Why you must get out and stay out of debt

Your debt makes other people rich. You’re borrowing from your future self, who will be poorer, less secure, or lead a less abundant life because you wanted something now, before you could afford it.
You must get out of debt. You can’t save while you’re in debt, and it grows like a weed. Kill it!

Avoid debt like the plague

The only good debt is debt taken on for investment. In personal finance terms, that means an affordable mortgage to buy property for the long-term.

We all know what bad debt looks like:

•  Excess clothes piled up on store accounts.
• A loan taken out to fund a holiday.
• Flashing the paper to keep up with your mates.
• The last week of every month’s expenses being put in a drawer and never actually paid off.
• Sundry pointless items bought on the ‘never never’ as our grandparents wisely called what we call credit.

Bad debt – non-mortgage debt – will make you poor if you’re not doing very well already, and it will stop you becoming rich if you are.
Too extreme, you say? Everyone has debt – surely millions can’t be wrong?
I disagree. The popularity of debt is down to:

1. Emotional marketing by retailers to persuade us that we must have things we never knew we needed and most probably don’t.
2. Emotional marketing by financial firms, who tell us we can have anything we want – now.
3. People being too impatient nowadays to save for anything.

I know I sound old-fashioned, but we need to relearn some old ways of thinking.
Financially, borrowing to consume makes no sense to me, whatever economists tell you about balancing ‘consumption over a lifetime’ or similar wealth-sapping baloney.

• Debt makes everything much more expensive.
• While you’re paying off debts you’re not saving and investing.
• Debt saps your efforts to make more money.

Remember, you’re not getting anything free when you buy on credit. You’re only borrowing from your future self, who will be poorer as a result.

The bottom line on debt. Don’t do it.

Get out of debt, and stay out of debt. You’ll earn money instead of paying it, you’ll end up richer instead of poorer, and the only possible downside is less hours spent with bored 17-year old staff at your local retailer, if that happens to be your hobby – at least until your savings have caught up.
My guess is when you’ve got the money in the bank you’ll not want to spend so much on pointless gadgets and gizmos.
I’ll discuss how to get out of debt in detail in a future post.
The short version:

• Cut up all your evpenditure to avoid getting new debt.
• Target the debt on the card with the highest interest first.
• Find more money: Sell unwanted stuff, do overtime, go busking.
• Pay as much over the minimum as you can each month to clear the debt.