Most everybody lives in debt. It’s a shocking indictment of society, but it’s a fact. The house we live in is owned by the bank until we paid off in 20 or 30 years. The car we drive is financed by the bank or the dealership, until we pay it off, and student loans paid for our college education. With so much debt all around, this begs the question: will we ever be debt free? Truth be told, debt is never something that goes away; it’s something that is managed. It’s much like the home owner’s association fees, electric bills, water bills, Internet bills, food bills, car maintenance bills et al that just keep on coming. As long as we breathe air, we owe money – the more you earn the more you owe. Government takes its fair share of our earnings by way of taxes. These include state tax, federal tax, sales tax, property tax, inheritance tax and a myriad of other taxes that we don’t even know about
Debt Is Pervasive but That Doesn’t Mean We Cannot Get a Grip on It
Can we really be debt-free? This is a question that has plagued financial planners, the middle-class and the local loss for time immemorial. Even the folks at the top of the pyramid – the high-income earners are saddled with massive debt. It’s a sign of the times when we must borrow to finance our lifestyle. Even at its most basic level, debt is always lurking beneath the surface. We buy our groceries without credit cards, for the convenience they offer and the 1.5% cash back we may receive on money spent. We pay scant attention to the interest -related repayments on the cards because we are using somebody else’s money right now and worrying about the payment later.
So how do we break the debt cycle? First of all, nobody wants to have collection agencies hounding them for money. That’s just bad business. The anxiety that we feel when our credit card statements reflect huge outstanding balances is certainly not worth it. Without debt, there’s a feeling of relaxation that we get; a feeling of well-being. It’s hard to see the sun through the trees when all we see ahead of us is a mountain of debt. When we are in debt, all of our income needs to service that debt, but when the debt is broken down and paid off, more of our income can be used for saving and retirement. There are many things that can be done with higher disposable income levels, such as a new property, a new vehicle, tertiary education, a much-needed vacation, or simply socking it away in the safe. This is what builds security. Debt is the destroyer of security.
Benefits of Being Debt Free
After debt has been repaid, more money is available for whatever you want it for. You don’t need to worry about repaying your credit card, since you can pay cash for the items you want. No interest repayments on borrowed money are necessary, and that means you’re saving that money every month. Greater autonomy is a byproduct of a debt-free life. You can live the way you want to live without being a slave to the banks. If happiness can be quantified by figures, the positive turn around invariably means you’re a happier person. Fortunately, it is a lot easier to get out of debt than we think. The minute debt starts spiraling out of control, it is time to clampdown on expenditures. Allocate more of the available budget to debt repayment – especially high interest debt – and work as diligently as possible to make debt the #1 enemy of the lifestyle you envision.