in other words...if i owe money on my mortgage, credit cards, car
loans etc but the value of my assets is greater than the debts.  Am i
in debt?

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Clarification of Question by jlaperch-ga on 13 Jul 2005 07:24 PDT

thanks all...was a philosophical question more than anything
else...last response was kinda along my line of thinking..


now the bigger question...am i 2 more dollars in debt to the people who answered?

No offense, but from the title of this question, I think you know the
answer to your own question. Yes, if you are in debt, then you are in
debt.  Having the means to pay off a debt doesn't mean the debt
doesn't exist.

guess i'm trying to figure for no particular reason other than
boredom...if i am one of those people who every other internet ad and
finanical column speaks to or am i...maybe just cash poor.  I.E.  I
have no money left over at the end of the month but worse came to
worse i could liquidate assets and wipe out all my debt.

You are talking about "cash flow", cash receipts versus cash payments
within a period.  If you have to liquidate assets or increase debt to
make ends meet, it is a negative cash flow, obviously not a good thing
on a regular basis.

Yes, you "are in debt", and one of the reasons lenders are willing to
extend credit to you (mortgage, cards, car, etc.) is because they
recognize that you do have sufficient assets:  the house for the
mortgage, a lien on the car for that financing, which gives each
lender a specific claim on assets that should cover his loan.  The
card companies and bank are looking at your cash income to eventually
cover their loans, but they probably have also considered that you
have a house  - even with a mortgage -  which indicates that you are
probably going to stay around and be a good citizen and pay your
debts, even if it hurts a little.

Just a thought...

There's no real way to stay out of debt. Say you pay off all your
debts, to celebrate, you go to a restaurant. You order, the meal
comes. For the duration of the meal, you are in debt for the cost of
that meal and it's preparation, and not so tecnically, a tip for the
good service of the waitperson that served you.

~~Cynthia

Yeah Cynthia-ga, that is just the way I feel ...  :) Myoarin

add up all your  assets (Money in Bank accounts, Value of your car,
Value of your house, other stuff you may own e.g. coin collection, dvd
collection etc.)

Add up all your debts (mortage, outstanding car loan, credit cards etc.)

Now subtract your debits from your assets. The result is your Equity.
If it is positive you are OK. If it is negative then you ARE in debt.

This will change in time.

Also  remember that values of some assets can change for the good.

Someone who bought a house in central London 5  years ago and has a took
a Mortgage of 500000 pounds are probably in a very good equity situation. 
Even if they have made little progress in paying off the mortgage the
increase in value of the house may more than compensate for any other debts 
outstanding including the Mortgage.
DPRK007