By "broke" they mean liabilities are more than assets. So if someone uses credit cards to pay for a $3,000 vacation, they have $3,000 in debt and no measurable

By "broke" they mean liabilities are more than assets. So if someone uses credit cards to pay for a $3,000 vacation, they have $3,000 in debt and no measurable asset. If someone takes a $300,000 mortgage to buy a $300,000 house, the asset equals the liability. (Minus transaction costs and all that good stuff) If the house increases in value to $500,000, they are $200,000 in net assets minus whatever they've paid down. If the house value drops $100,000 below the mortgage, then they're still negative. (In much of the US, houses are still worth less than what people paid for them 10 years ago)