Commitment to Structural Debt
Too many Americans have committed themselves to structural debt. That is, they structural their lives around acquiring debt. More accurately, they structure their lives around acquiring things — material things and experiential things — that cost them debt.
What is one of the first things a young person does when she begins the transition to adulthood? Goes into debt to acquire a car. What comes next? Going into debt to acquire an education. What do you need for an education? A computer you cannot afford. College students and recent grads in our ultra-connected, globalized world should travel. There are credit cards for that European vacation. Time to settle down; what do you need? Furnishings you have no savings for. It’s about time for a new car . . . loan. Got to buy, uh that is, charge some work clothes so that you look professional. Time to get out of that “starter home.”
The availability of credit (i.e. debt) allegedly makes first world countries prosperous. In practice the availability of credit has created a situation where people in “prosperous” countries structure their lives around debt. It is fair to question whether this really is prosperity.
Thankfully, our commitment to structural debt is mostly a choice. It is possible to choose not to participate, not to structure our lives around debt. That decision to orient our lives so that we reject indebtedness is no easy task. It takes a rejection of a consumerist mindset. It can be done.
Structure your life around simplicity and you will be free from debts.
Comments
This is a really interesting post. One thing in particulare that leapt out is the phrase “starter home” and that made me think about the terminology used to encoutage consumerism. One would assume that a “starter home” is adequate in order to comply with marketing legislation so why might it be called a starter home? Perhaps to entrench the idea that we should progress as quickly as possible? It certainly seems to work that way….
@ Paul: I think you are right. My mom is a real estate agent and I grew up hearing her call small houses starter homes. We live in a “starter home” and hope to stay for the rest of our lives. Enough is enough.
@Dave: I have been in debt three times: 1st time, in high school, to buy a $3000 bassoon. I paid it down fast, and sold it for a $1000 profit a few years later. My second experience with debt was on an $18,000 professional bassoon, as I was studying music in college. I paid it off by the time I graduated. I played professionally for a while, and when I quit, I sold it for a $13,000 profit and with the money finished off the third loan (the house). I hope never to go into debt again. I’m not sure what I would’ve done without those loans–there’s only a certain amount of progress I could’ve made without proper equipment–but at least the loans were on things that increased in value. In the long run, I was better off, financially, with the loans than without them. There is probably a time and place for debt, but as a lifestyle choice, or for depreciating consumer goods, no way!
I’ve never liked the idea of debt. It’s in the back of my mind… Even if it’s just “I owe a friend a few bucks for pizza.”
I remember being surprised when I was in kindergarten and my parents had just finished paying off their mortgage… and now I realize that other people have to take like 20 years not 6 or 7. Call me afraid of commitment, but I shudder at the thought.
When I buy a home it will be a “starter home” and my 2 kids I plan to have will each get their own room, and I don’t see why I’d need anything bigger.
My husband and I have committed to a debt free life. We are paying off our mortgage (the only debt we have) as fast as we can. We hope to be completely debt free in under 2 years.
We are saving for future purchases like cars, home repairs, etc. We just don’t want to owe anyone for anything. When you are debt free and have money in the bank, the sense of freedom is wonderful.
My Dad, born in ’31 taught me the familiar “live within your means” phrase as I was growing up. At 13, he cut off my (small) weekly allowance and let me start earning a (small) paycheck part time at a senior center instead. Any dates I was going to have with Girls was funded by dishwashing… In college, he went 50/50 with me on tuition, room & board. This gave me enough skin in the game to get my Engineering degree in four years. I had to pay off the student loans over a couple of years with my first job.
Now married with two daughters and in our second (too big) house. Just refinanced at low interest rate/10 year mortgage. We could pay off the mortgage now, but would take tax hit on the 401k withdrawal. Seems that the tax code also keeps mortagees hooked on debt with tax deductions for mortgage interest.
Thanks for the book – I may be starting this in 2012
I have to say the one debt I have that I would not go back on is my student loan. I make more in six months each year than the total I borrowed. Without my education, I would be making minimum wage. The security of having profession is well worth every cent of interest. I had very small children when I went through nursing school so I wasn’t able to work to pay for college upfront. Would not trade the loans for minimum wage….not a chance!!!!! Otherwise, I agree completely. I think the worst is taking out huge debt for a wedding….what a waste.