Posted by Tim Stobbs on February 22, 2008
Can you you smell the rant coming by this post’s title? If so, good for you.
I have to get this off my chest because I keep seeing in all over the place on blogs and discussion forums. You get people paying off their consumer debts and go around calling themselves ‘debt free’ when they are not. How on earth can you be debt free when your paying $1000’s or $10,000’s in interest every year on your mortgage?
So when are you debt free? When you owe nothing to anyone. Or when you are not paying one dime in interest to anyone. The reality is most people won’t be completely debt until just before they retire if you own a home. Otherwise it is possible to do this earlier if you rent instead.
So how did this little perversion come about? Well I’ve got a theory and you can let me know if it sounds alright. Generally with high debt levels in North America and everyone keeps digging deeper (including their government) the concept of having no consumer debt feel like winning the lottery. So everyone who does pay off their consumer debt feels it is a major event (by the way it is a very good start) and then they get carried away and call themselves ‘debt free’.
Yet calling people that feels wrong when the still have a mortgage. I personally got consumer debt free about 19 months ago. It is a good feeling, but come on people. Let’s call a spade a spade and call this ‘I’m consumer debt free’. Being truly debt free is a much more major event if you own a home. Let’s not confuse our terms to just make yourself feel better.
This post is now part of the 142nd Carnival of Personal Finance.