Figuring debt

Peeking_Around · Jun 20th, 2008, 12:47 PM

Okay - I'm confused. When figuring out your "debt" - do you factor in like utilities and just day to day expenses or .. is it just things like credit cards, car loans, personal loans, mortgage, rent, etc.

I know this is probably really simple ....

acshih · Jun 20th, 2008, 12:54 PM

I am not sure of the exact definition is, maybe someone here with an accounting expertise can help out?? But, in my book, a debt is money that one owes to someone else. In other words, an expense that has been incurred already, but just has not been repaid. Let's say you have used water for your house for the entire month, but the water bill does not come till the end of the month. So when the bill comes, you have incurred an expense. Unless the water bill is paid off, it is a "debt" in my book.

If one is not careful enough though, daily expenses can become "debts" really, really quickly

. Hope this helps

.

bagaddict44 · Jun 20th, 2008, 01:33 PM

When I think of "debt" I think of car loans, medical debt, mortgage, student loans and credit card debt... so when I say I am debt free it is because I dont have any of these debts ( well until we purchase a house in a few months lol ) I don't consider bills such as utilities, cable, dsl, insurence ect that you pay every month debt unless you get behind. I hope this makes sense.

bagaddict44 · Jun 20th, 2008, 01:34 PM

I forgot to add personal loans are also debt...

Peeking_Around · Jun 20th, 2008, 01:38 PM

Urgh - I forgot student loans.

I'll be paying on mine forever.......

I don't even know how to pay those off quickly. I guess I should take care of the other junk first and then work on the student loans. I'm still in school so payments haven't started yet.

LadyLinda · Jun 20th, 2008, 02:07 PM

"Debt" is the flip side of "assets." Debt is money you owe; assets are stuff you own, including cash on hand and bank accounts. Debt is an obligation to pay money either now or in the future.

Debt will be stuff like loans (including mortgages and car loans, student loans and personal loans), credit card balances, and outstanding bills. Any bill sitting on your desk is probably a debt, though it need not always count as such. What you think your phone bill will be three months from now is not a debt.

That's just a rule of thumb. I'm not an accountant or anything even close to one.

What kind of paperwork are you filling out?

Peeking_Around · Jun 20th, 2008, 02:26 PM

Quote:

Originally Posted by LadyLinda

What kind of paperwork are you filling out?

I'm not filling out paperwork paperwork .. but more or less writing down each debt we owe to - and wanted to figure out our debt to income ratio. I just wasn't sure if I put utilities on it ...

I'm just getting confused by all the numbers.

And then I don't know if I add in the small things like ... the little items we buy ....

IntlSet · Jun 20th, 2008, 02:40 PM

^^
Don't you pay off utilities every month? I wouldn't really count that as "debt." That's more like a set expense. You know you'll spend between $XXX - $YYY every month for utilities.

LadyLinda · Jun 20th, 2008, 03:13 PM

Quote:

Originally Posted by Peeking_Around

I'm not filling out paperwork paperwork .. but more or less writing down each debt we owe to - and wanted to figure out our debt to income ratio. I just wasn't sure if I put utilities on it ...

I'm just getting confused by all the numbers.

And then I don't know if I add in the small things like ... the little items we buy ....

Ah, I see.

Don't figure in bills or expenses, then. That's not necessary for a simple calculation of, say, debt to asset or debt to income. Just count money you owe on one side and money you earn on the other. Monthly bills, the little things you buy, going out to eat... that's expenditure, not debt.

I keep a spreadsheet I update monthly for my spouse and I about net worth. We don't factor in expenditures, just debts and assets. It's a rough figure, a snapshot of our finances, not an autopsy. Sounds more like what you're trying to do.

lorihmatthews · Jun 21st, 2008, 01:12 AM

Monthly utility bills aren't considered debt. Those are monthly expenses.

twiggers · Jun 21st, 2008, 07:51 AM

Your debt to income ratio would depend on what you are trying to get credit for. If you are applying for a mortgage then they will include your student loans, car loans, mortgages, and all credit cards.

If you are just applying for a credit card, then they will only look at your revolving credit debt (credit cards).

The majority of people will report two kinds of debt: credit card debt/car loans/student loans (aka, non-mortgage debt) or mortgage debt. Most people don't consider mortgage to be a 'bad debt' because it is an asset (well, in the majority of cases....many people right now have mortgages where they owe more than the house is worth and that's not good)!

guccimamma · Jun 21st, 2008, 12:09 PM

there are debts, (money owed on loans..mtg,)

and expenses, utilities, rent, tuition, etc.

banks don't really seem to look at your expenses too closely, although that may be changing with new lending requirements.

socalgem · Jun 21st, 2008, 02:22 PM

I think that will starting happening soon.

Quote:

Originally Posted by guccimamma

banks don't really seem to look at your expenses too closely, although that may be changing with new lending requirements.

TropicalGal · Jun 21st, 2008, 07:39 PM

I have zero debt. I buy my car with cash. (Toyota Matrix). I own my home. (No mortgages here in Mexico). I pay my bills. I have lovely handbags. I am paying my kids' college educations. I am healthy. I am happy.

Purses · Jun 21st, 2008, 07:55 PM

There is two different kinds fo debt.

One is called liquid debt (healthy debt) and that would be paying your telephone bills, rent...and you can pay it off every month

The other one...don't know the name is, the most nasty one. You owe money, you also owe interest for not paying it off on time and you don't have the money to pay it off in one lump sum.

Jun 20th, 2008, 12:47 PM	#1
Peeking_Around Member Joined: Sep 2007 Posts: 282	Okay - I'm confused. When figuring out your "debt" - do you factor in like utilities and just day to day expenses or .. is it just things like credit cards, car loans, personal loans, mortgage, rent, etc. I know this is probably really simple .... __________________

Jun 20th, 2008, 12:54 PM	#2
acshih Member Joined: Jul 2007 Location: Bag Heaven Posts: 2,073	I am not sure of the exact definition is, maybe someone here with an accounting expertise can help out?? But, in my book, a debt is money that one owes to someone else. In other words, an expense that has been incurred already, but just has not been repaid. Let's say you have used water for your house for the entire month, but the water bill does not come till the end of the month. So when the bill comes, you have incurred an expense. Unless the water bill is paid off, it is a "debt" in my book. If one is not careful enough though, daily expenses can become "debts" really, really quickly. Hope this helps.

Jun 20th, 2008, 01:33 PM	#3
bagaddict44 Member Joined: Dec 2006 Location: California Posts: 208	When I think of "debt" I think of car loans, medical debt, mortgage, student loans and credit card debt... so when I say I am debt free it is because I dont have any of these debts ( well until we purchase a house in a few months lol ) I don't consider bills such as utilities, cable, dsl, insurence ect that you pay every month debt unless you get behind. I hope this makes sense. __________________ LV Wish list-2008 mono keepall 55 mono batignolles vertical-purchased 7/08 mono zippy coin purse mono key and change holder-purchased 6/08

Jun 20th, 2008, 01:34 PM	#4
bagaddict44 Member Joined: Dec 2006 Location: California Posts: 208	I forgot to add personal loans are also debt... __________________ LV Wish list-2008 mono keepall 55 mono batignolles vertical-purchased 7/08 mono zippy coin purse mono key and change holder-purchased 6/08

Jun 20th, 2008, 01:38 PM	#5
Peeking_Around Member Joined: Sep 2007 Posts: 282	Urgh - I forgot student loans. I'll be paying on mine forever....... I don't even know how to pay those off quickly. I guess I should take care of the other junk first and then work on the student loans. I'm still in school so payments haven't started yet. __________________

Jun 20th, 2008, 02:07 PM	#6
LadyLinda Member Joined: Jul 2007 Location: Philadelphia Posts: 570	"Debt" is the flip side of "assets." Debt is money you owe; assets are stuff you own, including cash on hand and bank accounts. Debt is an obligation to pay money either now or in the future. Debt will be stuff like loans (including mortgages and car loans, student loans and personal loans), credit card balances, and outstanding bills. Any bill sitting on your desk is probably a debt, though it need not always count as such. What you think your phone bill will be three months from now is not a debt. That's just a rule of thumb. I'm not an accountant or anything even close to one. What kind of paperwork are you filling out?

Jun 20th, 2008, 02:40 PM	#8
IntlSet Bonjour! Joined: Jan 2006 Location: Chicago Posts: 10,592	^^ Don't you pay off utilities every month? I wouldn't really count that as "debt." That's more like a set expense. You know you'll spend between $XXX - $YYY every month for utilities. __________________ http://drinkmorechampagne.wordpress.com/

Jun 21st, 2008, 01:12 AM	#10
lorihmatthews Luv my Persian Joined: Oct 2006 Location: San Francisco Posts: 6,390	Monthly utility bills aren't considered debt. Those are monthly expenses.

Jun 21st, 2008, 07:51 AM	#11
twiggers Earning my PhD Joined: May 2006 Location: The Library Posts: 19,835	Your debt to income ratio would depend on what you are trying to get credit for. If you are applying for a mortgage then they will include your student loans, car loans, mortgages, and all credit cards. If you are just applying for a credit card, then they will only look at your revolving credit debt (credit cards). The majority of people will report two kinds of debt: credit card debt/car loans/student loans (aka, non-mortgage debt) or mortgage debt. Most people don't consider mortgage to be a 'bad debt' because it is an asset (well, in the majority of cases....many people right now have mortgages where they owe more than the house is worth and that's not good)! __________________ Check out my new blog.....and see how I eliminated $50,000 in credit card debt in just 7 months.... COME JOIN THE COOLEST CLUB AROUND...THE CURBING CONSUMERISM CLUB

Jun 21st, 2008, 12:09 PM	#12
guccimamma guccimamma Joined: Aug 2006 Posts: 2,642	there are debts, (money owed on loans..mtg,) and expenses, utilities, rent, tuition, etc. banks don't really seem to look at your expenses too closely, although that may be changing with new lending requirements.

Jun 21st, 2008, 07:39 PM	#14
TropicalGal Member Joined: Jan 2007 Posts: 3,538	I have zero debt. I buy my car with cash. (Toyota Matrix). I own my home. (No mortgages here in Mexico). I pay my bills. I have lovely handbags. I am paying my kids' college educations. I am healthy. I am happy. __________________ Visit me! www.theportablemother.blogspot.com

Jun 21st, 2008, 07:55 PM	#15
Purses Member Joined: Feb 2007 Posts: 1,115	There is two different kinds fo debt. One is called liquid debt (healthy debt) and that would be paying your telephone bills, rent...and you can pay it off every month The other one...don't know the name is, the most nasty one. You owe money, you also owe interest for not paying it off on time and you don't have the money to pay it off in one lump sum.