Your Questions About Lower Debt Ratio

Thomas asks…

What’s wrong with a company exposing itself to a large amount of equity (low Debt/Equity ratio)?

richmama answers:

Shares become diluted and existing investors receive a smaller ownership portion with each additional share issued. Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. In turn, the demand for the stock becomes lower and their stocks usually inch up. On a good day the stock may gain nothing but pennies or even untouched..

Maria asks…

Is it always good for debt ratio to be low and equity ratio to be high? Thank you very much.?

Ratio analysis

richmama answers:

Definitely, the higher the debt ratio the more you are borrowing of the total value. The high the equity ration the less you are borrowing of the total value. While there are some who would make an argument for leveraging to the hilt when interest rates are really low, I simply don’t agree with it. Debt at any interest rate is risk. Risk is necessary, but you should always keep debt to a manageable level and keep equity as high as possible.

Richard asks…

Debt/Equity Ratio vs.Current Ratio (10 points!!!) ?

If a business has a low current ratio yet a low debt/equity ratio, what would explain this?
My understanding: the business has high debt compare to assets, yet low compare to equity. How is this possible?? Can it be because of keeping a lot of retained earnings or a lot of shares outstanding (ie. higher equity)?

richmama answers:

The two debts are different

current ratio uses debt which is due in a short period of time, like your electric, phone bills

debt/equity uses long term debt, bonds, etc. Like your house mortgage

Mark asks…

Does it concern you that the USA has the third LOWEST debt/GDP ratio of the G8 nations?
“As of July 28, 2010, the “Total Public Debt Outstanding” was approximately 93% of annual GDP, ($13.258 Trillion) with the constituent parts of the debt being “Debt held by the Public” being approximately 60% of GDP ($8.63 Trillion) and “Intergovernmental Debt” standing at 32% of GDP ($4.55 Trillion). The United States has the third lowest Debt to GDP ratio of the G8 Nations (when using “Debt held by the Public” as the measure)”

You mean other G8 Nations have MORE debt than we do????

Can we all say “global meltdown?”
Lois, yes that surprised me, too. Hello…!?

richmama answers:

Yes, China is the only economy of any size that actually has a surplus. What happens when that surplus stops? No credit is what happens.

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Frugal Savings Tips for Busy Moms

Hey RichMamas – we have some cool tips from Andrea Woroch, a consumer savings junkie – she alerted us to the fact that woman loose sleep over money – more so than kids, family or work – hmmm…check out below for some ideas on how to lose less sleep over money…

Women lose sleep over lots of things, like kids and work, but a new survey released by reveals money matters keep them awake much more than men. In fact, the study conducted by Catalyst Group revealed “Financial worries are the biggest reason women stay up at night, with nearly one in three females saying they burn the midnight oil over money woes.”

Asked what keeps them awake, 35 percent of men replied “nothing.”

Ah, to be a man.

Lack of time to pinch pennies is a real problem for most women, particularly those forced into the supermom role, buried in the sandwich generation, or serving as home CFOs. Here are six tips to help all you superwomen make the best use of your time to save money.

1. Co-cook
Share cooking duties with another family by creating super-large batches and dividing it for future consumption. You’ll save money on supplies by buying in bulk and have the pleasure of a partner’s company while you cook.

2. Avoid Multiple Shopping Trips
Take advantage of such inexpensive services as Hoseanna, which delivers a run-free pair of pantyhose to customers’ doors every month. Or you can reduce time and money on food runs by opting for home delivery of groceries from sites like

3. Use Mobile Coupons
Extreme couponers spend untold hours organizing and preparing for a shopping venture. Why put yourself through that when you can use mobile coupon apps right in the store? Check out’s list of “15 Shopping Apps That Can Save You Big Bucks” and stock up on digital must-haves.

4. Try
The free, web-based service Manilla helps consumers better manage all their household accounts — including finances, utility payments, subscriptions and travel-rewards programs — in a single, secure, online location.

5. Reduce Paper Clutter
Lack of organization drives more women crazy than men, according to the survey. Roughly half of female respondents said they felt relaxed and 40 percent happy when organized. One way to reduce the clutter that creates havoc is to pay bills online so you can just electronically file the receipts. Best of all, you don’t have to write and mail checks, which always entails that lengthy hunt for stamps.

6. Shop for Presents All Year
This sounds impossible, but a little organization early on means less frantic shopping at the last minute. Which also means you won’t grab an expensive item just because time is running short. And if you do find yourself panicking mid-December, don’t forget about Free Shipping Day on Friday, Dec. 16. With free shipping offers from 2,000 merchants, this one-day event gives supermoms the added power of making last-minute purchases for arrival by Christmas Eve.


andrea-woroch-saving-on-daily-dealsAndrea Woroch is a nationally recognized consumer and money-saving expert for Kinoli Inc.  You can check out her blog at


How to Make a Budget – Family Budgeting How To

How to Make a Budget – Family Budgeting 101

make a budgetIt is more important than ever to learn how to make a budget and stick to it.  If you live alone or have a large family to raise, chances are that people are expecting you to stretch a dollar as far as it can possibly go in these challenging economic times. Learning to live within your means is one of the most important ways of staying financially solvent. When you make a budget it will help you determine what money you spend where, so that your spending doesn’t control you.  You need to control your spending and do that you need to make a budget.

How to Make a Budget

There are few simple steps you can take that will make a light turn on for you as far as where your money goes:

·      For one week, keep a notebook and write down every single thing you spend money on –  whether it is paying a bill like a mortgage or car payment to buying a café latte at your local coffee shop.  Write it down and at the end of the week, categorize your spending like this, (1) wants, (2) needs, (3) unexpected expenses. This will help you later when you go to make a budget.

·      The next thing to do is not cut out the (1) wants category completely, but see if you can reduce the number of things you spend money on.  For instance, taking a bagged lunch to work just one day a week instead of eating out can add up to savings of $40 a month, which translates to $480 a year.  If you consider all the little ways your pennies add up, and make small changes, you’ll find you can achieve a similar lifestyle with very little sacrifice and a whole lot of savings. Won’t take long to make a budget now.

·      See if you can spend less on things you must purchase, like groceries and gas, by taking advantage of sales and store coupons. Buy in bulk if you know your family uses a lot of something. There is no need to spend $1.00 per roll on toilet paper if you can purchase it on sale, or in bulk and pay 30 cents per roll. Again, small savings add up to big savings. But when you make a budget – don’t buy things just because they’re a good deal.

·      Trade one expensive hobby for a cheap or free one each month.  If you love to read, try going to your local library instead of the bookstore.  If you love to golf, find a course that has free or dirt cheap green fees, instead of playing at a country club.

·      To make a s budget work, stop buying things with credit cards. The only way of changing the way you see money is to spend what you have, not what you expect to have. If you can’t afford to pay cash for it, that means you can’t afford it – yet.  Try saving up for things instead of buying on impulse and using credit. You’ll feel a greater sense of accomplishment skipping a few high dollar dinners to buy that great sofa you saw at your favorite boutique.

·      Studies have proven that people gain more happiness from experiences than things.  Spend time with friends.  Learn a new language. Plant some new seeds on your patio garden.  These things are all practically free and add to your sense of self worth without breaking the bank.

Make a Budget – Work it For You

When you make a budget you need to make it work it for you.