Debt is a promise for a certain amount of future, not-yet-realized income, in exchange for the same amount, plus some extra. The extra is paid for the convenience of having the sum available immediately. Debt is usually paid back in regular installments, for weeks, months or years, each installment containing a certain combination of the capital (what you received initially) and the extra (or interest). Usually, the extra is paid at the beginning, the initial installment containing more interest than capital.
Debt is very popular. Debt is also a form of death.
I know it sounds harsh. And it sounds like this on purpose. I want it to sound harsh, because the actual experience of debt is way harsher than reading a couple of sentences on a random blog, like you just did. Debt can change your life in a second, turning you into a perpetual slave, limiting your options to the point of not having any left, and it can also spread its effects on your closest ones (in many jurisdictions debt is inherited, so your kids will have to pay if you don’t settle during your life).
Because of good marketing and peer pressure, and because of the way human mind is working, almost no one realizes that getting into debt is a death sentence for their future. Usually it takes a few years until the burden becomes clear. By that time, you are already tired.
Debt also makes very good use of the Overtone window. We usually start by borrowing small amounts that we can easily pay back. We borrow a few dozen until salary day, then some hundreds to cover a bridge for a new car, and, before we realize it, we are so confident that we sign up for a 30 years mortgage, for an amount we can’t properly understand. From that moment on, we’re fucked.
But, as I said, we don’t know that, until it’s too late.
Some financial models classify debt into good debt and bad debt. According to them there is type of debt that can be used as leverage, for instance, when you are investing, and there is a type debt that is just going into consumption, with no other outcome except the slow, inexorable drying of the account.
I don’t buy this. I don’t believe in “good” debt versus “bad” debt. I believe there is just on type of debt, which equals death, but you may disagree with me, and that’s ok.
It may seem that we live in a world in which debt is unavoidable. In the United States, for instance, student loans are something so popular, that almost everybody uses them. I can’t fathom how it is to finish college with a financial burden so heavy, that it may take decades just to be clear.
But who am I to talk? I took me about two decades to understand how debt works and to decide to break free. It finally happened a few years ago, I’m technically debt free, but the impact was so heavy on me, that I still consider myself tainted, I act like I’m still liable. This translates into specific budgeting habits, and into a consistent attitude towards financial resilience.
But debt is not unavoidable. You do have a choice. You can train yourself to understand the consequences of your choices before too much damage is done, you can learn to manage peer pressure, you can alter your lifestyle in such a way that debt is simply not an option.
If there would be just one way to think about debt, I would phrase it like this:
Every time you take on debt, you are paying with something from your future: your future money, your future time, your future health. Every time you take on debt, you’re shortening your life. It may seem like you’re getting some extra now, some extra leisure, some nice gadgets or opportunities, but this is only because you willingly chose to postpone looking at the price. By splitting it into future installments, you chose to ignore it.
Because if you would look at it, if you would have the courage to understand what you are doing, even for a second, you would never do that to your future self.
Photo by Alice Pasqual on Unsplash
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I would say that debt is a sacrifice of your freedom, not sure I would say death.
But when you owe others and intend to pay it back, you can not choose to leave a job, or take a vacation or...
It creates stress, living debt free feels great
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I know this feeling very very well
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I'm glad and I think the idea is spreading
Debt kills plain and simple, debt robs us of our freedom. We've got to avoid it at cost.
Good or bad debt is something I have to give more thought to arrive a decision whether there's such or there's just debt.
I wouldn't have phrase debt any better than you did, pure truth!
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This might have convinced me to pay for my mortgage as I have good cash flow, but for some reason, I was thinking that I could use that for something better. But getting free from debt might give me a bigger boost to start doing something on my own.
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To avoid debt make sure you stop borrow from people.Always pay all your bills immediately to avoid debt. Debt don't add profite instead it depreciate your own money when you want to pay it.
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If any bank would allow me credit, I'd take the most I could and buy crypto... I believe it depends a lot on what you do with debt. Taking money out of the bank to buy cars and houses is somethin I wouldn't do at this point. Society is currently on a mine field imo.
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I have a friend who's currently stuck in a bad debt cycle and is trying to get out. It is quite horrible and things can degenerate very fast
Love it! This is 100% true.
The return on most student debt isn't worth it, not like it was in previous generations. At least not in the traditional since. There are few fields/paths I would take on debt if I were in the market for a career change.
Debt was never an option to me. Never. And it still is.
This is about the only good thing which past "ussr regime" has made to my life. The regime, which (in most other terms) has spoiled the first 50% of my life.
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