WizardPC has been writing a very good series on his website called Debt Free Living. I’m very fortunate to have the father I do because he began his own business with nothing and now has the most successful auto shop in his town. While he had to take business loans periodically to establish and expand his business he’s always paid them off far ahead of their due date and has never accumulated debt via credit cards of other frivolous expenditures. Although I’m not the smartest man on the planet I’m very capable of learning from those who are incredibly smart and thus I’ve always been a close manager of my money.
Unfortunately many people in this country (and elsewhere in the world) are not so careful with their finances. WizardPC’s guide explains important things that you need to consider when trying to get out of debt. The most important of these lessons is creating and sticking to a budget and eliminating your current debt and the interest that must be paid on it as soon as possible.
Sadly as government policies continue to cause ever increasing inflation it’s difficult to create a sustainable budget while your purchasing power is reduced on a daily basis. While the interest in my money market account used to be notable it’s now so pathetically low that it’s like having no interest at all. Thankfully I’m a man who diversifies a bit and have been able to maintain much of my purchasing power through investments in precious metals. I think an important lesson for getting out of debt is understanding that you not only have to eliminate your current debt to forgo paying eternal interest but also because your money is becoming more worthless every day (thanks government) and thus you’re going to need more of it in the future to cover basic living expenses such as food and water (especially if you’re not getting periodic raises to offset the effects of devaluing money).
A man without debt is truly beholden to nobody (well except the government because they still have guns to your head). Instead of working for your financer, work for yourself. Once you’ve eliminated your current debt then all money made by you goes to you (and the government who will ultimately shoot you if you refuse to pay their demanded pizzo).
2 thoughts on “Debt Free Living”
While I agree with the sentiment having no debt isn’t necessarily the best option in an inflationary environment. From a freedom standpoint it always is, as you can get buy on very little if you don’t owe anyone anything, but consider a mortgage. I have my house locked in at 3.875% for 20 years. Chances are the way this administration and the previous one have printed money inflation is going to be much higher than that (especially with tax deduction considerations) so I effectively have a large dollar short with the money locked in at that rate. That being said it only works if you can pay the mortgage, and I am a big advocate of metals as well, I just stopped buying them after gold hit 850 as I had a full position and am just riding it out now.
I do agree that a locked in loan can be a good thing in an inflationary market as you ultimately buy a product for “less” money, as you said it only works if you can pay the mortgage.
If inflation is high enough a person able to afford his mortgage at the beginning of the loan may have trouble paying it off later due to the additional cost of food, electricity, gas, etc. unless that person is receiving periodic raises that match or exceed the rate of inflation. No matter how it’s looked at the uncertainty of an inflationary economy is dangerous to everybody involved.
With that said all forms of debt aren’t bad. Owning your own home is certainly a boon as you have a property to call your own and run as you desire. Likewise debt incurred by a business loan can end up making far more money in the future than the loan cost (in fact if it doesn’t you’ve invested poorly).
It’s the frivolous stuff that is pointless to incur debt over. I’ll never understand people who take a loan out on buying a television because they can’t rightfully afford one otherwise. A television is only going to go down in value and stands almost no chance of making you any money like a piece of business equipment can nor provide you with shelter and/or a place to work as a home would. Many people will incur debt by buying a new car they were unable to afford instead of a used car they could have easily afforded (of course this isn’t so much the case as used car values went way up after the government destroyed so many perfectly usable vehicles through the cash for clunkers fiasco).
Comments are closed.