Debt-Free Definition

antrobus

katsu wrote: »

Martin himself distinguishes between good debt and bad debt....

There is a difference between;

(a) borrowing money to acquire a capital asset, and repaying that money over a term which is less than the expected useful life of said asset, and;

(b) borrowing money to finance day-to-day spending because your current income is insufficient to cover the bills.

The former might be deemed to be 'good'; the latter 'bad'. Or at least pretty dangerous.

The same difference applies to nations as well as individuals.

antrobus

dw1 wrote: »

..... So in many ways it's not like having a debt at all, it's more like a tax.

It is more like a tax.

It's the closest you can get to having a graduate income tax, without having a graduate income tax.

lizbec

A mortgage is a debt,sorry! If you were to fall ill or lose your job,you'd struggie to keep up with payments and could lose your home.
I actually don't have a mortgage ( it was paid off) but have a credit card debt so don't consider myself debt free. I agree with others that it's a subjective thing.

Stereochild

I am with all those with the view debt is debt.
Money owed on a credit card even at 0% interest is still money owed.
Debt free save the mortgage is what I understand DFW to be for most people here.
I don't have a mortgage and plan to be debt free by March and then like Pixie5740 I am going to be working getting into debt by getting a mortgage.

therixonator

I'm not sure it is a subjective thing, either literally or in terms of these forums, which is what these posts are about.

Literally, all debt is debt. You're not totally debt free until all your debt is paid back. For DFW forums, people exclude tactical CCs and Mortgages. You can progress to the MFW forum after DFW if that is your next prerogative.

sugarbaby125

CalumHeath wrote: »

Debt: a sum of money that is owed or due.

Whether one can afford to pay or chooses when to pay has no bearing over the definition; the same is true whether the interest rate is 0% over ten years or 1000% over seven days -and everything in between: until it's paid or written off it's a debt.

Anyone telling themselves that any amount of money owed for whatever reason isn't a debt is just being dishonest.

Hi CalumHeath, I could not agree more. I am debt free, as I do not owe anyone so much as a pound. I am a not a homeowner, so do not have a mortgage. I pay my rent monthly in advance and I also have almost a full month's rent in credit and I have over £1,000 in savings, so that in the future if there are any financial hardships or unexpected large purchases to be made, I can absorb them with no difficulty :j

LolaLemon

I would class all debt as debt, including mortgage and my scottish student loan.
But ihave only just came round to this way of thinking. well i always classed the mortgage as debt but it wasnt a pressing debt unlike the credit card, until my employer started playing funny !!!!!!s with me.

Since then im over paying the mortgage - even £5 a month saves me £50 on interest just now, and ive no interest being added on the credit card, so for me the mortgage is a bigger issue than the credit card. and that is what made me realise the mortgage is a very big debt instead of a serviceable debt.

Million_Percent

I think everyone has their own idea of what debt-free means to them for the purposes of participating in this forum. As I posted on a similar thread not so long ago, it is almost impossible to exist totally debt-free in our society. A mobile phone contract is a debt, utility bills are a debt until they are paid. Even rent is a debt because you usually have to sign a minimum term contract. But most people would consider these as normal living expenses rather than debt.

For me, DFW is about clearing long term credit cards and overdrafts that have built up over time where I am paying out money every month but no longer benefiting from what that money was spent on. Mortgage and car loan I'm less concerned with because they are asset backed and I see them as a monthly cost of having that asset. Of course if I had the money available I'd pay them off but I don't worry about them and I'm not going to take extreme measures to clear them quicker than I need to.

mc2705

I tend to think of things in the same way that this forum is set up. Being “debt free” to me would mean having no loans/overdrafts/credit card debts. The mortgage is separate and if I ever get to the stage of being “debt free” I will work harder towards being mortgage free.

enthusiasticsaver

I consider myself to be debt free although I use credit cards for cashback and repay in total each month and interest free credit to buy furniture and even a car once even though I had sufficient money in savings to buy it outright. I would define debt free as having no mortgage or credit card debt/loans etc that I could not cover by savings. Sometimes it makes more sense to leave money in a current account earning interest ( I have my instant access savings in Santander 123 accounts) and only repay a 0% debt when you have to.