Your Mortgage Is Debt, Too!

I see it all over the place.  On TV.  On blogs.  In news articles.  It doesn’t matter.

When talking about debt, mortgages seem to get glossed over.  The focus always seems to be on ‘non-mortgage debt’.

While this is good, the fact remains that you still owe on your mortgage.  It’s still debt.  And, chances are, for most that have a mortgage, it’s the biggest debt and/or the biggest monthly payment that you have associated with debt.

So, why might mortgages get ‘left out’ of the debt discussion?  Just speculating here:

  • Backed by an asset – Up until the last few years, it was a pretty safe bet that most mortgages had an asset behind them, so you could kinda sorta see how it wouldn’t get looked at as the same type of debt as other things that aren’t asset based.  Most people (and banks too) figured that the house could always be sold and that could make the debt go away.  With so many people underwater these days, that’s really not the case anymore, but the old mentality seems to have stuck.
  • It would make a BIG BIG number even BIGGER – We talk about the debt in America in the trillions.  It’s already an overwhelming number.  To add in the collective mortgage balance would make it an astronomical number.

Personally, when I look at our debt, the mortgage is included.  Why?  Because it’s a debt!  Plain and simple, it’s a loan that we took out and have to pay back, and if that’s not the way to define a debt, then I need a new dictionary!

How do you look at mortgage debt in the ‘how much debt do I have’ discussion, and what other reasons might there be for not including it in the debt totals other than what I’ve listed above?

5 thoughts on “Your Mortgage Is Debt, Too!”

  1. Another consideration is the opportunity cost. Debt is simply a liability, just like any other fixed expenses, such as rent. And, if you own a home, you have the mortgage debt in liu of rent. So, it's almost a wash. You are going to have to pay for shelter either way. The reason it is sometimes considered "good debt" is because you can pay off a mortgage. Then, you will own the asset and eliminate the liability.

  2. I do segregate my debt into two categories but consider both debts. The priority is to be non-mortgage debt free; but I'll be paying off my mortgage ahead of schedule as well.

  3. Thanks for saying it like it is!

    I'm always saying mortgage is debt and people seem to look at me a little glossy-eyed. Same thing with car payments. I'm a firm believer in no debt. It's possible everywhere in the country to save and buy property and cars outright. People seem to act like it's just not possible where they live. Wrong. It's possible anywhere. You may have to move a town or suburb over, but the properties are there and they are nice too. Rent and save and buy is my philosophy. People are just to into instant gratification. Saving, paying and actually being the owner is a lot more fulfilling.

    I've read a lot of money blogs. I'll follow them for a while, but when they just go over the same old ideas with the same old philosophies, I get wearisome.

    Thanks for the upfront and honest cut-to-it approach. I just subscribed and if you keep it up, I'll stay around.

  4. Thanks for the great comments.

    Bret, I agree that there is an opportunity cost and depending on the opportunity and the risk level of each person, how mortgage debt is handled is up to them. I'm fine with that, I just want it to be recognized as debt.

    Bucksome, I also consider mortgage debt somewhat separate, and we will certainly celebrate when we're non-mortgage debt free, but it's not the end of the road until all of it's paid off. I think part of the issue is that, for most people, the time of being able to pay it off is so far away that it doesn't seem 'real'.

    Victoria, I try to set a high standard and to avoid writing the 'same old' posts as they, too, can push me away from a blog. It's good to know that I have someone to keep me in line!

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