While I am not a fan of carrying consumer credit card debt (yes, there are some people who don’t mind), there are three kinds of debt I don’t necessarily have a problem with. Going into debt to pay for a home, for an education, and even for a needed car are the only three times I feel it is OK to go into debt. Most people don’t have the income or savings to pay cash for their home, so they take out a mortgage for 30 years. Some people might want to get a better job, and might need to borrow the money to go back to school. And some people don’t feel comfortable shelling out $20,000+ in cash for a new car, so they might have to find a way to borrow some at a low rate. The only debt we have right now is our one car payment; our other car, my Jeep, was paid for in cash because it was a lot cheaper. The car debt is for another 4 years at 3.9%, so it’s not all that bad to take. While I use credit cards to pay for almost everything each month, I pay the balance off when it is due. This helps me get rewards points or miles, and keeps my credit history moving and current. However, some people have a different debt philosophy than me…
photo credit: Andres Rueda
Some folks don’t mind carrying debt because it allows them to live beyond their means. I don’t mean this is a good thing; rather, I believe that they think that because they can afford the minimum payments every month, it’s all good. After all, “living large” is the American way, right? Making the minimum payments for years on big screen TV’s, cars they shouldn’t buy, vacations they shouldn’t take – it all doesn’t matter as it allows them to have a make-believe lifestyle. That is their debt philosophy, and obviously it is a lot different than mine. I used to do some of those things, and paid dearly for it…and now you couldn’t get me to carry around consumer debt like that again just so I could play “pretend” around my friends and family. It’s not worth it.
Because of my own debt philosophy, I get to live the kind of life that I want – which was the ultimate goal. What’s your debt philosophy, and why do you choose to live by it?