumped pretty much all their net worth into a house, leaving them in the negative by a large margin.

Then you see what the average household debt is in Canada, and the average retirement savings is (almost nothing).

I would say the number for the AVERAGE person, is more like 50-55 years old.

Short of a market crash, a house purchase would never put you into a negative net worth situation.

[mo_money2supe]

Am I correctly reading that most of you guys by your early/mid-30s you have over 50% equity in your houses already? I'm turning 34 this year and while my wife and I have steady well-paying professional jobs, a few decent cars, a decent savings (registered & non-registered, and gov't pension), a sizeable HELOC (which means decent equity), very little non-mortgage/vehicles debt, I'm still in the negatives. I even had my student loans paid off within 6 months of graduating, some 8 years ago! If your home is only $2-300k and you dumped half your savings into it combined with a $100k increase in home price, then sure, I can understand you'll be in the positive, but I'm also expecting most of you early/mid-30s are married and many with children already with more than just a starter house/apartment. I just don't understand how positive networth is possible without parental help!

School me on your ways, oh financial great ones...

[killramos]

Originally posted by mo_money2supe
Am I correctly reading that most of you guys by your early/mid-30s you have over 50% equity in your houses already? !

No you are not.

Net asset value is Total assets - Total debt. So for that number to be positive you just need to not have more debt than your shit is worth.

With a home that means is your amount owing on your mortgage less than your home is worth. Which almost everyone's home is positive. Like above the rare case is when your home value has dropped below the amount you owe on it ( being underwater on your home ).

Where people end up in the red is having unsecured debt like Student loans, credit cards, LoC's, Car payments on a car that isn't worth the loan amount ( ie if you sold the car tomorrow you couldn't actually pay it off with the proceeds ) etc. on top of their mortgages.

My vote is 25-30.