What does it mean to be in debt

It’s common for people to refer to themselves or others as “in debt.”

“My brother is in debt.”

“More and more people are finding themselves in debt.”

“After my divorce, I found myself in debt.”

But what does being “in debt” mean exactly?

The vast majority of people owe someone something. In fact, I am fairly certain that I have never met an adult who owes zero debt. Auto loans, credit card debt, mortgage debt, medical debt, student loans, and personal loans are some of the most common types of debt that most people find themselves owing.

If it’s true that nearly everyone has debts to repay, then most of us are technically “in debt,” yet only some of us are described that way. The phrase “in debt” seems to be reserved for people who owe too much, but even that is hard to pinpoint. How much is too much?

Many experts believe that you are in, or are headed for, financial trouble when too much of your paycheck (36%) is being allocated toward debt payments. But I think that being in debt is more like being in love—you just know. To borrow a few words from Robert Palmer: “You can’t sleep. You can’t eat. There’s no doubt, you’re in deep.” In other words, my definition of being “in debt” is more about a feeling than a number.

What’s your definition of “in debt”?

Note: This post was included in the Carnival of Pesonal Finance #265 hosted by Funny About Money .

Kim McGrigg is the former Manager of Community and Media Relations for MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.