For the past eight years, my work has primarily revolved around investigating and composing articles on personal finance. Throughout this period, I have consistently encountered the mindset that debt is an ordinary, even advantageous part of life.
I take issue with viewing debt as a standard. While it may be widespread and largely accepted, it should not be perceived as normality. Here’s my reasoning.
Imagine a life with no debt – your house is fully yours, the cars are paid off, and the intimidating reminders of the cost of your education or big purchases no longer shadow your monthly expenditures.
How would you spend the excess money now available? Even those with modest annual earnings could notice an additional $500-$1,000 every month if they were entirely debt-free.
Many of us have normalized debt to the point that it is just another bill to pay, equating it with necessities, like food, which is a skewed perception.
Often, when I express my aspiration for a debt-free life, I am given advice like “some debt is beneficial” or “you need some debt, don’t repay everything.” Even renowned sources like CNN Money maintain that avoiding debt completely is unwise as it might drain your emergency funds, a notion that I thoroughly disagree with.
If you have no debts to pay, you could be better channeling your money towards savings and investments. It’s considerably easier to grow your emergency fund and savings when you don’t have colossal debts to settle on a monthly basis.
The long-held belief that holding a mortgage for the tax break is a money-saver has to be scrutinized. While enjoying the tax break is wise when you have a mortgage, staving off an early repayment just for the tax break is illogical. The amounts saved via tax breaks are rather negligible when compared to what you could save without monthly mortgage installments and interest rates.
Debt is often seen as the stealer of freedom. The narrative needs to change from #debtisnormal to challenging the debt mentality!
Another misconception is that you need considerable debt to enhance your creditworthiness. This is simply not true.
So, before you embrace debt as an ordinary part of your life, consider what you could achieve without it. What dreams could you fulfill? Where could your life journey take you?
Consider these common situations:
– “I cannot leave this job I despise because of the saddling student loan debt.”
– “I wanted to travel this summer, but my budget is choked by debts.”
– “I would love to quit my job and follow my writing passion, but the bills are overwhelming.”
– “Retirement this year doesn’t seem feasible without enough savings.”
Debt can imprison us and takes away financial autonomy. Thus, before accepting debt as a regular or beneficial part of your life, reflect on the multitude of possibilities that could unfold if you were not indebted.
Do you see debt as normal or even beneficial? Have you fallen into the trap of believing that debt or carrying a balance is necessary to establish good credit?
