Let’s look at the definition of what debt is. The definition from Wikipedia is “Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor.”
This means that everything you owe to somebody else (private person or company) is debt. For financial freedom every financial debt is relevant, like:
- Car lease
- Credit card debt
- Student loans
- Overdue bills
- Money your mother lent to you
How to define the actual debt?
Debt starts with a lending and ends when the amount lent + interests + other fees has been payed back. It can be quite intransparent to understand, where you are in this process. If you don’t have clear receipts, ask the lender how much would you have to pay back today, in order to repay the loan in full.
How to summarise and monitor my debt?
I use a simple spreadsheet where I update the value of my debt over time. You can create your own spreadsheet or use my personal FIRE template.