Money Myth: Debt Is A Tool

“Debt is a tool.”

Have you ever heard this phrase before? This may possibly be one of the dumbest things I’ve ever heard. Do you know who I’ve heard say this before? People who are in debt…and think they are using it as a tool.

Have you ever watched TV commercials? Of course you have…..but have you ever really WATCHED what is happening in TV commercials? Why do companies advertise? Answer: To sell their products. Whether it’s a car, cell phone, food, clothing or whatever else they are constantly pushing you toward a purchase so that YOU can PAY THEM.

Have you ever noticed what can be financed these days? Cars, cell phones, furniture, mattresses, puppies, you name it.

Side Rant: Do NOT finance a mattress. If you can’t buy it in cash you CANNOT afford it. You will LITERALLY be sleeping on your debt. Rant over.

Let’s talk about cell phones for a minute. The newest cell phone that came out and starts at $800…you know the one with the home button…you know what I’m talking about. I have a very good feeling that a very small percentage of the American population is walking into a cell phone store and dropping $800 on the counter to walk out with a paid for phone. They are likely using the “generous” financing plans provided by the cell company providers. You don’t have to be a genius to figure out that the cell phone company is going to make back the money and then some on the product they just put in your hand for the “low price of only $200 up front.” According to many people end up paying around $300 MORE for the cost of their phone over a two year period. Not to mention all of the extra fees that get tacked on during that time.

That’s just one example of debt that many times goes unrecognized as debt because it’s so common. Think of it like this….I’m selling you a pair of shoes and I give you option of paying $100 for them up front or you could pay $140 over a year…what would you do. You would LIKELY think it would be stupid to pay me $140 when you could pay less. So….why do so many people pay their cell phone companies so much extra?

Debt is NOT a tool…’s a death sentence to your financial future…

Now back to the main topic…..I’m not talking about using OPM (Other People’s Money) to grow your business or anything like that in this article. I’m talking about debt within Personal Finances. Did you know that the Bible actually talks about money quite frequently? Proverbs 22:7 says “The rich rule over the poor, and the borrower is slave to the lender.”

Getting out of debt should be your #1 priority in your finances. If you have debt your goals financial goals will be much harder to reach, both short and long term.

OK….debt isn’t a tool…what now?

Here are a few practical steps that I hope help you in your goal of being debt free (I hope :-)).

1. Change the Way You See Debt

If you don’t see debt as a financial problem…it’s time to change your thinking. Imagine if you had NO payments on anything you owned or purchased? I’m not talking about car insurance, gas bills, electric bills, etc. Those are monthly expenses. I’m talking specifically about debt. Figure out what debts you have and write them all down on a list. Example: Car payment, cell phone payment, furniture payment, or whatever else you may be paying off. It’s up to YOU to convince yourself to see those debts as a NEGATIVE in your finances.

2. Make a Plan to Get Out of Debt

Now that you’ve compiled your list see what you can do without in life. See what you can cut back on if you can’t completely eliminate it. Start paying off the smallest debt first, throw every extra dollar at that debt. It’s important to start small not only to see progress but to actually KILL off your debts ASAP.


3. Enjoy the Journey

Matt and I try to talk about this a lot. Just allow yourself to enjoy cutting back. Let me tell you from experience….it’s not going to be FUN at first..but that doesn’t mean you can’t learn to enjoy the process. Your friends or family may even make fun of your ambitious goals once they see you’ve cut back on shopping, going out to eat, etc. Just prepare yourself for this reality. Many people are ignorant and they speak out of ignorance. Once you start seeing your balances decrease prepare for your motivation to drastically increase.

Being debt free is AWESOME. If I can do it, YOU can do it!

Here are couple other related posts that we hope you find helpful. Click HERE and HERE.

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