[Glossary](https://pecuvo.eu/en/glossary/) · Credit and debt # Debt **In short:** debt is an obligation to pay a sum in the future — on a loan, but also on an unpaid bill, tax, fine or guarantee; in a personal balance sheet it is a liability. **Simply put:** debt is not bad in itself — a cheap long-term loan for a home is a different decision from expensive debt for consumption. Problems start when instalments eat up the budget. The first step out is the full picture: to whom, how much, at what rate, when. **Example:** Ivan lists his debts in a table: a mortgage, a consumer loan, a credit card and an unpaid electricity bill. He sees that the highest rate is on the card and the largest instalment is on the mortgage. **Watch out:** debt does not disappear when you avoid it — interest and late charges grow. An early conversation with the lender gives the most options. **Source:** Pecuvo Module 23, Chapters 1–2, and Module 9; EU/OECD-INFE financial competence framework for adults (2022), topic 2.8: https://finance.ec.europa.eu/publications/commission-and-oecd-infe-publish-joint-framework-adults-improve-individuals-financial-skills_en ## In depth in the modules - [Module 9](https://pecuvo.eu/en/modules/managing-cash-flow/) - [Module 8](https://pecuvo.eu/en/modules/the-iron-principles-of-cash-flow/) ## Related terms - [Credit (loan)](https://pecuvo.eu/en/glossary/credit/) - [Over-indebtedness](https://pecuvo.eu/en/glossary/over-indebtedness/) - [Assets and liabilities](https://pecuvo.eu/en/glossary/asset/) - [Net worth](https://pecuvo.eu/en/glossary/net-worth/) - [Debt avalanche and debt snowball](https://pecuvo.eu/en/glossary/debt-avalanche-and-snowball/)