What is 'debt free'?

Stewart_78

Yes, I suppose it's unsecured debts really. Or more specifically, debts which you have no asset to liquidate and pay it off.

Take a car loan. You need a car for your job which pays well. So you get a loan. This is OK as your job pays for the car and you can't have one without the other. If the worst happens you should be able to liquidate the car and clear most if not all of the debt, assuming a realistic repayment schedule.

I'm just trying to get my head around the whole debt thing. As people have said, there is good and bad debt.

joe_mcclaine

Debt is debt.

It is still costing you ... and if you lose your job it's all going to be 'bad' debt.

Like saying I've got cancer - but it's OK, it's good cancer.

vacheron

joe_mcclaine wrote: »

Debt is debt.

It is still costing you ... and if you lose your job it's all going to be 'bad' debt.

Like saying I've got cancer - but it's OK, it's good cancer.

Really? In that case please explain how the 18k I have on 0% credit cards earning me 3.5% interest which I can pay off at any time is a bad thing?

joe_mcclaine

vacheron wrote: »

Really? In that case please explain how the 18k I have on 0% credit cards earning me 3.5% interest which I can pay off at any time is a bad thing?

How in the !!!!!!y flip is 0% debt?

matttye

joe_mcclaine wrote: »

Debt is debt.

It is still costing you ... and if you lose your job it's all going to be 'bad' debt.

Like saying I've got cancer - but it's OK, it's good cancer.

I have enough savings to cover all my debt and have some left over for emergencies.

By debt I mean credit card which I pay in full each month, phone bill, gym contract, etc.

moohound

Most people could not ever buy a property without a mortgage, so it is for all but the very few an essential step to owning their home. But you can eat, go on holiday, own a vehicle without debt (as my parents did)

I would rather have a mortgage, mine will be paid off when I am 49 and then live rent free in my own home than the alternative of living in rented accommodation into retirement. I have no desire to clamber up the property ladder, our house is more than big enough for us.

My mortgage does not fill me with dread and panic like my unsecured debts did, It is my intention never to have a loan, credit card or overdraft again.

All major religions and ancient philosophies take a dim view of money lenders, interest and debt in general. Debt is mentioned in the old and new testaments the Koran and the Torah and by Plato and his contemporaries as well as eastern philosophies and the major religions of India. They all say it's bad:D

Having masses of consumer credit in many cases signifies living beyond your means, whereas having just a mortgage does not.

I suppose most debts could be viewed as good or bad, my husband gets an allowance towards travel of £450 a month and he uses this to pay a loan on a car, he got a cheap rate personal loan and the allowance more than covers it, the rest is put away for repairs servicing and tyres etc. he could have chosen to lease a car with the money or take to option of a company car, but this way we aquire an assest for he same outlay as hiring one, a bit like a mortgage, the car will need replacing eventually but will last longer than the loan. There is an element of risk, as anyone can find themselves out of work, and he is responsible for repairs which would not be the case for a company car, but weighing it up this seems a 'good' debt.

For me though, I think it's like being a recovered alcoholic, I'm not even going to go anywhere near credit if I can help it, but you never know what life throws at you.

I agree it's a very good question and deserves some thought.

vacheron

joe_mcclaine wrote: »

How in the !!!!!!y flip is 0% debt?

Well for starters because the definition of debt mentions nothing about the requirement for interest to be charged at all.

debt
)n.1. Something owed, such as money, goods, or services.
2. a. An obligation or liability to pay or render something to someone else.

Karb

Good question. At the risk of being seen as sitting on the fence, I would say that, for the purposes of this forum at least, debt is whatever you deem it to be; based on your own individual circumstances.

I think most of us on this board would treat mortgage as separate to debt (there's even a separate mortgage free wannabe board), but I can understand those people who treat it in the same way. If its right for you and your circumstances, then include it.

Same with 0% debt. If I had enough savings to cover a debt at 0% interest, I probably wouldn't include that either. But I know that others probably would include it. As it is, I don't have that luxury so its not an issue.

At the end of the day, this board is here so that we can find and offer help and support, whatever our circumstances, There is no definitive right or wrong answer.

Former_MSE_Andrea

Great question Stewart_78

Have you seen our Good Debt/Bad Debt Quiz?