Liability
Any debt or financial obligation you owe — the amounts subtracted from assets to find net worth.
A liability is money you owe: mortgages, auto and student loans, credit card balances, and other debts. Liabilities are the second half of the net-worth equation, subtracted from your assets to reveal your true financial position.
Not all debt is equal. Low-rate, tax-advantaged debt like a mortgage behaves very differently from high-rate credit card debt, which compounds against you. Managing liabilities — paying down high-interest balances first, deciding whether to pay off a mortgage early — is a core part of building net worth and freeing up cash flow for investing.
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.