zero_to60

in light of the interest rate rises yesterday it's got me thinking about 'debt'

If you have assets such as cars that are worth more than the money you owe, although this is strictly speaking debt would you consider it to be so as in theory if you wanted to you could be debt free as quickly as it takes to turn the asset into cash

S2000Mike

Being in debt would be owing more than you have, so in your example, assuming you could get the expected price for your assets, you wouldn't be in debt.... I think!

Lurking Lawyer

Being in debt simply means owing someone something -nothing more, nothing less.

Whether you have the assets to cover the debt is irrelevant to whether you are in debt - that's simply a question of whether you're insolvent or not.

Richieh

I'm not sure the country's debt problem is the issue it's made out to be. I'm sure it's simply the fact that house prices are higher, and therefore people have bigger mortgages and more debt. As long as interest rates remain low.

Whilst on interest rates, this idea of raising interest rates to control house prices is dumb. The cost of buying a house isn't the

AquilaEagle

in corporate finance...

Debt is GOOD, Cash is BAD



I like that idea, think i might be good at it

Prestonian

I think you're referring to either net assets or net debt. An asset sold off quickly to pay off debts may not get what could otherwise be obtained if you could wait to sell. Hence why bankrupt stock goes so cheaply.

Ryn

I know what you are getting at zero, you are saying are you in debt if you owe a few quid on your credit card same as if you owe a few thousand. A few quid you could sell something and pay it if you really really had to, a few thousand maybe not.

But i guess anything you owe is debt, and what the government is worried about is people using their credit cards to pay household bills and getting further in debt etc etc just to have a roof over their head.

If interest rates went up another 2% I reckon i'd have to sell my S so I could afford my mortgage

zero_to60

all my borrowing is fixed, what concerns me is that my house is my pension too, I've sunk everything into it. I don't want rates to rise and cause the market to crash as it will wipe my equity out

Worrying times ahead I think

Lurking Lawyer

[QUOTE]Originally posted by zero_to60
what concerns me is that my house is my pension too, I've sunk everything into it.

mikerich

[QUOTE]Originally posted by Mark Turner