If I have a $500,000 mortgage, and my assets (including equity) only sum to $400,000, then I’m $100,000 in debt.
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If I have a $500,000 mortgage, and my assets (including equity) only sum to $400,000, then I’m $100,000 in debt. If I make $12,000 a month, and my mortgage payment is $4,000, then I have $8,000 a month to spend. I’m in debt, but I don’t think anyone would call me broke.
The key point in your scenario is that you don’t have money to spend, not that you’re in debt.