14562 days ago
In the book of proverbs, King Solomon writes “the borrower is servant to the lender.” Right now in the United States, millions of people have become debt slaves by working ridiculously long hours just to pay bills.
I am SHOCKED at what some of my friends and family pay for on a monthly basis, high rent, enormous college tuition, and car payments. Since I was young I have always managed to make great money, with the exception of 2008 and 2009, my active income has always been in the upper tax bracket. However, though I make more money than a lot of people I know, I have never had a car payment over $485 a month, and prior to that it was always below $250 during my entire 20’s.
I have never paid more than $1,100 for rent. Even in Southern California I found a decent house that I rented, which was actually offered for $1,300, but I negotiated the landlord down. I’ve always owned houses; however, I did rent for about 2 years during 2007-2009. I simply felt that housing wasn’t a good buy at the time, so I sold almost everything I owned in 2007 prior to the housing collapse.
When it came to college, I chose not to go to college, not because of the debts, but because I didn’t see any real value in it. My reason being that I saw plenty of jobs and businesses that make more than a college graduate. Since I was 16 years old, I knew I wanted to get started on life right away and had zero interest in continuing school. My education was directly from mentors, books, seminars, and trial and error.
Car PaymentsAs I write this I firmly believe you should do everything you can to avoid a car payment, there are plenty of vehicles you can own outright for less than $5,000. You don’t need to purchase a $30,000 vehicle with bank financing, this isn’t an asset, it is a financial obligation. Rather than accumulating debt with unneeded purchases, you should focus on acquiring assets during your 20’s through 40’s, this is your life’s asset accumulation phase.
Renting a Nice Place“I just don’t get it, you don’t own it”, so, “does it matter?” Why would you need to impress people by having the nicest ‘rental’ on the block? I am not saying to find a rental in the ghetto, but please don’t try and pretend you are rich when you are not. It’s not worth it, you are far better off living with your parents, a friend, or renting a room or smaller apartment and investing your money.
This goes for the 30 year mortgage too, avoid it, unless it is a rental where someone else is going to pay it off, you really need to focus on an affordable house, that means one you can pay off in 10-15 years. I know this means you will end up with a larger payment, but I promise you, you don’t want to become a 3 decade long debt slave, own your home and live in peace!
CollegeIf you already went to college and have a payment over $300 a month, I am sorry you are in this mess. The problem with the way college loans are structured, is that there is no cost to the consumer at the time of borrowing, so you end up with a 10-20 year commitment you made when you were 18-22 years old, this is just horrible. Those that are reading this who are in school, get to the nearest community college asap, or skip college all together and start working, become an apprentice for someone or start your own business that fulfills a need.
DebtDebt obligations are extremely stressful, especially once you fall behind, this is something you want to prevent. You have to get passionate about debt, hate it, fight it, and resist it. Do not justify debt just because the salesman is telling you its only X amount of dollars per month, forget about it, debt is not a plan, it is a trap.
In order to take control over your own life, you will have to be disciplined in the art of living a debt free life.
Is there good debt? Yes, and it can be defined simply as any debt where someone else is going to pay it off for you. For most of us, this will only apply to real estate rental property, you can purchase a cash flowing asset that will be paid off by your tenants.