A liability is debt that you have taken on and that you must repay in the future. Most financial planners classify liabilities as current or long-term.
Current liabilities are those that must be paid off within the next year and long-term liabilites come due beyond a year’s time. In listing your liabilites, be sure to include only the unpaid balances on those liabilities.
Remember, you owe only the unpaid portion of any loan.
– In general, the current debt category is comprised of the total of your unpaid bills including utility bills, past-due rent, cable TV bills and insurance premiums that you owe.
The unpaid balance on your credit cards represents a current liability because it’s a debt that you should pay off within a year. Even if you have not yet received a bill for a purchase you made on credit, the amount you owe on this purchase should be included as a liability.
– This category tends to consist of debt on larger assets, such as your home or car or student loan. Because of the nature of the assets it finances, long-term debt almost always involves larger amounts than does current debt. If you think about it, the very reason long-term debt covers the long term is that it involves sums too large for the average individual to be able to pay off within one year.
The largest debt you ever take on, and thus the longest-term debt you ever take on, will probably be the mortgage on your home. Car loans are another major category of long-term debt. Just as a leased car is not considered an asset, the remaining lease obligation should not be considered a liability, or something that you owe.
In effect, you are ‘renting’ your car when you lease it. However, it’s a very fine line between a debt obligation and a lease contract – if the lease simply can’t be broken, no matter what, it may be considered debt.
Keep in mind that future lease payments, future insurance payments, and future rent payments are something you may owe in the future, but they are not something you owe right now.
Finally, any other loans that you have outstanding should be included. For example, student loans, loans on your life insurance policy, bank loans and installment loans are liabilities. Together, long-term debt and current liabilities represent what you owe.
Source :- Measuring Your Financial Health and Making A Plan