When I was studying Finance at Indiana University, Bloomington, Indiana, USA, the equation that ALWAYS stick in my mind is,
Asset = Debt + Equity or A = D + E
Let's assume, for example, that you've just bought a Property at S$1,000,000. You came out with CASH of S$200,000 and you borrowed S$800,000 from a bank. Hence,
A = D + E
1,000,000 = 800,000 + 200,000
And, if the price of the property falls to S$800,000,
A = D + E
800,000 = 800,000 + 0
In this case, your Equity is completely wiped out.
If the price of the property falls further to S$700,000, then,
A = D + E
700,000 = 800,000 + (-100,000)
You now have a NEGATIVE Equity of S$100,000, or, your property is now "under water".
My point is, if you borrow money to acquire an Asset, you will ALWAYS be "in debt", but, your Equity may not always be there.
So, as far as possible, try not to borrow too much money. The best is, NEVER borrow money!!!
A = D + E is a simple yet PROFOUND equation.
Think about it.