I wanted to (finally) give you a money dictionary that doesn’t require a dictionary to understand the word’s definition. That doesn’t exist . . . so I made my own. You know how you explain a term to a friend who doesn’t “get” it? That’s the way it’s written here. Let this glossary be your go-to guide for definitions with a practical perspective whenever you need a little cheat-sheet. Some stuff changes over the years, but these basics never go out of style.
This is what happens when the amount of an outstanding loan is more than the thing you borrowed it for, is worth. For instance, if you take out a $300,000 loan to start up your business, but your idea flops and the value of your assets (including office space, equipment, and software) now has a market value of only $250,000, your company is considered underwater (by $50,000— eek).
A start- up with no track record that is valued at more than a billion bucks. Think Facebook, before it went public.
Unsecured Debt -
Unsecured Debt: This is the kind of debt that isn’t secured by any goods that can be repossessed if you fail to pay, like a car. Student loans and credit cards are examples of unsecured debt. (See also: Secured Debt)