Want to be a debt slave? I didn’t think so but it is really EASY it is to become one. Most people spend more than two decades of their lives working their way out of debt. You DO NOT have to be like most people if you recognize and avoid the traps.
- Let the good times roll – running up credit card debt for partying will get you enslaved. Those fees and that interest remains a lot longer than the hangover.
- Consumerism – buy now, pay later. An easy payment plan. Those consumer goods lose value quickly. The terms “upside down” and “underwater” indicate that what you bought is worth less than you owe for it.
- Failures – this is a bit more subtle. You tried to use debt the right way and it did not work out. Paying off that debt is “another freaking growth experience”.
- Capital gains borrowing – (also called being “land poor”) buy something that you expect to gain in value but you have to rely on a different income stream (for most people, that means working for a living) to pay for it. This might work out, it is just risky.
- The teeter-totters – these are things that could go either way. For example, borrowing for a car. If your job depends on transportation, that is OK. If you take on student loans to learn a marketable skill, that is OK. Running up 60k in student debt for a degree in sixteenth century feminist literature is going to make you a debt slave.
Once you ARE a debt slave, you loose options. You MUST work, even if you hate it. You might get stuck in your house, even though it is too small for your growing family.
So what is debt good for? Find out next time.