what is debt exactly?

iVillage Member
Registered: 04-04-2003
what is debt exactly?
16
Tue, 01-18-2005 - 8:38pm

i just wonder...

when you hear people on TV, or ever us here on the boards say they are $50,000.00 in debt what are they condisering debt?

do you count what you have to pay off on your house? or your cars? i know that tuition can be debt- but that puts you towards a good goal of improving your value in the market... so isn't a mortgage good too? and i know that credit cards are obviously debt... but what about money borrowed from a retirement fund?

i just wondered what is considered "debt" and if everyone is using the same terms...

(just FYI, if you don't count cars DH and i only have $900.00 of credit card debt. we rent, have no school debt (anymore) and have minimun other random outstanding bills (-$20 for a doctors appt, $17 for a scrapbook bill, etc...) i think that is exceptionaly good. but then our cars put us up over $25k, and we borrowed from his plan once for $3,000.... so then we'd be closer to $30k in debt... but that just seems wrong when we only have two credit cards and pay over the minimun on EVERYTHING to pay it all off.... $900 vs $30,000.00 -see my confusion?)

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iVillage Member
Registered: 11-13-2004
Tue, 01-18-2005 - 9:24pm
I guess I count everything. I'm not really worried about my good debt, but I think you are supposed to count all non-mortgage debt. So basically everything but you home loan. Others may count the home loan too, but I don't. Hope this helps.
iVillage Member
Registered: 05-30-2003
Wed, 01-19-2005 - 12:21am

I can see how you would be confused, lol.

I count it all-if I owe it, it's debt. Even if it's to the retirement plan, because it has to be paid back.

Sometimes that's a very scary number to face.

Personally, I don't think there is 'good debt'. Yes, our school loans are helping us to get an education to better our work lives, but perhaps we could have come up with a better way to pay for it all.

I'd say it all comes down to your own definition of debt-I know that's not very helpful, sorry!

Lisa

iVillage Member
Registered: 09-25-2003
Wed, 01-19-2005 - 3:52am

We include everything. For us, this is - credit cards, student loan, a loan from my sister, and a car loan. I imagine it would be different if we had a mortgage, I might not count that.

But I think each person has their own definition. I don't think it really matters, so long as in the end, you know how much you owe.

Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Wed, 01-19-2005 - 7:43am
For the purpose of tracking my debt, I only count the unsecured debt (credit cards).

All my best,
Danni

Avatar for cl_beckymk
iVillage Member
Registered: 03-19-2003
Wed, 01-19-2005 - 9:31am

I think everyone counts everything different...but to me "If I *have* to pay it back - it's debt"...I borrowed money that I have to pay back.


Now, when I'm counting on paying off stuff, I don't really count the mortgage per se because well, that's a high number but I *would* count car payments because the cars depreciate and are worth less than what you paid for them usually the minute you drive them off the lot.

iVillage Member
Registered: 05-10-2004
Wed, 01-19-2005 - 10:47am
I only count the cc debt as that is my primary goal.

 

iVillage Member
Registered: 02-25-2004
Wed, 01-19-2005 - 10:58am

If it helps, when I talk about "my" debt I'm including, Our MBNA loan, dh's school loan, and an amex and a discover card.

I am NOT including our mortgage (I do consider it debt, but since it's going to take me 30 yrs. to pay it off it's a whole 'nother category by itself for me, lol) and I do NOT include our cars, basically because they're leased and I see them more as a monthly expense/bill than a debt. (Hopefully next Apr. when my car lease is up dh and I will be leasing OR buying a car with a smaller payment, IF we buy - than I will consider it a "debt" and no longer a monthly bill). Hope that made SOME kind of sense. :)

Avatar for gidgetgirl
iVillage Member
Registered: 03-26-2003
Wed, 01-19-2005 - 11:27am

I count it ALL as debt, but when I post about progress and talk about paying off debt before TTC, I mean what DH and I call the "non-house debt". For us, that is one car loan, one credit card, and two student loans.

I look at it this way- cars depreciate, just because you got an education doesn't necessarily mean you will make more money OR find a job in your field of study- it is money already spent and it may or may not help you in the long run. Vehicles ALWAYS depreciate and cannot be considered an investment. CCs, well, they aren't ever "good", even on a 0% APR. House debt is no-man's land for me- it is an investment (usually), but also your biggest monthly bill and debt (generally speaking), but I don't feel like it is a bad thing to have a mortgage. In fact, as long as one's mortgage is reasonable, a mortgage can be a very good thing to have.

That said, we have about $24k in non-house debt and 14.5 years left on our mortgage. We hope to get rid of the non-household debt in 18-24 months.

iVillage Member
Registered: 03-28-2003
Wed, 01-19-2005 - 12:38pm
I count ccs and dh's student loan, but not our car loans. (well, I count them as debt, but I don't put them into the figures.) They have set pay-off dates, and aside from paying extra or paying late, nothing is going to change when they are going to be paid off. Our non-car debt totals around $44,000. We have more debt than most because of years of dh not earning up to his potential, and we have moved three tmes in just over two years to get services for our daughter, who has autism. We are ok with where we are, as we are set to earn more money this year (by about $10,000) than we have in any other year. We bought both of our cars last year (one new, one used), and don't expect to have major repair bills, like we did up until we bought them. I used to only count ccs, but found that to be misleading myself. If we stay on the track we are on, the bills can be paid off in about 4 years. I don't know if that will happen, but it is our goal. We have been married 8 years, 4 years doesn't seem long to us. What puts it into perspective for us is that one year of our dd's therapy would have cost us $60,000 if we had stayed where we were at. I suppose if we count the car loans in our figures, we would have the benefit of seeing our debt figures decrease by another $470 per month, but it isn't our focus for now. Good question!
iVillage Member
Registered: 09-21-2004
Wed, 01-19-2005 - 2:15pm
I'm the same way. I don't count our car loan as debt cause it has a date in which it will be paid off. Plus we need a reliable vehicle in order to make money and survive so essentially to us, it is an investment. We only have one vehicle. We also buy a newer, although still used, vehicle and there is less money put in for maintanence and service. If we got a second car, which would be useful but not needed, then I would consider that a debt just because I don't work. My car payment is under $250 a month and the ins on it is quite reasonable esp compared to my camaro which I was paying $375/month plus an extra $35/month on ins. Now it never needed extra service or maintanence (just the norm) but still expensive. If I had no other debt, yes I would throw extra money to my car payment every month so I wouldn't be paying as much on it, but we haven't quite gotten to that point yet where we can buy a car up front.

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