Debt management is a misnomer for many today. Debt addiction is a far more appropriate term. From corporate heads to little toddlers, it seems that everyone, except the secretive financial elite, are screaming to go into debt as a means of salvation for all our problems. They forget the ancient wisdom that those who borrow are slaves of their creditors. Understanding why we go in debt is the first step to proper management of your finances.
1. Why We Go in Debt – Most people go in debt because they do not have the patience or the discipline to compete with their fellow indebted peers in buying products. When you are the only person buying something with cash, you have to compete with the inflated prices that occur because of the excess abundance of borrowed money that your peers are using. Living free of debt in all your purchases requires far more effort than most are willing to make. We go in debt because we refuse to delay gratification for the future.
2. Is it Good to Go in Debt? – This could be rephrased as, “Is it good to be a slave of someone for the rest of your life?” Whoever you are paying your credit card bill to is your master. You cannot act independently of them as long as you borrow from them. People who go in debt are naturally impatient. They want what they want now, and are unwilling to wait for later.
3. Living Debt Free If you want to live debt free, you have to realize it will come at a cost. You will no longer be able to buy what you want exactly when you want it. You will have to wait when your friends are greedily buying. You may have to go to the school that no one wants to go to. You may have to work the extra shift when every other person is out early spending with their credit cards. However, at the end of the day, you will be smiling when your mortgage is gone, your bills are minimal, and your wallet is stuffed full of bills and silver.
4. What Debt to Remove First? – If you, like many people, are heavily in debt, it is good to downsize and prioritize what needs to be paid off first. What do you actually require to live? Food, water, shelter, and clothing are common items. If you are in debt to get these sorts of things, start paying it all off now. Eliminate purchases of unnecessary things like entertainment and pleasures. A good priority list for paying off debt is credit cards (in full), mortgage (consider moving to a smaller place), and then other forms of debt. It is easy to be overwhelmed by it all, and refuse to take any action. The old saying goes that you begin a 1000 mile journey with a single step. You can take action today, and it will yield big benefits for your future independence and financial happiness.