Monday, June 14, 2010

Death Pledge

I wonder, if we had known that the title of the post is the original meaning of the debt burden we accept when we take out a home loan, or mortgage, would we have done it?

I think the answer is more than likely, yes, for most of us.

I was reading an article earlier about debt, and the author confided that despite all of her talk in the past about debt and budgeting and such, she still had debt. She didn't say what kind, but I know that the typical American response to debt is that things like a mortgage are not usually considered "debt." In fact, the money-management gurus will often ignore mortgage debt when discussing people's finances.

So, my question is, since Deus Ex Machina and I don't carry a credit card balance, and we don't have any car loans, and we don't have any personal or school loans, and the only revolving debt we have is our mortgage, are we in debt or debt-free?

Just wondering ....


  1. Debt is debt, and money owed is money owed. In other words, I consider a mortgage to be debt. Unfortunately, it is very difficult to avoid having mortgage debt if one wants to have their own home and not be a permanent renter. Perhaps people don't consider it debt because it is a long-term investment unlike something like credit card debt which can result from poorly thought-out purchases (or the unfortunate emergency or health crisis).

    It's really good that you have no debt other than the mortgage. More people should definitely strive for that.

    With a mortgage, the question becomes determining whether it is more worthwhile to put extra money towards paying it down more quickly or put any extra money towards making yourself more self-sufficient/sustainable. Get rainwater harvesting set up or pay extra towards the principle? Buy half a dozen trees that will provide fruit and nuts for years or make an extra payment?

  2. Our only real debt is the mortgage, and I still feel - acutely - like we're in debt. Though we use a credit card routinely, it's paid off in full every month, so I don't count that. I agree with Chile: debt is debt. But, also in agreement with her, mortgage debt is substantially different (in principle) than consumer debt, because it's a debt on real estate, which is termed "real" for a reason. Of course, most people who currently hold mortgages probably wildly overpaid for their homes, given the real estate bubble. Still, the debt is secured by something real, and in the US at least, mortgage holders are free to turn over the keys to the lender and walk away. That's just not the case with a car loan or credit card debt. But I don't want to walk away, so I am extremely aware that we don't own our home free and clear.

  3. That's how I feel, too - we have a mortgage, and so we have debt. It's just interesting to talk with people and realize that they don't consider their mortgage a "debt", and I wonder where that idea comes from. I agree, Kate. Walking away just isn't an option I'm interested in or willing to exercise, and so I'm keenly aware that we still owe on this house.

    Chile - I'm in the same boat: do we pay off the mortgage or put extra money toward becoming more self-sufficient? It's quite a conundrum, because every little thing we do to become more self-sufficient also saves money, which could be put toward paying off the house. That little investment in rain barrels, for example, could save hundreds of dollars in water over time, and with the cost of food increasing all of the time, any edible perennials we plant now are going to have value far beyond what we paid for them.

    I lean, deeply, toward investing in self-sufficiency ;).

  4. I agree that a mortgage is debt - it's money owed. But it's a debt with collateral so much more positive than credit card debt. And you're slowly paying it down.

    Last year we sold our home, just before it would have gone upside down on us (and did for the buyers). It was part of my plan to get out of the DC metro area. Part II is finding a job in the west. Slowly but surely...