Debt-Free Definition

Fruit_and_Nut_Case

:xmastree: Hi Folks and Season's Greetings!

I've looked in The New DFW Dictionary but can't see a reference. It may be a subjective thing, but how do people here define "Debt-Free"? Is it a case of

• having no creditors?
• having assets in excess of liabilities?
• having no debts apart from a mortgage?

I ask because I'm a great fan of stoozing so almost always owe money to credit card providers. However this borrowing is at 0% and is more than balanced by cash in savings accounts.

Any opinions please?

quantic

I think this is a tricky one, I have a few exceptions which I do not consider as "debt" or "bad debt" which I allow myself to have while still considering myself as debt free. These include:

- Mortgage
- Debt on 0% credit card or any 0% finance (Which I can pay off at any point.)

I sometimes put things on CC which I could actually afford to just buy, to take advantage of CC security along with other perks. Especially when buying gifts that you may have to send back, id rather the CC company was out of pocket than me.

Another thing I often tell myself is that as long as my debts do not exceed my savings I am not in debt. So in other words, if I had to pay off everything I owed at a moments notice (bar mortgage) could I and still be in positive balance?

If the answer is yes, I am debt free.

Fruit_and_Nut_Case

Thanks quantic. That's the answer I was tending to go for myself. I'd still love to hear other people's thoughts.

Tixy

The term on here is generally used for all debts with mortgages excluded and use of credit cards where the balance is paid in full each month excluded.

I think stoozed debts with the equivalent in savings are not really debts, if the savings are specifically to repay those debts.

If someone has 0% debts but does not have the savings to repay then I would say they were not debt free.

ratrace

Good question

Im of the opinion that all debt including a mortgage is still classed as debt

owning everything outright including cars, house, no credit card debt etc....

whichever way one looks at it its still a fantastic position to be in having no debt except a mortgage

Im a bit old fashioned in that sense must get it from my dad who is very very frugal he is from the generation where they just fix everything :rotfl:

FireWyrm

ratrace wrote: »

Im of the opinion that all debt including a mortgage is still classed as debt

that is of course true, but I dont think most people count a mortgage as 'debt' as such. Just more like rent to the bank. For the purposes of this board, debt just generally means unsecured. There is a separate mortgage-free board for those who graduate from here and I think that is sensible since mortgages are rather longer term commitments and no everyone has one.

Muhren

FireWyrm wrote: »

that is of course true, but I dont think most people count a mortgage as 'debt' as such. Just more like rent to the bank. For the purposes of this board, debt just generally means unsecured. There is a separate mortgage-free board for those who graduate from here and I think that is sensible since mortgages are rather longer term commitments and no everyone has one.

Couldn't have put it better myself, that is how I look at it as well!

Stewart_78

What if you have 50k CC debt and a 100k mortgage and then a week later have no CC debt and a 150k mortgage? Have you magically become debt free?

Personally I count it all. Of course, what you have to stack against it is very important but at the end of the day it's all debt and if you stop paying a mortgage you will invariably lose your house. In many ways, it's a much worse kind of debt than an unsecured CC. But because paying it off any time soon is impossible for most, we choose to see it as a 'good debt', reinforced by the steady gains in property over time and the long term un-attractiveness of renting.

Personally, if my credit file wasn't ruined, I could easily absorb all my unsecured debts into the equity in my house, my mortgage is currently about 40% LTV but I would never do that.

ratrace

Stewart_78 wrote: »

What if you have 50k CC debt and a 100k mortgage and then a week later have no CC debt and a 150k mortgage? Have you magically become debt free?

Personally I count it all. Of course, what you have to stack against it is very important but at the end of the day it's all debt and if you stop paying a mortgage you will invariably lose your house. In many ways, it's a much worse kind of debt than an unsecured CC. But because paying it off any time soon is impossible for most, we choose to see it as a 'good debt', reinforced by the steady gains in property over time and the long term un-attractiveness of renting.

Personally, if my credit file wasn't ruined, I could easily absorb all my unsecured debts into the equity in my house, my mortgage is currently about 40% LTV but I would never do that.

Now i couldn't have put that better my self

your spot on All debt is debt regardless if its cc's or a mortgage stop paying it and we will find out how much of a "good debt" it really was

(no such thing a good debt) Great minds think alike:rotfl:

Muhren

I view my mortgage as a kind of savings account that I put into each month and at the end of it I will own the house. Rather than paying rent where I won't have anything to show for it, so in my eyes it is a good debt.

matttye

I too would consider a mortgage as debt. I'd say 'I'm debt free apart from the mortgage' if that was my only debt.

Like Tixy says though, I wouldn't class repaid in full each month credit card debt as debt. This is for the simple reason that there are a number of benefits to using a credit card for purchases. If the same benefits were available to people who only use debit cards then people would just use their own money instead.