Debt Free Definition

AngusS

Hi Folks
Without a mortgage but with a car loan of 18K, I would like to understand the "definition" of debt free that you are all working on ??

Is debt free defined as NOT owing any finance at all and having all bills paid, or is debt free the postion of having more assets than liabilities ?

My understanding would be that debt free means you owe nothing to anyone

Any views ?

pania

yup exactly that. Debt free would be no loans/credit cards/hp/secured loans/finance agreements of any sort outstanding except for a mortgage. that would be my understanding of it.

LizD_2

I think the definition for most people (except the MFWs) is to be free of all non-mortgage debt. Whilst it IS a debt, a mortgage is positive in the sense that it's paying for your home and 99.9% of people could never afford to buy outright. After all, not everyone earns Wayne Rooney's salary, do they?

hypno06

My definition is to be free of all debt with the exception of my mortgage.

I would include credit cards, loans, car loans, re-mortgage/consolidation loans and student loans as the debt that should be cleared before you can say you are debt free.

Of course mortgage is still a debt and I have no doubt that I will be tackling this in a big way once my other debt is gone!

Some people don't count their student loans as real "debt" but it is still money owing, so in my mind should be counted.

lmw1977

I'm with the general consensus here that I don't include my mortgage for reasons previously mentioned (i.e. investment, positive debt etc.).

However once I clear all the tosh I intend to start overpaying my mortgage and chucking as much as I can at it...roll on 2012 (not for the olympics) it's my current DFD!

cheers.

nearlyrich

Al_Mac wrote: »

Debt free is no debt to anyone.

I would exclude mortgage, if I had one, as I don't see that as a debt, but an investment.

I would also exclude 0% credit cards, if the money is in a savings account.

I agree with this definition basically having more assets than liabilities is debt freedom.;)

hypno06

nearlyrich wrote: »

I agree with this definition basically having more assets than liabilities is debt freedom.;)

I don't agree (sorry ). I have more assets than liabilities so your statement above would mean I have debt freedom.

I do agree that I have a choice, in that I could sell my house to clear all of my debt, but that is as far as it goes. The debt that I am trying to pay off cannot be left to look after itself like my mortgage can. I am faced with my "unfriendly" debt every day and until that has gone, I do not consider myself to be have debt freedom. Also, there is nothing to say that my house will increase at a % value that is greater than the % that I am charged on my debt. As many of my debts are at approx 25% APR, this is expecting a lot of the property market to keep things positive.

But I do know what you are saying, and it is comforting to know that if the worst came to the worst I could sell up and start again.

mjdh1957

I don't have a mortgage, but my own personal definition of 'debt-free' would mean no credit cards, HP or loans. Mortgages are different in that they are linked to an asset that might (hopefully) appreciate over time.

Dr_Hook

I agree with Hypno - if your assets outweigh your liabilities it just means you're solvent (on paper anyway).

You could have a £250k house, £150k mortgage and £90k unsecured debt - I wouldn't consider that to be debt free by a long stretch.

smudgemanc26

I would say i am debt free when ive paid all my credit cards, loan, and overdraft back. Although i'll still have a mortgage like some of you say thats an investment and not a debt, and who really can afford to buy a house outright at these current prices, unless you are on Rooneys wage!

immoral_angeluk

I split it in to two types of debt free
Unsecured debt free
Completely debt free