From 0 To Debt Hell In Six Seconds

by Nicole

I've never subscribed to the philosophy of debt, which seems to be one of the leading sources of misery in the Western world. I've always valued the peace of mind that zero debt gives me far above the stuff that going into debt allows me to buy.

I'm not naive, I know for some it's hard to escape debt since a minimum wage hardly covers even the necessaries of life (which is obscene, and a whole other story). But most of us do have a choice: A new car and new debt vs. keeping your old car, and your peace of mind. A new flat screen TV and new debt vs. keeping your old tube TV, and your peace of mind. It's a question of values, and what you value more.

Americans are tempted and brainwashed into debt from a very early age, with credit and debit cards marketed to kids, and obligatory student loans ensuring that we embark on our adult lives chained and enslaved by our society of debt.

We all know to stay away from loan sharks, but few question the wisdom of "respectable" institutionalized debt, such as car loans, which are likely to be our biggest monthly expense after rent or mortgage payments.

We're conditioned to believe we can have the car we "deserve" now, rather than merely the one we can afford. Worse still, we are told if we don't drive the "right" car it'll harm our personal and job prospects, the “right” car for our social group inevitably being one that’s more expensive than we can really afford.

This form of corporate-driven peer pressure is truly insidious. Few realize that by subscribing to this philosophy, and something as seemingly innocuous as a modest monthly car payment, they may well be trading in their future financial security.

Do the math. If you saved up and bought a more modest used car cash down, and put the $400 a month the average American spends on their car payments in a high yield mutual fund that earns 12% annually, after 30 years you'd have a nest egg of well over $1 million.

So what does that BMW say about you now? Is the luxury car company really selling you "sheer driving pleasure" or "sheer debt forever?"

| 04/21/08 | Lessons