Reply to: Debt Free

[deano]

I only have the morgage, so whenever my mother-in-law pops her clogs (sooner rather than later, please!) and we can flog her house to pay off my remaining mortgage is when I'll be debt free.

Hopefully there will be enough left over to pay the remaining school fee's for the kids and then I can go part-time shelf-stacking until the pensions kick-in.

Job done.

[Doggy Styles]

I don't necessarily see my mortgage being a debt either. I can easily afford the repayments and even in this market, the value of the house covers the outstanding mortgage on it.

So by that definition a family with 200K mortgage is not in debt, as long as the house will sell for more than that.

That house of yours - who holds the deeds to it?

What happens if you stop making repayments?

Where will you live if you sell it?

Would you want to sell it?

[NetwkSupport]

Fun though wasn't it - if you could go back and do it all again would you?

Acually no, it was more a case of:

Salary - mortgage + bills + other outgoings = deficit therefore live and eat on credit cards.

How the hell people can live properly on a permie wage is beyond me

[Jog On]

Same here Platypus, far too much living beyond my means on a meagre 21k salary before i started contracting 2 yrs ago. We should start up a BR contractors club!

Fun though wasn't it - if you could go back and do it all again would you?

[NetwkSupport]

Well done !

I fear it's too late for me... seems probable I'll have to go BR this year

I think you can consider yourself debt free when the all debts except mortgage are paid, just like anyone renting their property. Having a mortgage is essentially just renting from the bank/building soc anyway IMO.

Same here Platypus, far too much living beyond my means on a meagre 21k salary before i started contracting 2 yrs ago. We should start up a BR contractors club!

[expat]

debt free means "I have no debt", why is this so hard to understand.
if you have borrowed money you have not paid back yet you have debt.

Yes but if you read beyond the literal, people may be trying to say something else.

E.g. if you have 100k in your account and you also have a 100k loan, whereas I have a 100k loan with nothing in the bank, we are not in the same position. OK it would be wrong to say that you have no debt: would it be OK to say that you have no net debt, and I do? I think this is one of the things that people mean when they discount a mortgage as debt.

Again: you have an interest-only mortgage on a house, for 1000 per month. I pay rent of 1000 a month on a similar house. In this case, literally, you have debt and I do not. But in some ways, we are in the same net position: paying 1000 a month for somewhere to live, with (hopefully) no other net effect. I think this is another thing that some people mean when they discount a mortgage as debt.

Both of these ideas seem to have some merit to me. Of course there is a third, that people can not practicably pay off their mortgage soon, so they go into denial about its really being debt. That does not have the same merit.

[DimPrawn]

and even in this market, the value of the house covers the outstanding mortgage on it.

Yeah, they'll be queuing up to buy it.

[ThomasSoerensen]

Depends on how you define debt.

I look at debt as having an obligation to service a financial liability with equity (either liquid or otherwise) that you do not have. I.e. you've spent more than you have, or can afford.

So I do not personally have any short term debt apart from a small balance on my CC but I have cash in the bank that can pay it off in a stroke.

I don't necessarily see my mortgage being a debt either. I can easily afford the repayments and even in this market, the value of the house covers the outstanding mortgage on it.

debt free means "I have no debt", why is this so hard to understand.
if you have borrowed money you have not paid back yet you have debt.

[Svalbaard]

Depends on how you define debt.

I look at debt as having an obligation to service a financial liability with equity (either liquid or otherwise) that you do not have. I.e. you've spent more than you have, or can afford.

So I do not personally have any short term debt apart from a small balance on my CC but I have cash in the bank that can pay it off in a stroke.

I don't necessarily see my mortgage being a debt either. I can easily afford the repayments and even in this market, the value of the house covers the outstanding mortgage on it.

[gingerjedi]

Have a look on http://www.moneysavingexpert.com/ I know you have to look at that smug git Martin Lewis's picture every time it you visit but there's loads of 'debt free wannabe' posts in the forum.

It feels more like a support group but there are quite few tips and tricks to give you ideas if you're serious about being free.

I keep meaning to give the free bingo sign up offers a go as it yields a free £200 on average if you're persistent... but I'm a bloke so I can't bring myself to play bingo.

[Jog On]

Also aiming do be debt free by mid 09, got a spreadsheet and a plan. I'm putting debt free before warchest atm as I've more than had enough of paying interest on the owed debt.

No mortgage and doesn't look like I'll be getting one any time soon, so aiming to get one around late-end of 09 wwith 0 debt, decent warchest and some other assets on the 'balance sheet'

I'm constantly shocked by the number of high-paid contractors who have credit card debts, car loans and the like.
What part of "live within your means" don't you get?
Or are you so brainwashed by the consumer society and keeping up with the Jones's?

Only been a contractor for a couple of years, been thoroughly irresponsible for a lot longer

[sasguru]

A mortgage is a debt like any other borrowing, and the only debt that's justifiable IMHO. And it should be paid off as soon as you are able.

I'm constantly shocked by the number of high-paid contractors who have credit card debts, car loans and the like.
What part of "live within your means" don't you get?
Or are you so brainwashed by the consumer society and keeping up with the Jones's?

[Platypus]

Not true. When you factor in the value of money (ie inflation), the real value of debt reduces over time as inflation impacts it - so in real terms the value of that debt reduces.

Even with credit card companies charging upwards of 20% APR ?

[PM-Junkie]

Your debt will only ever grow.

Not true. When you factor in the value of money (ie inflation), the real value of debt reduces over time as inflation impacts it - so in real terms the value of that debt reduces.

[EternalOptimist]

Well done !

I fear it's too late for me... seems probable I'll have to go BR this year

I think you can consider yourself debt free when the all debts except mortgage are paid, just like anyone renting their property. Having a mortgage is essentially just renting from the bank/building soc anyway IMO.