Staying out of Debt

Most of the visitors to this site are probably looking for help after they have financial problems. This post is for the people reading this, before the are are running into money difficulties.

One of the most liberating things you can do in life is to stay out of debt. This seems hard to do, but it is mainly a cultural thing. In the US people are expected to go into debt. They buy new cars that they can’t afford. They go to expensive schools where the tuition is very high. They buy electronic equipment on credit to have a cool stereo or television. They try to get the biggest apartment possible and on and on.

Many of the reasons people go into debt is for status. They want to own a newer vehicle so they can look good. Buying a used car for $2000 isn’t good enough because it won’t look good to their friends. They want a big apartment so everyone can be impressed with their home, etc. There are some times that it makes sense to take out a loan. Buying a house and in some cases paying for college, but you have to make sure you are going into debt for good reasons not for personal status.

Getting into debt limits your options. If you are heavily in debt and suddenly your job changes to where you hate it, you may not be able to quit your job because of your financial obligations. Your ability to control your own destiny is decreased by every dollar you owe someone else.

When you are completely free from debt, you have opportunities that no one else has. I have spent my life being very careful to stay out of debt. All my cars have been purchased with cash (and I always buy used vehicles). I paid for college with scholarships and cash. The only debt I’ve ever had was a mortgage that I paid off in 2 years when I sold the house.

When I decided I wanted to quit my job and start my own business, it was very easy to do. We had enough in savings from selling our house to last 2 years without any income (just in case the business didn’t do well). The only way I was able to do that is because I had worked very hard to stay out of debt from a very young age. I usually drove a car that was older than everyone else. I worked most of the time I was in college. Every summer I worked 60 to 80 hours per week to pay for college. I may have looked less affluent to many of my friends, but now they are starting to see a difference. Their cars are now old (mine is a newer used vehicle that I recently purchased), they have a very nice very big house that they are struggling to pay off while I live in a smaller place but have money free to travel and pursue other interests. They are working for jobs that they can’t leave for fear of losing their house while I work for myself

If you can stay out of debt from a young age, you will find your life will be much easier. It might look like you are behind your peers at first but in your late 20s, you’ll start seeing a big difference between you and your friends. Debt is a mindset. If you do your best to avoid that mindset, you’ll give yourself opportunities that go way beyond what your peers are able to achieve.