Can I be considered 'debt free'?

2

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  • Very very tricky question....I think it is only for you to answer.

    If you invest the money, you would ultametly make more money.

    However, emotionally it would be a massive relief being debt free.

    If it would be me, I would pay it off. If it is in your bank you will spend it.,.
    GOAL 30th November 2017 - 100% paid off, 0% debt left
    31st March 61% paid off:T
    March 2015 Debt at Highest
  • This question comes up a lot and I think in your heart of hearts you already know the answer.

    A lot of people will bend the definition of 'debt' to suit themselves so they can claim to be debt-free - it's a peculiar insecurity a lot of people have.

    People love to not class a mortgage as a debt - it is.

    Simply, if you owe money it's a debt. Whether you can pay it off tomorrow or not makes no difference. You're in debt, I'm in debt - what matters more is if we're making the best of our personal situations. My debt is one mortgage and a couple of 0% credit cards. There's nothing more I could do to minimise the interest I'm paying and/or maximise the interest I make on my savings.

    But I'm in debt. Will I ever be out of debt? Probably not - but I'm alright with that.
  • enthusiasticsaver
    enthusiasticsaver Posts: 15,445
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    If you still have debt outstanding then no you are not debt free. Even if or when you get the £20k if you stick it in the bank then you are debt neutral but not debt free.

    It may make sense however to do that as you can get interest on the £20k and pay nothing on the credit card debt until the interest free period expires.

    Even those of us who use credit cards and pay it off in full each month are technically not debt free. I am not sure it matters though as it is all semantics anyway.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • TightRob
    TightRob Posts: 36 Forumite
    Not sure the future receipt of an inheritance should be classed as "good fortune"
  • datlex
    datlex Posts: 2,237
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    Even those of us who use credit cards and pay it off in full each month are technically not debt free. I am not sure it matters though as it is all semantics anyway.
    See I would disagree with that. I use my credit card as a means of payment (for reward points) not a source of funds and always transfer the money to pay it from my current account to an account that covers it. I could literally pay it off every day. I don't always wait for the bill to come in. I therefore don't see it as a debt.

    As for the original question:
    I only counted myself as debt free once my final loan was paid off. Until that happens there is the temptation to spend the funds you could have used to pay it on all manner of things.
    Paid off the last of my unsecured debts in 2016. Then saved up and bought a property. Current aim is to pay off my mortgage as early as possible. Currently over paying every month. Mortgage due to be paid off in 2036 hoping to get it paid off much earlier. Set up my own bespoke spreadsheet to manage my money.
  • takman
    takman Posts: 3,876
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    datlex wrote: »
    See I would disagree with that. I use my credit card as a means of payment (for reward points) not a source of funds and always transfer the money to pay it from my current account to an account that covers it. I could literally pay it off every day. I don't always wait for the bill to come in. I therefore don't see it as a debt.

    You may not see it as a debt but as soon as you spend on that card you owe that money so it is debt. Whether or not you have the money to pay it back doesn't change whether it is debt or not!.
  • TightRob
    TightRob Posts: 36 Forumite
    In the same way then, unless you pay all your utilities in advance for the gas / elec / water / phone you'll use in the coming month, you're in debt.

    Well isn't that bad news for everyone.
  • enthusiasticsaver
    enthusiasticsaver Posts: 15,445
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    datlex wrote: »
    See I would disagree with that. I use my credit card as a means of payment (for reward points) not a source of funds and always transfer the money to pay it from my current account to an account that covers it. I could literally pay it off every day. I don't always wait for the bill to come in. I therefore don't see it as a debt.

    As for the original question:
    I only counted myself as debt free once my final loan was paid off. Until that happens there is the temptation to spend the funds you could have used to pay it on all manner of things.

    I do the same, use the credit card for the cashback and pay the whole balance off by direct debit the following month. We have savings and could transfer sufficient immediately after using the card but I see no point in doing this. We get interest on our savings but pay none on the credit card balance. Technically it is a debt and it does not bother me, much the same as using gas and electricity before the bill is paid does not bother me.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
  • takman
    takman Posts: 3,876
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    TightRob wrote: »
    In the same way then, unless you pay all your utilities in advance for the gas / elec / water / phone you'll use in the coming month, you're in debt.

    Well isn't that bad news for everyone.

    No its not bad news at all. Some debt is good and some debt is bad, debt that is at 0% while you have the money to pay it off earning interest is always going to be good debt.
  • TightRob
    TightRob Posts: 36 Forumite
    Completely missing the point :money:
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