[FLAUSA]

You wrote: "Unless these assets are on the table as collateral, then they should be kept off the books for the purposes of this discussion."

When you assess your financial well being, do you only consider your debt or do you also include the things you own? Are you better off with no debt and no IRA or with $10,000 in debt and $200,000 in an IRA?

[ordinaryguy]

When assessing acceptable debt load, I consider the ability to repay the debt. That means liquid assets and cash flow. I am unwilling to sell my car to repay a loan. Therefore, I would not consider that asset when considering the loan.

If you simply considered net worth, then you could be broke, yet buy any car you wanted. Borrowing 100% of the cost of the car would, according to your method, leave you in the same financial situation. That is, zero net worth. Then the first payment would come due. What would you do then? There is a reason the bank wouldn't have given you that loan.