Debt-Free Definition

Tixy

quantic wrote: »

I think we need a new a new state which is neither "in debt" or "debt free", I don't think the two of them alone quite cover it.

A net asset position then? Its definitely something I am conscious of in addition to the level of my debts.

PinkPoppies

For the purposes of this board I think the definition of debt-free is a personal thing as it's different for lots of people depending on their situation and mindset.

I don't really don't think it matters a jot so long as peoples' varying definitions help them remain focused, and motivated towards a positive goal.

Personally, I don't include our mortgage debt in my current definition on this board, although our attention will swiftly switch to it once we have paid off our unsecured debts. I'd like to think I can still see the bigger picture, but right now we have enough to be getting on with so it makes sense to 100% focus on the unsecured stuff and I'm looking forward to moving to the MFW board when the time comes.

Roundthebend_2

I think it is a very personal thing.
I count our mortgage as debt. We had (still have I suppose) high equity on our property, a year ago we got into trouble with credit card debt, I had to quit my job and our car broke and I couldn't afford more than the minimum repayments for a long time. So I put it into the mortgage. Yes, I will be paying a lot more than the original debt but needs must at the time. For this reason, my mortgage is debt to me

Fruit_and_Nut_Case

Tixy wrote: »

A net asset position then? Its definitely something I am conscious of in addition to the level of my debts.

Yes, Tixy, that's quite a useful way of looking at things and is another way of stating one of the options in my OP.

Fruit_and_Nut_Case wrote: »

• having assets in excess of liabilities?

Thanks to everyone who has responded. With hindsight, perhaps I should have added a Poll to this.

Windofchange

To me, I have debts that I am worried about, and those that I am not. I invested a lot of money into retraining a few years back, and although that is a debt, I don't see it the same way as I see the credit card bills for money I have wasted on holidays and going out.

I will consider myself debt free once my credit card debt is paid off. That then leaves my student loan and a small personal loan ticking away which is money I spent on my future. I guess I would include a mortgage in that same breath if I had one. It is money that you haven't wasted per se, but money that is invested in your future.

The other thing is the credit card debt is obviously costing me lots per month, whereas the other debt is not - student loan 2% p.a and personal loan just under 7% pa I think.

Anyway, those will have trickled away in the next two years or so, and then I truly will be debt free - well assuming my plan to clear the remaining 8k of my debt in 2015 goes to plan!

Sazzie23

It's great discussion point - whatever your view, it makes you think.

Jagraf

I consider a mortgage being a debt. You owe money to the bank and its not your house until the money is paid back, then you get the deeds and ownership is yours. Until then, the property is not yours and belongs to the bank.

katsu

Martin himself distinguishes between good debt and bad debt.

We counted ourselves as debt free when we cleared all our non-mortgage debt.

dw1

What are people's thoughts on income-contingent student loans as debt?

On paper mine's a very big debt - still over £40k the last time I checked - but the way it's paid back it doesn't feel like having one. Repayments are proportional to my income, if I ever earn below the income threshold I'll pay nothing, and at the rate I'm currently paying it back the balance will get written off in 20 years time before I've fully paid it.

Unlike any other debt, if I pay more each month it'll actually cost more in the long term, not less. So in many ways it's not like having a debt at all, it's more like a tax.

greensalad

dw1 wrote: »

What are people's thoughts on income-contingent student loans as debt?

On paper mine's a very big debt - still over £40k the last time I checked - but the way it's paid back it doesn't feel like having one. Repayments are proportional to my income, if I ever earn below the income threshold I'll pay nothing, and at the rate I'm currently paying it back the balance will get written off in 20 years time before I've fully paid it.

Unlike any other debt, if I pay more each month it'll actually cost more in the long term, not less. So in many ways it's not like having a debt at all, it's more like a tax.

Yeah, I'm completely torn by this too. I have about £25k in student loan debt.

It's not like other debts. It's more of a tax. I have no say in the matter really. It's kinda like saying income tax is "debt" to the government every month, isn't it?

I don't count SL as debt.

A mortgage I probably would as I actually would pay it out of my bank every month, and if I lost my job it would affect me. But I just see student loan the same as NI, or some other such "bill" that gets paid on my behalf.