I've had debt problems. 2 years ago, I couldn't make ends meet, because of all the consumer debt I had. I refi'd the house and gave the cards (except 1) to the wife. I still thought debt was a good tool then. I never let my 1 remaining cc balance get above $1000.
6 months ago, I put a heloc on the house and bought a rental property, taking our a $90,000 mortgage. I still thought debt was a good tool then.
3 months ago, I started listening to Dave Ramsey. I have, since starting to listen, heard story, after story, after story, about not just people who were BAD with money, but from people who had it all under control, had "good debt", were leveraging, etc.
Right up until the financial rug got pulled out. Medical problems. Accidents. Layoffs. Whatever.
And I started really thinking about the *risk* that comes with debt. Debt is - it truly is - a form of legal slavery - you are BONDING yourself to someone else, voluntarily, to buy today at the cost of the future.
And I started thinking about how tenuous this "all under control" situation I'm in now really is. I have 2 mortgages, 2 car loans, 1 heloc, and $1,600 EXTRA in the budget per month right now. I am NOT struggling to make ends meet.
But if something happened, and I couldn't earn what I earn now, I'm about 60 days from defaulting on those loans. So are 7 out of 10 of you, according to the statistics that show that 70% of Americans are living paycheck to paycheck. (And yet only 55% worry about it, which means 15% of us are having prozac moments...)
I make it clear, I am not a Christian, but some of the best MONEY wisdom on the planet can be found in the bible.
The rich rule over the poor, and the borrower is servant to the lender (Proverbs 22:7).
He who puts up security for another will surely suffer, but whoever refuses to strike hands in pledge is safe (Proverbs 11:5).
Let no debt remain outstanding, except the continuing debt to love one another (Romans 13:8).
Do not be a man who strikes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you (Proverbs 22:26-27).
My son, if you have put up security for your neighbor, if you have struck hands in pledge for another, if you have been trapped by what you said, ensnared by the words of your mouth, then do this, my son, to free yourself, since you have fallen into your neighbor's hands: Go and humble yourself; press your plea with your neighbor! Allow no sleep to your eyes, no slumber to your eyelids. Free yourself, like a gazelle from the hand of the hunter, like a bird from the snare of the fowler (Proverbs 6:1-5).
If you want to consider debt a tool, that's your choice, but the thing is, NOBODY can be certain they'll never go through a trying economic time in their lives. Risking today is one thing - but putting ones future at risk for the sake of the present? That's no longer something I'm willing to allow myself to do anymore.
Only 7-8 years left.
. I'm not in a position to say whether or not he could make it another year.
