I don't want to tell anyone reading this what to think about debt, but as for me, I dislike it. In fact, I'm happy with as little debt as possible, and my goal is to continue to hate it, despise it, and get completely out of it as soon as possible.
That attitude towards debt doesn't seem to be very popular nowadays, but it's allowed me to push my familiy's net worth to a good healthy level. My views on debt may not work for everyone, and that is ok, because we all have different sets of priorities, but it's worked for us.
My goal in this blog post is to give you some insight on what I think about debt, and to inspire YOU to develop your own philosophy about debt. In the end, it's all about what works best for you and your family.
I don't have any fancy jaw dropping advice, stunning conversational comparison analysis of good debt vs. bad debt, or some breaking news that you haven't heard before. But I do want to mention a few things that may make you think.
Are you sure you want to be "average" when it comes to debt?
No, we are not debt free. We have mortgages on two rental properties, and our primary home. Thankfully, we have good amounts of equity on our real estate, because the mortgages are either on 15 year notes, or they are older loans that have been around more than 15 years.
We also owe a small amount on student loans. A couple of years ago, we had IRS debt of about $18,000, but we've managed to pay it off.
The IRS was a surprise debt because of an audit. That is another blog post for another day. Trust me, you won't want to miss that one. The IRS is a beast. All I can say is "keep good records", and sorry for this sidebar.
Study conducted by Ramsey Solutions
We also have no car loans, no credit card debt, or other debt. Our goal is to pay off the student loans in the next 2 years. Thankfully, we haven't accrued any new debt in a long time, so we have been paying down debt for quite awhile.
We don't use debt to fund large purchases, and I don't distinguish between good and bad debt. I'm not disparaging those that do, but our straightforward approach that "all debt is bad debt", has paid off in a major way.
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So while we aren't completely out of debt, our ability to not accrue new debt, has been huge!
For the last 12 years, we have not taken on any new debt, which has helped us realize that you can live well without relying on debt.
For me, debt is stress, it's bondage, and it forces you to do things you really don’t want to do. Debt makes you think things you don’t want to think, and can negatively affect your health, your relationships, your time, your money, and your overall well-being.
Debt seems to be the enemy of of what we are trying to do with money, and it has a direct negative impact on our ability to increase our net worth.
Study conducted by Ramsey Solutions
Debt will do things like keep you at a bad job, keep you working well into your old age when you don’t want to be working, cause depression, weight loss, weight gain, destroy your spirit and willigness to fight through, and much more.
Click HERE to read an interesting article about the link between depression, stress, and debt.
The question is: Why do we tie ourselves to something that can create such havoc in our lives?
Here are a few possible answers:
1. We are addicted to material things and experiential things - We've been conditioned to associate "stuff" and "experiences" with good feelings. So we purchase stuff and experiences with "no worries", in an effort to "feel better".
Click HERE for an in depth well written article about the our unwavering pursuit of material and experiential purchases
2. We don't know what we don't know - Many people were never exposed to concientious spending habits, budgeting, or saving cash for large purchase, and don't have the first clue where to start. If you had parents that taught you about managing money from a very early age, consider yourself lucky!
Click HERE to check out a recent blog post about how poor money habits lead to poor money outcomes
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3. Many people don't have the discipline to delay pleasure - We want what we want, and we want it, and we will get it by any means necessary.
Too often, we throw caution to the wind, and toss common sense out the window, when it comes to debt. I've heard people say they don't care about debt because they are "going to be dead anyway".
Check out the Video at the end of this blog post for more ideas:
Everyone has their own motives. I just know whats worked well for me and my family. I'd personally rather live with the discipline to delay pleasure, then leave here with a mountain of uncontrolled debt.
Everyone has their own unique perspective, and that is ok.
4. Some of us have a sense of entitlement - Some people believe that just existing automatically entitles them to what they want, when they want it. They truly believe that the fact that they are breathing means they deserve that vacation, or those concert tickets, or that new car.
Some believe that living on this planet automatically means they are entitled to, and have the right to, whatever exist on this planet, even if they don't have the money to buy it.
5. Appearances and perception supercede real financial responsibility - Many people would much rather "look" like they are winning with money and life, then actually be winning with money and life. Be careful with this one. Some of us, without realizing it, go into debt to look good and impress our peers.
I realize that my view of debt is not very popular, and a lot of people choose to use debt to grow their businesses, increase their credit scores so that they can buy even more stuff, and other things they believe are harmless and good. If that is you, that's fine, but it's just not for me.
For me, debt is not winning.
Now, more then ever before, I see a lot of people touting debt as good and something to aspire to in order to have the "finer things in life", or to "get rich quick".
Study conducted by Ramsey Solutions
I've even heard some people swear by the idea that you NEED debt. When I hear that, I simply say to myself "they gotcha hook-line-and-sink, right where they want you". The belief that you cannot live happily without debt, is scary.
Some facts about student loan debt
The truth is: you can live just fine without debt, be at peace, and have just as much, if not more, joy as anyone else.
What we all need more of, is:
self-discipline, sacrifice, control over our spending, new habits, new information (i.e. books, podcasts, and new friends), and a willingness to take personal responsibility and accountability for our money decisions.
For many of us, having the ability to tune out the noise of the masses, and stop caring so much about what other people think, along with, a concerted focus on controlling our spending, will catapult us to a new place with money.
Drop a comment or leave me a message. I will respond. I'm curious to hear your ideas and what you think about debt!
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