Debt is not "the Devil"
Christine M Luken
Helping six-figure business-owning couples manage money & emotions to achieve lasting Financial Dignity?
Unfortunately, some of us (me included) have been taught by society and religion that all debt is bad. We might feel like we have to avoid debt for any reason and at all costs. We might beat ourselves up for borrowing because we will lose our coveted "Debt-Free" status. This leads us to feel shameful about our debt, and honestly to make some unwise financial decisions.
For example, one prominent money guru advises stopping retirement contributions while paying off debt.
Why is this a bad idea?
You’ll miss out on your employer’s company match (FREE money!) and the compounding power of time on your investments. Plus, you're breaking the habit of paying yourself first to pay someone else first. Once you're finished paying off the debt, you have to overcome inertia to jump-start your investing again.
Debt is a tool that CAN be used wisely, in moderation. I love the way self-made millionaire and Money Queen, Amanda Frances explains debt: "Debt is NOT the devil! Debt is a decision to pay something off over time."
I like to say it this way: Debt can either be a shovel or a slingshot. The choice is up to you!
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If you buy something that is going to appreciate over time (like real estate) or increase your earning power (like a degree or certification), you’re using debt to slingshot you forward in the future. If you’re going into debt at 15%+ for clothes, restaurants, and other things of no lasting value, you’re using debt as a shovel.
Yes, you do need to be careful and intentional with debt. Don't take on more debt than you feel comfortable carrying financial or emotionally.
But let’s agree to STOP demonizing debt! You're not a bad person for having it. It’s simply a decision to pay something off over time. ?And let's also stop associating being debt-free as being virtuous or holy.
Want to be debt-free? Awesome, go for it!
Want to use credit responsibly and in moderation? Awesome, go for it!
P.S. If you're NOT comfortable with the level of debt you're currently carrying, let's chat about how I can help with that.
| Time Management Expert | Revenue Catalyst | Driving Success through Strategic Planning & Execution | Author of "The Time-Optimized Life" |
2 å¹´The title hooked me Christine Luken. Thank you for the informative article.
CFEd ? at WealthWave —> I provide tailored financial planning to your team, creating more stable and focused employees, and taking you to the next level of profitability.
2 年Such great points! Not all debt is “bad!†Also you never get your time back so, if your debt is not super high interest, you will probably do far better to contribute to your retirement and pay off low interest debt more slowly. Debt that helps you build wealth is a tool you can use as leverage. Thanks for a great summary!
Creating bespoke and "done for you" real estate investing strategies for busy six and seven-figure individuals that can be effortlessly implemented because it is tailored uniquely to you and your personal goals.
2 å¹´Great post! I think consumer debt is something that definitely needs to be discussed and cared for in a responsible way. As a real estate investor, I use debt all the time to grow my personal net worth and income. Using other people's money can be a very useful tool when done correctly - but in all things, it can also be abused. Thanks for bringing up this topic! It's so powerful.
Daily Money Manager | Helping you manage household finances | Bringing peace of mind to struggling older adults | Busy families | Individuals
2 å¹´The struggle is that to determine if debt should be a slingshot, one has to do the ROI for that debt amount and that can be too complicated for some. (And even when done, it can feel counterintuitive!) So perhaps to avoid the work of determining ROI some people just say "don't do debt".
Guiding faithful stewards on the journey to "Well done!"
2 å¹´Well stated, Christine Luken. Love the slingshot or shovel analogy!