Granny_Weatherwax Posted June 21, 2010 Share Posted June 21, 2010 what do you consider being debt free? Is it simply no credit card debt? Does carrying student loans count as debt? What about other consumer debt? DH and I recently became what we called debt free. We consider being debt free as in 'we do not owe money to anyone except for a mortgage'. We know other people who call themselves debt free because they do not have any of the major credit cards (MC, Visa, Discover) yet they owe money to stores like Menard's, Furniture Row, etc. Still others consider themselves to be debt free yet have things like medical bills and student loans. DH and I tend to follow Dave Ramsey so his idea of being debt free is what we consider to be the Gold standard. What do the rest of you think? Quote Link to comment Share on other sites More sharing options...
Daisy Posted June 21, 2010 Share Posted June 21, 2010 (edited) I'd love to have debt-free mean owning nothing. Period. I don't say we are debt-free but I do feel like we are practically there. In our case we have no unsecured debt. So we carry a mortgage and we even have a car payment (but it is small and a lot less than what the car is worth). If I owned more on my house or my car then what they were worth, I'd definitely not consider myself debt-free. Edited June 21, 2010 by Daisy Quote Link to comment Share on other sites More sharing options...
pqr Posted June 21, 2010 Share Posted June 21, 2010 No debts other than a mortguage and the value of the house must exceed what is owed. Quote Link to comment Share on other sites More sharing options...
jld Posted June 21, 2010 Share Posted June 21, 2010 To me, debt-free means no debt at all. I didn't realize there was a different definition. Quote Link to comment Share on other sites More sharing options...
Heatherwith4 Posted June 21, 2010 Share Posted June 21, 2010 I consider it to mean owing no money to anyone, including the mortgage company. However, when the day comes that we owe only on the house, we will be celebrating big time! :party: Quote Link to comment Share on other sites More sharing options...
Pamela H in Texas Posted June 21, 2010 Share Posted June 21, 2010 no debts except the mortgage though I have mixed feelings about student loans. We're just starting DR and we're so excited. We have our first month ready which includes our BEF and paying off the first 10 (yes TEN) smallest debts. Hopefully month two will have us do the next four or five debts. We have 20 debts in all (counting student loans). We don't have any credit cards. We knew we weren't responsible enough for that! Honestly, for the first time ever, I have financial HOPE. So cool :) Quote Link to comment Share on other sites More sharing options...
LauraGB Posted June 21, 2010 Share Posted June 21, 2010 I consider "debt free" to mean not owing anyone any money at all. Quote Link to comment Share on other sites More sharing options...
Momma2Many66 Posted June 21, 2010 Share Posted June 21, 2010 I consider debt free to mean no debt besides the mortgage. No car loans, no credit card debt, no student loans, no outstanding bills owed to businesses, friends or family. Quote Link to comment Share on other sites More sharing options...
MIch elle Posted June 21, 2010 Share Posted June 21, 2010 Debt free is just that - NO debt at ALL including the mortgage Quote Link to comment Share on other sites More sharing options...
Granny_Weatherwax Posted June 21, 2010 Author Share Posted June 21, 2010 no debts except the mortgage though I have mixed feelings about student loans. We're just starting DR and we're so excited. We have our first month ready which includes our BEF and paying off the first 10 (yes TEN) smallest debts. Hopefully month two will have us do the next four or five debts. We have 20 debts in all (counting student loans). We don't have any credit cards. We knew we weren't responsible enough for that! Honestly, for the first time ever, I have financial HOPE. So cool :) Good luck. KUP so we can cheer for you when you get there!! Quote Link to comment Share on other sites More sharing options...
Lawana Posted June 21, 2010 Share Posted June 21, 2010 I second the notion that debt free means owing money to no one, not even for a mortgage. I think that it is a common idea to exclude the mortgage, because the value of the house "covered" the debt. If one needed to, one could sell the house and pay off the mortgage. The current economic situation, with houses lousing value, resulting in a mortgage greater than the resale value, brings out the problem with that line of thinking. Quote Link to comment Share on other sites More sharing options...
dragons in the flower bed Posted June 21, 2010 Share Posted June 21, 2010 I would include the mortgage as debt, as well as student loans, medical bills, credit cards. I know some people only count credit cards as debts, but that seems silly to be. If you owe, you owe. Quote Link to comment Share on other sites More sharing options...
cathmom Posted June 21, 2010 Share Posted June 21, 2010 To me, debt-free means no debt at all. I didn't realize there was a different definition. :iagree: No credit cards, no store cards, no student loans, no medical bills, no mortgage, no home equity loan, usw... Quote Link to comment Share on other sites More sharing options...
Mynyel Posted June 21, 2010 Share Posted June 21, 2010 Debt free? /snort whats that? We are never truely debt free. We have to pay taxes and while not considered a debt it is something that you owe every year. We will never be debt free. We have student loans that we will be paying off for at least the next 20 years. .......WELL if we could make about 35k a year then we could pay lots of stuff off!! :D Quote Link to comment Share on other sites More sharing options...
nono Posted June 21, 2010 Share Posted June 21, 2010 I consider debt-free to be all bills paid in full under 30 days (or shorter if those are the terms) and no installment loans, including a mortgage. Quote Link to comment Share on other sites More sharing options...
LuvToRead Posted June 21, 2010 Share Posted June 21, 2010 I agree with the majority - debt free means no debt, including mortgage. I consider us debt fee, but we do charge Netflix to our CC, so I guess technically, we have a small debt every month. Quote Link to comment Share on other sites More sharing options...
LibraryLover Posted June 21, 2010 Share Posted June 21, 2010 Barring a lottery win (and I don't play, wha!), I won't be dept- free until I am elderly (mortgage). Quote Link to comment Share on other sites More sharing options...
angela in ohio Posted June 21, 2010 Share Posted June 21, 2010 We have just the mortgage and the student loans from long, long ago that we are paying in a trickle for 80 years. I consider that "close neough to debt free." :001_smile: We pay cash for everything (cars included.) Quote Link to comment Share on other sites More sharing options...
cmarango Posted June 21, 2010 Share Posted June 21, 2010 Debt free=no debt whatsoever We should be there in about 4 years if I can keep aggressively paying off our mortgage. I hope that there is no major disaster in our lives before then. Fingers crossed. Quote Link to comment Share on other sites More sharing options...
Tap Posted June 21, 2010 Share Posted June 21, 2010 Debt free means I do not owe anyone (inc mortgage, student loans or private debt) and I have the money to pay my taxes. I say we are 'debt free except the mortgage'. And in essence we have more in investments than our mortgage note, so we could be debt free but our investments are still gaining more than our interest, so we stay put. Quote Link to comment Share on other sites More sharing options...
Sebastian (a lady) Posted June 21, 2010 Share Posted June 21, 2010 I felt debt free when we paid off credit cards at the end of the month and our recurring payments (car/mortgage) were covered by our monthly budget without scrimping or juggling. However, we've not had a car payment for over 10 years and we paid off our house last year so now we really have NO debts. Not sure what Dave Ramsey's standard is. I do feel like a mortgage payment could be the equivalent of a rent payment. On the other hand, if your employment situation changed, it could be very hard to downsize and move if you can't find a buyer. Quote Link to comment Share on other sites More sharing options...
Mommyof4ks Posted June 21, 2010 Share Posted June 21, 2010 I consider debt free owing nothing to anyone. Sadly I don't think we will ever get there, but that is what we are aiming for. Quote Link to comment Share on other sites More sharing options...
keptwoman Posted June 21, 2010 Share Posted June 21, 2010 I would consider it not owing anyone, including the mortgage. We have just started DR and DH spreadsheeted our "debt repayment snowball" it's amazing to see how it works, it's exciting to have a plan which isn't doom and gloom! We'll have nothing but the mortgage in a shorter period than we ever felt was possible. I'd love to then hit the mortgage, but unfortunately we will have kids heading for Uni, so the mortgage will have to live a little longer. Quote Link to comment Share on other sites More sharing options...
Prudent Posted June 21, 2010 Share Posted June 21, 2010 I consider debt-free to mean having no debt. I don't know what a mortgage or a student loan is if not debt. Quote Link to comment Share on other sites More sharing options...
tatertotschool Posted June 21, 2010 Share Posted June 21, 2010 what do you consider being debt free? Is it simply no credit card debt? Does carrying student loans count as debt? What about other consumer debt? DH and I recently became what we called debt free. We consider being debt free as in 'we do not owe money to anyone except for a mortgage'. We know other people who call themselves debt free because they do not have any of the major credit cards (MC, Visa, Discover) yet they owe money to stores like Menard's, Furniture Row, etc. Still others consider themselves to be debt free yet have things like medical bills and student loans. DH and I tend to follow Dave Ramsey so his idea of being debt free is what we consider to be the Gold standard. What do the rest of you think? I agree, but I am a Dave Ramsey follower. On Debt Free Friday's, you may call in and scream "we're debt free" if you've paid everything but the house. I guess this is because paying rent, and paying a mortgage is all the same thing. We've been doing Dave for 2 years and we're to a point where we've started using one of his financial coaches. The only debt I still have is massive student loan debt, so I guess I'm better in my own mind than people who are slaves to credit cards and furniture companies. Jokes on me of course, because that debt can be bankrupted. Student Loan debt can not! Quote Link to comment Share on other sites More sharing options...
tatertotschool Posted June 21, 2010 Share Posted June 21, 2010 I would consider it not owing anyone, including the mortgage. We have just started DR and DH spreadsheeted our "debt repayment snowball" it's amazing to see how it works, it's exciting to have a plan which isn't doom and gloom! We'll have nothing but the mortgage in a shorter period than we ever felt was possible. I'd love to then hit the mortgage, but unfortunately we will have kids heading for Uni, so the mortgage will have to live a little longer. You don't include your mortgage in your debt snowball. You get your 1000 in the bank, do your debt snowball- then fully fund your emergency fund (3 - 6 months in savings). Once you have that cushion, you start working on paying off your mortgage, funding your retirement, and building college funds all around the same time. My DH and I could have our house paid off in 10 years if we put it in our snowball, but we would miss out on all that compound interest in retirement and college funds. We've actually taken a break from our snowball now that we just have the student loans. He's been laid off 4 times in 2 years so we're going to fully fund our emergency fund and go back to our snowball. Houses aren't necessarily debt, that's why we have things like equity. My house is worth more than I owe, even in this horrible housing economy. You always have to pay for a place to live- of course, unless you own your home, and you're not going to own your home if you aren't paying on a mortgage. (Unless you're living in your parents basement mooching off of them to save for your own home). So, that's what it is- if it's not debt. Quote Link to comment Share on other sites More sharing options...
tatertotschool Posted June 21, 2010 Share Posted June 21, 2010 I felt debt free when we paid off credit cards at the end of the month and our recurring payments (car/mortgage) were covered by our monthly budget without scrimping or juggling. However, we've not had a car payment for over 10 years and we paid off our house last year so now we really have NO debts. Not sure what Dave Ramsey's standard is. I do feel like a mortgage payment could be the equivalent of a rent payment. On the other hand, if your employment situation changed, it could be very hard to downsize and move if you can't find a buyer. Debt free is everything but the mortgage. Once you pay off your mortgage- you're in what Dave calls Financial Peace! Congratulations! Quote Link to comment Share on other sites More sharing options...
Nestof3 Posted June 21, 2010 Share Posted June 21, 2010 Debt-free to me means no mortgage, no car loans, student loans and no credit card debt. Quote Link to comment Share on other sites More sharing options...
elegantlion Posted June 21, 2010 Share Posted June 21, 2010 I include the mortgage in debt too. Having two cars that are paid for still feels REALLY good, even if we're not completely debt free. Quote Link to comment Share on other sites More sharing options...
Gooblink Posted June 21, 2010 Share Posted June 21, 2010 It might be fair to call yourself "debt free" if you have a postive net worth. That is, if you could liquidate your assets, pay off any debts and still be in the black. Quote Link to comment Share on other sites More sharing options...
Melissa in Australia Posted June 21, 2010 Share Posted June 21, 2010 Dept free= no dept at all. I am dept free:party: everything paid for, including the house. Both my husband and I are misers, we would rather not eat than have a debt. I am currently studying at uni, I am so far managing to pay for each unit as it comes up. Quote Link to comment Share on other sites More sharing options...
Peela Posted June 21, 2010 Share Posted June 21, 2010 To me, debt-free means no debt at all. I didn't realize there was a different definition. :iagree: Debt free means free of debt. Even a mortgage is debt. However, it may be intelligent debt (or it may not). We live a debt free type of lifestyle mostly- we buy cars, furniture etc always with cash. Quote Link to comment Share on other sites More sharing options...
LaissezFaire Posted June 21, 2010 Share Posted June 21, 2010 For me debt-free means no debt whatsoever except mortgage. I guess that is not totally debt free but I would feel free with just the mortgage...and we are close to that now. Quote Link to comment Share on other sites More sharing options...
Hannah Posted June 21, 2010 Share Posted June 21, 2010 I consider debt-free to be all bills paid in full under 30 days (or shorter if those are the terms) and no installment loans, including a mortgage. This It might be fair to call yourself "debt free" if you have a postive net worth. That is, if you could liquidate your assets, pay off any debts and still be in the black. Yes, it would sometimes makes sense to have a small mortgage if other easy to liquidate (by which I mean under 30 days) investments are earning more interest than the mortgage interest rate. Quote Link to comment Share on other sites More sharing options...
keptwoman Posted June 21, 2010 Share Posted June 21, 2010 You don't include your mortgage in your debt snowball. You get your 1000 in the bank, do your debt snowball- then fully fund your emergency fund (3 - 6 months in savings). Once you have that cushion, you start working on paying off your mortgage, funding your retirement, and building college funds all around the same time. My DH and I could have our house paid off in 10 years if we put it in our snowball, but we would miss out on all that compound interest in retirement and college funds. We've actually taken a break from our snowball now that we just have the student loans. He's been laid off 4 times in 2 years so we're going to fully fund our emergency fund and go back to our snowball. Houses aren't necessarily debt, that's why we have things like equity. My house is worth more than I owe, even in this horrible housing economy. You always have to pay for a place to live- of course, unless you own your home, and you're not going to own your home if you aren't paying on a mortgage. (Unless you're living in your parents basement mooching off of them to save for your own home). So, that's what it is- if it's not debt. Yes, I understand all that :) But mortgage free still means needing less money to live on and sooner that DH can be slightly less tied to his employment. Plus our mortgages in Australia are at substantially higher interest than yours over there, so it can be a balancing act whether retirement saving or paying off the mortgage provides the best long term use of the money. Also, legally in Australia, an employment package includes an additional 9% on top of your salary (and many employers pay more than that, including DHs) that your employer pays into a retirement fund that is inaccessible until you hit 60? 65? So we do have some, but not as much as if we'd been here more than a few years. However, it's all moot because we will be funding University after the full emergency fund is in place. Quote Link to comment Share on other sites More sharing options...
Amber in AUS Posted June 21, 2010 Share Posted June 21, 2010 To me being debt free is exactly that, not owing money to any one at all for anything at all. Quote Link to comment Share on other sites More sharing options...
Heather in Neverland Posted June 21, 2010 Share Posted June 21, 2010 I consider it debt-FREE as in you owe NO debts. We are there except for my student loan which I will probably be paying off for the rest of my life. :tongue_smilie: Quote Link to comment Share on other sites More sharing options...
Ester Maria Posted June 21, 2010 Share Posted June 21, 2010 Debt free means NO debt of any kind (mortgage, loans, credit card debts). Some people also count as debt free those with the value in real estate that is higher than the debt, but those things are tricky, as the value of either money or real estate is not quite fixed, so I go with the "not owing anything to anyone" definition. Quote Link to comment Share on other sites More sharing options...
Catiejoy Posted June 21, 2010 Share Posted June 21, 2010 I echo debt free means no debt, therefore we are not debt-free. Our house is paid, not sure what it is worth- is that is important? unless you have a qualified buyer, just a thought. Our cars are paid for also, but we have unsecured debt from a now defunct business. On the other hand, of the four cards, we have paid all but one. (Liquidated a savings account to do so, but the stress reduction it brought was worth it) Quote Link to comment Share on other sites More sharing options...
Carrie12345 Posted June 21, 2010 Share Posted June 21, 2010 Debt free means debt FREE- $0 owed to anyone. Still, I would be perfectly content to be mortgage-only, within certain limits. Quote Link to comment Share on other sites More sharing options...
Lizzie in Ma Posted June 21, 2010 Share Posted June 21, 2010 And in 36 more months we will finally be there!! Quote Link to comment Share on other sites More sharing options...
Granny_Weatherwax Posted June 21, 2010 Author Share Posted June 21, 2010 Thanks for the replies. Here is a question: Are renters who sign a lease agreeing to pay $X for X months in debt? Are the people who live on a month to month lease the only ones truly out of debt? Quote Link to comment Share on other sites More sharing options...
nono Posted June 21, 2010 Share Posted June 21, 2010 Our house is paid, not sure what it is worth- is that is important? unless you have a qualified buyer, just a thought. :iagree: I always say that "My house is worth nothing until there's an offer on the table." (And, yeah, I'm sitting on a piece of real estate that's currently worth nothing. :) Luckily, it has no mortgage.) Quote Link to comment Share on other sites More sharing options...
fairfarmhand Posted June 21, 2010 Share Posted June 21, 2010 I consider it to mean owing no money to anyone, including the mortgage company. However, when the day comes that we owe only on the house, we will be celebrating big time! Our plan is to pay off our house in 4 years. The end is in sight!!! I will be 35 and dh will be 40. Switching to a 15 yr. mortgage was a great idea! Quote Link to comment Share on other sites More sharing options...
KellyinAr Posted June 21, 2010 Share Posted June 21, 2010 To us, debt free is not owing any money for anything including your home. My husband and I have been working to achieve the goal of being debt free and this year, God willing we will achieve it. We bought a home with cash in April (through God's Providence), and plan to pay off his truck by the end of the year or early next year. It can be done! Now if we didn't have to buy all those books..............:001_smile: Quote Link to comment Share on other sites More sharing options...
KrissiK Posted June 21, 2010 Share Posted June 21, 2010 I agree - debt free is owing nothing on anything. We were on the fast track to getting our mortgage paid off (our only debt), but then dh got furloughed and we're living on 80% of his income. We can make our mortgage payment fine and everything else is fine, we just can't be making those big extra payments like we were. But, still, we're not in bad shape.:D Quote Link to comment Share on other sites More sharing options...
Heather in Neverland Posted June 21, 2010 Share Posted June 21, 2010 Thanks for the replies. Here is a question: Are renters who sign a lease agreeing to pay $X for X months in debt? Are the people who live on a month to month lease the only ones truly out of debt? Hmmm...good question. if you have a year lease then you are obligated to pay it and therefore you do "owe" a debt. A month-to-month would be different, I think. Never thought about that. Quote Link to comment Share on other sites More sharing options...
JumpedIntoTheDeepEndFirst Posted June 21, 2010 Share Posted June 21, 2010 Debt free would mean owing no money to anyone. That said-I have never been particularly concerned about owing on a mortgage payment. That is debt I expect to have. So-as long as that mortgage payment is within a reasonable and realistic budget... I consider myself effectively debt free when that is all I owe. ETA: Keeping in mind that I pay mortgage instead of rent and as rent comes with an obligation it too is a form of planned debt. To consider myself truly debt free I would also not be paying rent. JMHO. Quote Link to comment Share on other sites More sharing options...
The Girls' Mom Posted June 21, 2010 Share Posted June 21, 2010 I consider debt free to be owing NOTHING to anyone. Even being under a lease is a form of debt to me. If you are renting, but don't have a lease term...then it's not debt. We are currently 'debt free' with the exception of our house rent, which is a temporary situation for us until our house sells. We owe nothing else on anything: cars, credit card, medical, mortgage...nada. We plan on keeping it that way if at all possible. I don't consider it debt free if you still have a mortgage. Quote Link to comment Share on other sites More sharing options...
Parrothead Posted June 21, 2010 Share Posted June 21, 2010 To me, debt-free means no debt at all. I didn't realize there was a different definition. This. Quote Link to comment Share on other sites More sharing options...
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