What does debt free mean to you?

[Tiger926]

So, there have been several articles and news reports about the fact that household Canadian debt is at an all-time high, but no where in any of the reports does it clarify what debt they are talking about. It says that households are carrying approx. on average $150,000 in debt. This is what remains on our mortgage, and we are currently double paying, so we will have it paid off much earlier than the 25 year plan.

We only owe on our home, and have no CC debt (paid in full each month), cars are paid, DVC paid, no student loans, also have several savings accounts, investments/stocks, retirement funds, education funds and vacation account.

We don't say we are debt free as we still have a mortgage, so what do you consider debt free to mean? I see posts on here that say we are debt free, except for our home, and others don't clarify, so what does it mean to you?

Tiger

 

[MissDaisyofTexas]

I think truly debt-free is no debts and no mortgage. But I'd be happy being debt-free not counting the mortgage!

 

[Reddy]

debt-free - you only have to pay water, sewer, lights
cable and internet

 

[akcire]

Debt-free is just that, owing no one money.

Now, technically if you have and use a credit card you are never debt-free; since you will always owe that months charges (same scenario would apply with utility bills). For practical purposes in our modern society, I would say debt-free is no debt older than 90 days--if I go to the doctor, it takes about that long for them to generate a bill to me for my portion.

If I died now, my estate would have obligations from my living expenses generated as recently as today. They wouldn't be significant; but they would exist.

Even when we still had a mortgage, but had assets in the bank greater than our mortgage balance, I did not consider us to be debt-free--since I still had to make a payment every month and was left with an existing balance.

Those are just my personal thoughts.......

 

[Nicolepa]

The reports talk about credit card and loan debts, so I can't imagine that it counts mortgages, as $150,000 is not that much for double income families, and in cities like Toronto or Vancouver where real estate is astronomically high, that figure is very small.

But do you really think that people have $150K in non mortgage debt? If you are averaging households that are homeowners and renters that will bring down the average mortgage significantly.

 

[manning]

All I can say is you are one smart canadian couple!!!!

 

[PrincessBelle09]

I'd say that truly debt-free is no consumer debt, no loans, no mortgage. I would consider myself "debt-free except the house" before paying off a mortgage. But, any debt beyond a mortgage is not debt-free in any sense.

 

[Kathi OD]

I'd say that truly debt-free is no consumer debt, no loans, no mortgage. I would consider myself "debt-free except the house" before paying off a mortgage. But, any debt beyond a mortgage is not debt-free in any sense.

This.

We were debt-free 6 years ago. Then we went and bought a new house. A couple of years later, DH was laid-off for 2 years. We're no longer debt-free, and won't be for quite awhile.

 

[homedad]

was going to say everything paid off but house, but after reading pp i'd have to say everything but day to day living expenses....maybe one day!

 

[Colleen27]

I take it at face value - debt free means no debt at all, good or bad. I still qualify it when I talk about our own situation (we're "practically" or "may as well be" debt free) because we're not technically there yet; we have a mortgage on our rental house and even though the rent covers the payment, making it a zero sum game in our monthly budget, we're still responsible for that obligation. We have no credit cards, no student loans, no car notes, and no mortgage on our residence, but until we finally sell the old house we won't be completely debt free.

 

[dreamin_disney]

Debt free means no house payment, loans, creditcards or car loans BUT....

If your working on your debt like in my home to me debtfree means no creditcard debt, then once thats mastered on to the next level.... debt free will then be no car loans.....next level ....no housepayment...=ultra debtfree baby steps

 

[ancestry]

True debt free means owing no one money. However for me personally I would be perfectly happy with no credit card or personal/unsecured loan debt. I think is most cases a mortgage, and possibly a car loan are necessary evils. I consider us to be debt free when we have no credit cards or loan debt.

 

[deedeetoo]

I think that $150,000 average includes mortgages. There are many people that don't have mortgages, for example, older people who have been in their house for a long time and people who rent. Also, while mortgages in cities will be very big, mortgages in small rural areas will be much smaller. It all averages out.

 

[caledonia]

Debt free to me means all debt except my mortgage.Seems most people need a mortgage to buy a house but a car, a new camera or holiday on a credit card can be met by saving for them rather than adding debt.

We will never be debt free as long as governments borrow at the expense of tax payers.

Roll on the day when we are debt free as a nation.

IAN

 

[J3nn78]

fully debt free is owning no one any money.

For now, I am happy to be consumer debt free. .

 

[Tiger926]

Sorry, fell asleep while on computer last night, so first time back.

Thanks for the discussion. It's interesting to see the different perspectives, and I guess your opinion will be coloured by your current financial situation.

Great discussion, Tiger

 

[sk!mom]

Debt free = no debt

If your debt free except for a mortgage, then I think that is worth mentioning since most people will have to take on debt to own a home so if that's your only debt then you're in good shape financially.

 

[DAD21]

Debt free to me is not owing on anything that carries interest. Interest is what gets people into trouble on several purchases.

 

[LisaTC]

I'd say you are pretty close to Debt Free. Your house is worth 300K and you only owe 150K, you have 150K in equity, so "theoretically" you are debt free or could be upon sale of your home. Unsecured debt has been the demise of many in this economy in the US and abroad. I don't think being debt free exists. You always have to live, pay bills that you don't always know how much they will be. You are always going to have to pay for something. My goal (nearly there) is mortgage only. I'm consolidating phones (cell/land) I don't have premium cable at all or the fastest internet available from the cable company, I don't have a mowing/yard service or housecleaning or need of mechanic (thanks to DH's skills!) or carpenter, plumber or electrician (again thanks to DH's skills!) so I feel I think that has aided in our quest to be as debt free as humanly possible in this economic climate. We have retirement and are saving for DD's school. It's a trying time, to be sure!

 

[tnd]

To me debt free means not owing anything on long-term obligations like mortgages, cars, student loans, credit card balances for past spending, etc. You will almost always have accruing obligations, like property taxes, monthly bills, etc (for example, our water bill comes quarterly, so we have an obligation that is owed throughout that time).

I would assume lots of families have 150,000+ in total debt, including cars, mortgages, student loans, etc. We have way more long-term debt than that, but it's manageable because we don't have consumer debt. That said, being debt-free is not my current financial goal. My current goal is to have manageable levels of fixed expenses and limited variable expenses, so I can save enough money for the future, and balance it with getting to spend money on things which are truly important to our family.