To be financially independent and absolutely debt free, we the average consumer, should be focused on accumulating "Assets" and avoid "Liabilities". What is considered an "Asset"? Anything that can be owned and has value would be considered an Asset. If you own a home, you've acquired an asset. The value of this asset is the amount that you can sell it for. A liability is the amount that you owe (i.e. mortgage). Thus, if you have financed a car, it is considered a liability since you owe X amount of dollars on that car, hence it is a liability.
Your home is an asset as long as it hasn't been burned to the ground or so bug-infested that you can't sell it at any price. The "equity" in a home is equal to the following, Equity = Asset - Liability. Your home mortgage is considered "underwater" if the value of your home is less than your liability (i.e. if the equity is less than zero). This occurs if you spent too much on your home, yet the house is still considered an asset.
If you own a house that is worth $200,000 and you have a $190,000 mortgage on it, your assets are $200,000, your liabilities are $190,000 and your equity is $10,000.
So what have we learned from all of this?
Asset = Good
Liability = Bad
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