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Stay Off The Debt Treadmill

Updated on February 11, 2016
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I've been an independent financial planner for several years now. I try to keep my advice as objective as possible.

Aim to not owe anyone.

Debt is thought to be a normal way of life for many of us. It doesn't have to be. It is quite possible to live life debt-free. I look at debt as a form of bondage. What you're basically doing is mortgaging your future self. This can include mortgages, car loans, credit cards, student loans, signature loans, and many others. The best way to get out of debt is not to get into it. Change the way you think first though. Resolve in your mind that it is in fact not normal or good to owe anyone money. You most likely work at a job trading time for money which is then taxed. With those taxed earnings you then pay for debt which is compounding against you. Be on the correct side of compounding and earn interest or dividends. Let's look at three forms of debt that are common these days: mortgages, student loans, and credit cards.

Everyone needs a place to live. Let's face it, most of us don't have the money to pay cash for a house. I certainly don't. This doesn't mean that it's not a good idea to pay off your mortgage early though. I say forget the tax deduction. You're still losing a lot of money to interest even with the deduction. Take out a 15 or 30 year fixed and pay it down as soon as possible or be a lifelong renter. But you're flushing your money down the toilet you say by renting. Maybe so, but insurance, repairs, property taxes, and interest aren't exactly getting you anywhere either.

Student loans are particularly insidious. They are rarely discharged in bankruptcy at least in America. This is a debt that follows you for life. Nice isn't it? My advice is don't take out student loans. If you must then only borrow a reasonable amount and pay it back as soon as possible no matter the interest rate on it. These dumb things can hang over your head for decades. This ties into the mindset of college for all which I don't agree with. Society is producing a bunch of indentured servants that are chained to the job world with little hope of escape anytime soon.

Credit cards are free money right? Yeah right! What a lie that is. I use credit cards, but I pay my balance off before the statement even cycles. That's how cautious I am with these things. Credit cards are like playing with fire. You must be very careful. I use them in a transactional manner for the rebates. I'm not earning any money with interest anyway in my savings account so to me there is no good reason to put off clearing the balance.

Don't get into debt if it's within your control. And a lot of it is. I've lived a debt-free life since 1999, and I plan to continue living this way. I just don't like the feeling of owing anyone. Make your own plan to get debt under control or never get into it in the first place.



© 2013 Blair Williamson, ChFC®

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