Not too long ago, I filled out a survey about my consumer habits. One of the questions, just before the demographic information, asked about my home. I was asked to choose between Rent and Own (and Other). As I checked the box next to Own, it occurred to me that I don’t actually own my home.
If I’m going to get really technical about it, the bank owns my home. I have a mortgage on my home, and since I bought my house with borrowed money, the bank actually has the first right to my home. If I stopped making my mortgage payments, the bank would be well within its rights to have me evicted. While it is true that I have some rights (the bank can’t just kick me out as long as I am making my mortgage payments), the reality is that I do not think that I actually “own” my home in the sense that it is truly mine. I will not truly own it, in my mind, until the mortgage is paid off and the bank no longer has the right to take it away from me.
Of course, this thought process has me thinking of other items that perhaps I do not really own. Our second car, bought about 18 months ago, is another purchase that we have to make payments on. We bought it with a loan, so I think the bank owns a pretty solid chunk of that car.
On the other hand, the first car my husband and I bought eight years ago as a married couple is something we own — it’s paid off. But if we were to get a title loan on the car, it would diminish our ownership. After all, we would have to give someone the right to take the car away from us if we did not pay back the loan. Ownership tends to shift about, I think, depending on whether or not someone else has the right to take it away from you. If you are securing debt with something you “own”, then you are, in fact, reducing your ownership in it.
What about unsecured debt? Can you really be said to own something that you bought with money you do not really have? Or does the fact that the credit card company cannot exactly come and repossess the specific item mean that you really do own it?
It is an interesting conundrum. I submit, though, that carrying a great deal of unsecured debt does challenge your ownership of almost everything you have. If you default, creditors can sue you for what you owe — even if it is unsecured debt. Additionally, even bankruptcy does not always help. Stipulations in bankruptcy law mean that a judge can decide that you need to liquidate some of what you have in order to help pay back some portion of what you owe. These non-exempt assets can include non-essential furnishings that go beyond what most people need on a basic level in their homes, an expensive second car, or other unnecessary possessions that can be reasonably sold to help you reduce your debt.
In the end, debt represents a reduced ownership of the things that you have. Before you begin feeling good about what you own, stop and think: Do you really own that?
What are your feelings on ownership? Do you think debt diminishes your true ownership of what you have?