Definition of "debt free"

[busymom]

Tallguy: Congrats to you on being mortgage free!


You'll have to get back to us on how it feels to have a financially stress-free life! (I'm working towards the same goal.)

[❤ mollymouser ❤]

Jul 1, 2011 10:21:03 GMT -5 swamp said:

Debt free = having no debt. Living expenses put on a credit card that gets paid monthly isn't debt.

That's my definition.

No student loans.
No car payments.
No mortgage payments.
No credit card balances carried to the next month.

[❤ mollymouser ❤]

Jul 1, 2011 16:52:46 GMT -5 busymom said:

You'll have to get back to us on how it feels to have a financially stress-free life! (I'm working towards the same goal.)

Swamp ... it's nice.

[debtheaven]

At this point we have only rental debt (78K) on two small rentals (apartments). No consumer debt or (home) mortgage debt.

I agree that completely debt-free can be overrated. We sold a rental in February and could have paid off the 40K we owed on the other rental. It was tempting. But we would have had one less rental, and the rentals are a big part of our retirement plan. So we paid off our car, used the rest as a DP, and borrowed 40K more to "trade up" to a better rental.

PS Congratulations Tall Guy! I still feel great about not owing any money on our home; it's coming up to four years (Aug 2007).

[Deleted]

Even Dave Ramsey isn't debt-free if you include ongoing rent, utilities, property taxes, etc. To me, what's more important than being debt-free is having minimal ongoing obligations if my income went away. Example: my sister and BIL had a house on Hilton Head that cost $12K per year to insure (hurricane risk). Property taxes were $9K. So, even if you paid cash for the place, there's $21K per year off the top of your income. (They sold it at the top of the market to a couple of surgeons from Savannah who planned to use it as a vacation home. )

We do have a mortgage but at this point it's voluntary. At 3.75% (after we process the refi next month), it's silly to pay it off. I don't care what Dave Ramsey says. I like his approach to getting people out of debt and teaching them to live on less than they make, but beyond that I have some disagreements with him.

[tallguy]

Jul 2, 2011 8:43:22 GMT -5 @athena53 said:

Even Dave Ramsey isn't debt-free if you include ongoing rent, utilities, property taxes, etc.

But...but...nobody does....

Those are not debt. You may be accruing a liability, but you do not OWE anything until you are presented a bill for payment. And you are not yet responsible for any possible charges for later months because you have not yet accrued them. If you pay everything due at the time it is due, then you have not carried debt. Debt should only refer to a liability that is not paid in full.

My property taxes are due twice a year. I pay them twice a year. All of my recurring expenses (electric, utilities, phone, heat, auto insurance, etc.) are all on auto-pay and are paid on the due date. None of those are debt. To carry your argument to an extreme, one could be said to be in debt while they are sitting at the table in a restaurant being asked if they would like dessert or enjoying a post-prandial coffee while they chat. Ridiculous, don't you think?