We do not have any credit card debt. We do not have any car payments - we drive second hand vehicles. I have been imprisoned by that monster one too many times in my life so we make sure that we do not carry balances.
We do however, have student loan debts to the tune of 33,000. Well, not "we" - me - I do, because I decided I was going back to graduate school. How I managed that in a year and a half is mind boggling. We do have other debts - the orthodontist bill - down to $1700.00 right now from $3000.00 (all from snowflaking which I will share with you later) - and we have three other children that will be needing braces all within the next few years. We do have a mortgage but I will not consider this a part of my debt reduction until everything is paid off. Since I am currently in school I do not have to pay the student loans as I am in the grace period currently, but having that hanging over me makes me lose sleep at night. Just the very thought of having a monthly payment equivalent to a car payment or some mortgages makes me shudder. I need to pay it down now while I am in school.
We do have savings accounts, 2 Roth IRAs, Husband's 401K, Money market - all vehicles for saving money that we put into place recently to make sure that we were saving money while we embark on this. Since I have the looming braces freak show upon me in three consecutive years for three kids in a row I want to budget and pay for those out of pocket rather than financing like I had to do this time.
You could say that we might be in better financial shape than some - I mean, we have no car payments, we have no credit card debt, we have savings - that isn't bad. But we weren't always in that position.
And we still have a long way to go. Being debt free is being debt free.
Debt and/or Savings Strategy Step #2: Know what and who you owe.