Debt and Freedom: How One Cannot Live With The Other
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Normally, those two terms are associated with very different categories. When we think of debt the thoughts that come to mind are worry, hardship, lack of ownership and even guilt. Freedom on the other hand springs thoughts of control, happiness, prosperity and a bright future.
When we are in debt, we are not free. I do not care what type of debt it is, when you owe someone something, you are not free. Even “good debt” such as a mortgage or school loans still puts you in someone else hand. There are very few things I strive for more than being able to say, "I do not owe any one anything." It is a tough position to be in knowing that money you have not even earned yet is spoken for each month. Don’t get me wrong, I have plenty of student loans, so I know the feeling, and I will for a long time.
Freedom on the other hand gives us the ability to choose what we want to do with our earnings and when. Remember when your parents would give you some money at the amusement park and simply say, meet back here at noon for lunch? You could do whatever you wanted, in any order, at any time. You had money specifically for the purpose of your enjoyment, that being whatever you saw best fit at the time. There were no worries about what you were going to get for lunch, or if you would have money for lunch, your parents were going to cover that. The money they gave you was yours, you were free to do with it as you pleased.
Now sticking with the analogy, as you walked through the park, there were plenty of things and attractions biding for your attention and money. Rides, face paintings, food, toys, stuffed animals, games and souvenirs.
It is no different in life, where society, commercials, fashion trends and celebrities are telling us where and how we should spend our money. Don’t have the funds right now? Open a charge card, get it now and worry about paying us later. OK, enough with the emotional beat down, we have all fallen victim to that, so how do I get out of this hole, or stay away from the hole?
1. Avoid debt at all costs in the first place- You may already be in debt, but moving forward, starting today, do everything within your power to avoid paying for items that you cannot pay cash for at that time. Interest will kill you! If you were to pay the minimum payment on a credit card with a $1,000 balance, with an average interest rate today, you would be making payments for years! And pay about an extra $500.
2. If you currently have debt, attack it- adopt the mentality to attack your debt. Don’t limp at it with minimum payments, tackle it with every spare dollar you have until it is gone. Pay down your highest interest debt first, or your smallest balance debt first, which will help create mini victories along the way of eliminating debt. Pick a system and follow it.
3. Ask yourself these questions before a purchase- do I need this? Do I need it today, or can it wait a week? Can I find this cheaper somewhere else, online maybe? Did I do enough research on this, or ask enough people to make an educated purchase? Can I find this used? Can I pay cash for this today? As you can see, these questions make you wait, or think about your purchase more, which negates impulse buys, or purchases that come from societal pressure. Take your time, do your homework, and stay out of debt.
There are a couple clever marketing tricks that switch our thinking into making purchases we really cannot afford:
- Hurry in, sales ends this week!(there will always be another sale, or another store that will have it just as cheap)
- Monthly payments as low as …(sure the monthly payments are low, but what’s the overall cost that I pay out of pocket for this 5 year loan)
- Open a credit card and save an additional 20%( yeah, on that one purchase, then you make 26% on any purchase I do not pay off right away)
As you can see, one common thing is to create a sense of urgency, or the feeling that you are getting a good deal. Well you may be for that instant, but you have to think past today. Getting out of debt is not fun, and it is hard work. You need to take a long term approach to your debt in order to stay on track and reach your goals. But you cannot get there unless you start, today!
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