Anything a person or entity owes to another party, including loans, credit card balances, mortgages, and other debts — the negative side of the net worth equation.
A mortgage, a car loan, a credit card balance, student loans — all liabilities. They're subtracted from your assets to get your true net worth, because that money is already spoken for, even if it hasn't left your account yet. A big salary and a big house mean little if liabilities are large enough to offset most of it.
A low-interest mortgage tied to an appreciating asset behaves very differently from high-interest credit card debt with nothing to show for it — both count as liabilities on paper, but they deserve very different levels of urgency to pay down.
Related Terms
💳 Get a clear payoff plan for your debt.
Try the Debt Payoff Calculator →