Over the past few months I have chronicled on this blog how I have been on a mission to pay off debt. I fully admit I hate debt. I hate seeing my money go out the door. I hate realizing how dumb I was in the mistakes I made in the past. I just don’t like debt.
During that time several people have e-mailed me why I am so anxious to pay off my house and student loan debt because it is “good” debt. I mean student loan debt helps you get a degree and your mortgage helps you obtain a house, which is a good thing. Why are you in such a hurry to pay off things that didn’t harm you?
My answer to that is, in my opinion, there is NO such thing as good debt. Debt is debt. Yes, I know that some people take out debt to get a degree, buy a car, obtain a home, etc. And I don’t necessarily begrudge people for doing that. I have done it. I am in the middle of it. But that doesn’t mean that loan is necessarily a good thing. And it doesn’t mean that we should be praised for taking out loans for things we can’t afford. For example, taking out a large car loan for 84 months because we had to have a new car, instead of buying a used one, particularly taking out a loan for something that DROPS in value.
I mean I can see some justification for taking out student loans (at least some small ones) if you truly financially desperate or most people will need to take out a mortgage to buy a home. But let’s be honest a good chunk of people take out loans and use that extra money to buy stuff they don’t need or we take out a bigger loan to buy a bigger house to put stuff in it that we don’t need. Ultimately, I don’t understand our celebration of debt.
Why I Hate Debt?
There are a number of reasons why I have come to hate debt with a passion. First, I actually used to be one of those people who said that student loan was good debt. It helps you get a college degree. It helps you advance in your career, etc. All of those things are true to an extent. Student loans can help you finance a degree, but so can working a full-time job and going part-time and paying for school on your own. I mean I took out student loans when my schooling was paid for. It is the biggest regret I have with regards to finance. If I could go back and time I would yell at myself and say GET ANOTHER JOB YOU IDIOT! And the fact is that students who take out loans are now burdened with a heavy debt load that delays their ability to buy cars, houses, etc. If I had my way we would make a lot of universities less costly and if you took out student loans I would base my student loan system on Australia’s where you pay back loans based upon what you make and what your profession is. So people aren’t pressured into going into a field they won’t enjoy. But until that happens people who take out student loans, including myself, have a big fat stone around their neck and our drowning. But I made that mistake. It is my mistake and I will pay for it. It was stupid.
A second reason I hate debt is because debt is, in some respects, financial slavery. Now I don’t mean to equate debt with the idea of slavery that America experienced for over two hundred years. But the fact is that when you have debt you are beholden to someone else. They, in essence, can control your life. Your money must go to service that debt or you will lose your possessions, your livelihood, your credit rating, etc. I don’t know about you, but I don’t like to be beholden to a bank or the government. There is only a handful of people that I will hitch my wagon too and at the top of that list is my lovely wife. Other than that I don’t want to be beholden to you.
A third reason that is related to the second is the notion of freedom and independence. When you are debt free it means that you can control your financial life. You get to decide where those dollars go. If I want to go out to eat good for me; if I want to go on a vacation and save for it I can do it. I can do so many more things where I direct where those dollars will go. I am not dictated to by anyone else. I have freedom to do what I want. And isn’t that what a lot of us are looking for? To be able to enjoy life and not have to worry about paying a mortgage, car payment, etc. It just makes my life cleaner. I don’t have to worry about other stuff.
Now of course you will always have bills, but that is different than having debt where you pay some bank or other entity for something that may or may not have some value to it.
Finally, having no debt gives you the opportunity to save, spend, and give like you never have before. Again, in some respects it is a form of freedom and independence. I get to save even more money than I want too. I can quickly pile up cash to go on that Viking River Cruise or buy a new car or whatever because I don’t have any debt.
The Bottom Line
After paying off student loans for over 8 years, having three car loans, credit card debt, and now a mortgage I am firmly convinced there is no such thing as GOOD debt. Debt is debt. No matter what you are beholden to someone else. Does that mean we should get rid of loans altogether? Absolutely not. Am I someone who will never have debt in their lives again? Well, I hope so. I hope I never have to take out another loan to buy a car or the like, but I can’t necessarily say that. What I can say is that when I have debt, particularly the amount of consumer debt that I have, I feel like a rat in a wheel. I have to teach extra classes. I have to do extra things at my university to earn money. I have to do these things or I can’t pay these things off and still do others like eat, go to a movie, etc. I am tired of HAVING to do something.