Posts Tagged ‘Debt’

Debt

Tuesday, December 9th, 2008

Debt is your enemy.

It shortens your life from stress, lack of good food, shelter, clothing, and medical care.
It sucks the joy out of your life. (Just check out these divorce figures.)
It removes your ability to deal with the emergencies that life throws at you.
It takes away your ability to support your family and friends.
It limits your ability to think.
It consumes your most precious resource: Time.
It takes away your most precious right: Freedom.

It keeps humans from petting Pookahs.

There is no such thing as good debt.

There ARE ways to use debt to your advantage. This is called gambling. You are playing the odds. If you are clever and wise, you stack the odds in your favor. When you take out that 30 year mortgage on your house, you are betting that you will be able to keep the payments up for THIRTY YEARS. You are gambling that you will stay employed, physically healthy, and mentally healthy at approximately your current state (or greater) for the next THIRTY YEARS.

Banks, credit card companies, and other lending institutions want you to stay in debt. They will tease you, entice you, and seduce you to get into debt and stay in debt. They want you to stay in debt for as long as possible. They may even break the law to do it. They are amoral. Many are unethical. They are all greedy.

When you buy something on a credit card, you are betting that you will be able to pay that loan back within the next billing period. That’s less than 30 days. THIRTY DAYS. The credit card company has all the odds stacked in its favor. They can change the duration of the billing period, the interest rate, the minimum payment, the payment schedule, add on fees — anything at all, ANY TIME THEY WANT. It is not fair. It is not equitable. It is what you agreed to.

If you are clever and wise, you can take out a mortgage for THIRTY YEARS for a house that is well within your resources to maintain and keep up the loan payments for, negotiate a no-penalty clause for early repayment of the loan, and pay off the mortgage loan before the loan comes due… and save yourself a lot of interest fees.

If you are clever and wise, you can beat the odds. But there is risk. If the lender offers you a 0% interest deal with a small fee for a limited time, and you have the wisdom to build within yourself the discipline, you can take that loaned money, pay the fee, and put it in the safest, highest-interest financial product you can find, then take it back out to pay back the loan, and pocket the interest for yourself. If you are clever, you will make sure that the interest return to you is greater than the fee you paid to the lender.

If you are clever and wise, you can build within yourself the mental fortitude to resist the urge to satisfy your wants immediately, so that you do not impulse buy.

You can become clever and wise like Pookah.

If you are clever and wise, you can save up for emergencies.

If you are clever and wise, you will still make mistakes. That is what your emergency savings are for.

You can become clever and wise by first understanding that debt is not your friend.

You can become more clever and wise by learning how to avoid debt.

Then you can start living life like Pookah.