{"id":1108,"date":"2020-07-26T12:36:14","date_gmt":"2020-07-26T12:36:14","guid":{"rendered":"https:\/\/www.cashvisory.com\/blog\/?p=1108"},"modified":"2020-07-26T12:37:15","modified_gmt":"2020-07-26T12:37:15","slug":"solvency-ratio-avoid-the-debt-trap","status":"publish","type":"post","link":"https:\/\/www.cashvisory.com\/blog\/solvency-ratio-avoid-the-debt-trap\/","title":{"rendered":"Solvency Ratio: Avoid the debt trap"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"1108\" class=\"elementor elementor-1108\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-7328231 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"7328231\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-33529f8\" data-id=\"33529f8\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-b3d1b7e elementor-widget elementor-widget-text-editor\" data-id=\"b3d1b7e\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">Borrowing can be a powerful tool to boost one\u2019s finances if used in the right way &#8211; as discussed in our <\/span><a href=\"https:\/\/www.cashvisory.com\/blog\/debt-the-good-the-bad-and-the-grey-in-between\/\"><span style=\"font-weight: 400;\">recent post<\/span><\/a><span style=\"font-weight: 400;\">. We have also explored the other end of the spectrum, that is &#8211; borrowing beyond your means and its impact on your cash flow &#8211; in our post on <\/span><a href=\"https:\/\/www.cashvisory.com\/blog\/loans-how-much-is-too-much\/\"><span style=\"font-weight: 400;\">how much loan is too much<\/span><\/a><span style=\"font-weight: 400;\">. This article focuses on another important metric that evaluates your assets and liabilities, to make sure you don\u2019t fall into the debt trap. This is the solvency ratio, which tells you how manageable your debt burden is in relation to your assets.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-c40e628 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"c40e628\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-f572ef0\" data-id=\"f572ef0\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-36ed400 elementor-widget elementor-widget-heading\" data-id=\"36ed400\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Solvency Ratio<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-f907007 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"f907007\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-e6ac305\" data-id=\"e6ac305\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-2100127 elementor-widget elementor-widget-text-editor\" data-id=\"2100127\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">Mathematically speaking, solvency ratio is your net worth (assets &#8211; liabilities) divided by your total assets. It indicates how healthy your net worth is as a percentage of your assets. This ratio helps to analyze the ability of individuals to pay off existing debts using existing assets in the event of an unforeseen event.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-057cc58 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"057cc58\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-no\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-87f1c54\" data-id=\"87f1c54\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-inner-section elementor-element elementor-element-c29fd48 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"c29fd48\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-50 elementor-inner-column elementor-element elementor-element-6f8a0c5\" data-id=\"6f8a0c5\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-f09d1ca elementor-widget elementor-widget-text-editor\" data-id=\"f09d1ca\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><em><span style=\"font-weight: 400;\">Solvency Ratio = (Net Worth \/ Assets) x\u00a0<\/span><span style=\"font-weight: 400;\">100 <\/span><\/em><\/p><p><span style=\"font-weight: 400;\">Example: Let us say Raj has the following financials:<\/span><\/p><p><span style=\"font-size: 15px; font-weight: 400;\">Assets:<\/span><\/p><ul><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Home: Rs 50,00,000<\/span><\/li><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Investments: Rs 20,00,000<\/span><\/li><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Cash: Rs 5,00,000<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">Total Assets =<\/span><b> Rs 75,00,000<\/b><\/p><p><span style=\"font-size: 15px; font-weight: 400;\">Liabilities:<\/span><\/p><ul><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Mortgage: Rs 30,00,000<\/span><\/li><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Car loan: Rs 2,00,000<\/span><\/li><li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Credit card loan: Rs 1,00,000<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">Total Liabilities = <\/span><b>Rs 33,00,000<\/b><\/p><p><b><span style=\"font-weight: 400;\">Net Worth = Total Assets &#8211; Total Liabilities = <\/span>Rs 42,00,000<\/b><\/p><p><span style=\"font-weight: 400;\">Solvency Ratio = (42,00,000 \/ 75,00,000) x\u00a0<\/span><span style=\"font-weight: 400;\">100 =\u00a0<\/span><b>56%<\/b><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t<div class=\"elementor-column elementor-col-50 elementor-inner-column elementor-element elementor-element-cb7634c\" data-id=\"cb7634c\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-ea2f71a elementor-widget elementor-widget-image\" data-id=\"ea2f71a\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img fetchpriority=\"high\" decoding=\"async\" width=\"668\" height=\"788\" src=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-1.png\" class=\"attachment-large size-large wp-image-1109\" alt=\"\" srcset=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-1.png 668w, https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-1-254x300.png 254w\" sizes=\"(max-width: 668px) 100vw, 668px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-2dfec64 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"2dfec64\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-fb32a88\" data-id=\"fb32a88\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-10f1598 elementor-widget elementor-widget-heading\" data-id=\"10f1598\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">How much should the solvency ratio be?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-2de3e93 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"2de3e93\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-6ec1d45\" data-id=\"6ec1d45\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-fca30b7 elementor-widget elementor-widget-text-editor\" data-id=\"fca30b7\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">Solvency ratio should ideally be <\/span><b>50% or above<\/b><span style=\"font-weight: 400;\">. Anything below that is considered low. Negative values are considered critically low.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-779b35c elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"779b35c\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-d60aa4b\" data-id=\"d60aa4b\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-857a4a4 elementor-widget elementor-widget-image\" data-id=\"857a4a4\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"975\" height=\"251\" src=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image5.png\" class=\"attachment-large size-large wp-image-1111\" alt=\"\" srcset=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image5.png 975w, https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image5-300x77.png 300w, https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image5-768x198.png 768w\" sizes=\"(max-width: 975px) 100vw, 975px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-4f54a3f elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"4f54a3f\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-f82e27d\" data-id=\"f82e27d\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-b48a500 elementor-widget elementor-widget-heading\" data-id=\"b48a500\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">What does the solvency ratio tell you?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-2016d79 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"2016d79\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-3c0551a\" data-id=\"3c0551a\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-eb5057e elementor-widget elementor-widget-text-editor\" data-id=\"eb5057e\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">Having a high solvency ratio indicates a healthy split between assets and liabilities and means that you are well prepared to deal with emergencies and financial downturns. On the other hand, a low solvency ratio is indicative of too much borrowing in relation to your assets. This means that in case of emergencies, you might not be able to pay-off your loans as comfortably.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-4dbbd86 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"4dbbd86\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-19b5ed3\" data-id=\"19b5ed3\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-8f5535b elementor-widget elementor-widget-text-editor\" data-id=\"8f5535b\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">Such a situation can occur if your assets have reduced in value in conjunction to your loans or due to a large amount of unsecured debt:<\/span><\/p><ul><li style=\"font-weight: 400;\"><strong>Reduction in value of assets: <\/strong>In case your assets reduce in value due to a downturn, you might see your loans outgrowing your asset prices. A good example of this is the subprime mortgage crisis of 2008. House prices fell sharply, dwarfing the prices in comparison to the mortgage amounts. The best way to combat such situations is to keep your portfolio diversified among different asset classes, so that other assets can come to the rescue for downturns in certain areas.<\/li><\/ul><ul><li style=\"font-weight: 400;\"><strong>Large amount of unsecured debt: <\/strong>This means that the person has not only been borrowing against the assets that they own, but also getting significant amounts of unsecured loans without any collaterals. These loans, if large enough, can affect your ability to pay off your debts during emergency situations. Hence, it\u2019s advisable to always limit your unsecured borrowings to manageable amounts using the solvency ratio as a guide.<\/li><\/ul><p>\u00a0<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-ebd221b elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"ebd221b\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5080400\" data-id=\"5080400\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-1e97f34 elementor-widget elementor-widget-heading\" data-id=\"1e97f34\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Implication of solvency ratio on insurance<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-70830fe elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"70830fe\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-71a6204\" data-id=\"71a6204\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-9a85c53 elementor-widget elementor-widget-text-editor\" data-id=\"9a85c53\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">We have talked about the importance of risk management with respect to your finances and why <\/span><a href=\"https:\/\/www.cashvisory.com\/blog\/life-coverage-the-most-important-financial-product-youll-ever-buy\/\"><span style=\"font-weight: 400;\">life insurance is critical<\/span><\/a><span style=\"font-weight: 400;\"> in this regard. The implication of solvency ratio comes into the picture with regards to dependants, if one were to pass on. For someone with a low or negative solvency ratio, the dependants will struggle to pay off the outstanding debt with the remaining assets. This debt burden will cripple their finances and ability to sustain their current standard of living. Having an insurance that at least covers your liabilities, helps address some of the major concerns in this situation. In addition, maintaining a healthy solvency ratio ensures that immediate liquidation of assets is not needed upon the passing of the debtor.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-cd6121f elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"cd6121f\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-994751f\" data-id=\"994751f\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-9a7f439 elementor-widget elementor-widget-image\" data-id=\"9a7f439\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"817\" height=\"589\" src=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image3-3.png\" class=\"attachment-large size-large wp-image-1112\" alt=\"\" srcset=\"https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image3-3.png 817w, https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image3-3-300x216.png 300w, https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image3-3-768x554.png 768w\" sizes=\"(max-width: 817px) 100vw, 817px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-4e5fe9b elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"4e5fe9b\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-a4e8ed6\" data-id=\"a4e8ed6\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-2476319 elementor-widget elementor-widget-heading\" data-id=\"2476319\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Bottom Line<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-4b1c653 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"4b1c653\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-25f9ac1\" data-id=\"25f9ac1\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-8ba6a5c elementor-widget elementor-widget-text-editor\" data-id=\"8ba6a5c\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">It is important to use debt in order to leverage the power of your funds to reach your goals. However, you must be cognizant of how much leverage is beneficial and how much is too much. This is where solvency ratio acts as a good guide and helps ensure that you are well prepared for life\u2019s uncertainties.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Borrowing can be a powerful tool to boost one\u2019s finances if used in the right way &#8211; as discussed in our recent post. We have also explored the other end of the spectrum, that is &#8211; borrowing beyond your means and its impact on your cash flow &#8211; in our post on how much loan [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1109,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[6],"tags":[],"class_list":["post-1108","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loans"],"uagb_featured_image_src":{"full":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-1.png",668,788,false],"thumbnail":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-1-150x150.png",150,150,true],"medium":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-1-254x300.png",254,300,true],"medium_large":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-1.png",668,788,false],"large":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-1.png",668,788,false],"1536x1536":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-1.png",668,788,false],"2048x2048":["https:\/\/www.cashvisory.com\/blog\/wp-content\/uploads\/2020\/07\/image4-1.png",668,788,false]},"uagb_author_info":{"display_name":"Admin","author_link":"https:\/\/www.cashvisory.com\/blog\/author\/admin\/"},"uagb_comment_info":6,"uagb_excerpt":"Borrowing can be a powerful tool to boost one\u2019s finances if used in the right way &#8211; as discussed in our recent post. We have also explored the other end of the spectrum, that is &#8211; borrowing beyond your means and its impact on your cash flow &#8211; in our post on how much loan&hellip;","_links":{"self":[{"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/posts\/1108","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/comments?post=1108"}],"version-history":[{"count":3,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/posts\/1108\/revisions"}],"predecessor-version":[{"id":1324,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/posts\/1108\/revisions\/1324"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/media\/1109"}],"wp:attachment":[{"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/media?parent=1108"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/categories?post=1108"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cashvisory.com\/blog\/wp-json\/wp\/v2\/tags?post=1108"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}