Probability of Default for average person 12-Dec-2014

Probability of Default is shortly called PD, the probability that individuals or entities become insolvent.

Although the most of people earning average salary may not think of their becoming insolvent near future, mathematical analysis shows certain level of the probability of default for average people.

(Example 1)
 UK household
 Employee
 30 - 34 years old
 Savings: 5,000 [GBP]
 Salary: 30,000 / 1Y [GBP]

 Bonus: 5,000 / 1Y [GBP]

 Expense: 15,000 / 1Y [GBP] + Loan repayment

 Loan 15Y: Outstanding 150,000 [GBP], repayment: 900 / 1M [GBP]

Probability of Default is 72.0% for next 15 years. (35.0% for next 10 years.)

(Example 2)
 US household

An US household

 Employee
 30 - 34 years old
 Savings: 4,000 [USD]
 Salary: 45,000 / 1Y [USD]

 Bonus: 7,000 / 1Y [USD]

 Expense: 30,000 / 1Y [USD] + Loan repayment

 Loan 15Y: Outstanding 120,000 [USD], repayment: 750 / 1M [USD]

Probability of Default is 72.2% for next 15 years. (36.0% for next 10 years.)

The analysis is based on mathematical models. Future income, expense and employer's credit are modeled as uncertain factors. It does not take into account changing jobs or financial assets other than own savings.

You can quote your own Probability of Default at http://www.iamdefault.com/AnalysisInput.php.