I’ve never had an empty bank account without some support from others. I’ve never hit zero dollars, and then decided what I need to sell to make ends meet. I’ve never run out of money, and been unable to make a co-pay or buy food. This is a privilege of my social class, but it’s also a consequence of this country’s acceptance of debt.
When I turned 18, I immediately applied for my first credit card. I researched and found the ultimate cash back card for my beginning credit line. At the time, that meant a $50 bonus for opening the account, and a check every time I hit $50 in rewards. The bonuses weren’t much, but they were a taste of the good life.
Even before I was accepted into graduate school, I started spending more. A computer sound system — that was amazing! A beautiful road bike. New smartphones whenever I wanted. Life was good, but it was all an illusion. It was all charged to credit cards, and my poor spending habits only descended as my academic career continued.
Eventually, I needed to take out a balance transfer, and opened a new credit card that allowed me to transfer and put off my debt. When I finally started getting student loans, I needed more to pay off the credit debt. This is the classic “robbing Peter to pay Paul” concept of debt payments. I constantly owed one bank something or another. Frankly, this life was stressful and full of unknowns. I constantly questioned, “Will I have enough to pay off this debt?”
But that was all behind the scenes. On the surface, I was a brimming success. Look at the materialistic items I was able to purchase — the “things” I had amassed! I could scan around my room and provide details about the latest purchase — all without addressing a gaping hole in my story.
Everything was purchased with debt. My things were the banks’ things.
Debt prevents us from seeing how little we actually have. It’s a scary psychological trick that banks prop up for us. Why should anyone be able to spend more than they have? Why must we finance our vehicles, homes, and dreams? If we do not have the actual money, why should we be enabled and empowered to spend?
I’m not sure that, as humans, we’ve evolved rapidly enough to adapt to taking out and handling debt properly. And yet, our system pushes people to adapt or perish in bills and debt collectors. The victims of this systemic problem are blamed and tarnished — left to bankruptcies (unless it’s student loan debt — you must die to rid yourself of that) and court proceedings.
We need to reevaluate both success and reality. In reality, the life I lead is a modest one where I cannot afford that European vacation I desperately want. But my credit card and possible student loan access says otherwise. In reality, I cannot afford to own a nice car I want. But my bank keeps offering me car loans at 2% interest APR.
Where can I find the middle path? Where can I compromise and meet my budgetary reality? The simplest answer I’ve found is realizing that I don’t need much. In fact, most everything I ever purchased served an unnecessary status function in my life. The only way I’ve been able to stay afloat these days is by realizing how little I “need” and how much can be thrown away as “wants” — some of which are extrinsically motivated.
When I want to spend more than I have because I can, I constantly remind myself about the stress and unknown feelings surrounding debt. There was such powerful shame because I couldn’t “control myself.” We need to take responsibility where we can, while also recognizing that we live in a system that ushers out goodies to perpetuate and encourage spending — then blames you for participating. The best we can do is remove the credit card chicanery and unveil the truth: debt is the illusion of success.
Don’t ever feel shame about making mistakes that are part of the learning process. Shame is reserved for those who have made the same mistake over and over again, without ever learning different behaviors.
Debt equals stress. Stress equals diminished quality of life. That’s all anyone needs to know.
Debt is definitely the worst in preventing one from living life. Just stay clear from it. It’s also okay to make mistakes along the way but what’s more important is to grow from it. It’s a good thing laws have changed. Back in the day people became indentured servants with the debt they held but I guess that’s true today too.
We haven’t had a credit card in over 10 years now. We never could handle them. People are told that you cannot function without credit. I’m here to tell you, you definitely can! 🙂
Good for you! That’s exceptionally impressive. 🙂
You’re absolutely right that you CAN avoid the credit cards and consumer discretionary debt. It helps to start with a good budget, though!
Sam
My debt years were the most stressful time in my life. Now, even if we have a ‘bad’ month, we’re saying that at least we got all the bills paid, we’re healthy and no bank comes to us for money
Wow! What a realization. I love it. I’ve never thought about it in this simple of terms, but you are totally right. Debt is just the illusion of success. Most of the things we finance with debt: fancy homes, cars, clothes, electronics, etc., is only to prove to everyone around us that we are successful. Great post!
Almost everything in this society is an illusion of some sort. McDonald’s is an illusion of food, soda is an illusion of a drink and debt is an illusion of success as you wrote. What these all have in common is that they’re cheap to produce and easy to get addicted to.
Very well-said!
Leveraging debt isn’t necessarily bad. Consumer debt is. Most people can’t afford to buy a home or car with cash. Also, if the interest you pay on the debt is less than you can earn through investing, you could actually be worse off using that money to pay cash when you could finance it. It’s about bein responsible and doing the math.
Steven,
This is one of the great questions about debt — frankly, life in general. Should we have a “need” for debt, even when non-consumer discretionary? Should we think of leveraging debt as an asset to our economy, instead? You may have a point, but my heart keeps me in a place of defensiveness about taking on ANY debt. I believe that debt allows you to live bigger and bolder material lives than we ever conceived. In turn, buy buying bigger and bolder homes with flexible and easy mortgages, we fill these temporary palaces with stuff. This is all to say that when it comes to debt through mortgages I’m somewhat undecided and see your point, but would deeply regret and hesitate to take any out, personally.
Thanks for your thoughts and comments,
Sam
Great article and well said.
Absolutely true! The only debt we have is a 15-year mortgage (and the only debt I would be willing to have) is a 15-year mortgage, and we are working to pay it off as quickly as possible. I don’t worry about what’s going to net me more money in the end, what investments would pay off at what percentages because even money decisions aren’t about getting as rich as possible. There is so much more to it than that. Debt is slavery, and I’d rather be free with less money than a rich slave.
At 59 years old,I have never in my life had a credit card.I don’t know anyone else who has lived without one.I have borrowed only to buy real estate and a car,and these were paid off as soon as possible.Also, I brought up 2 children on my own with little child support (ex died whe youngest was 10).Never inherited anything either. With no family to help I just always found a way to get by with a bit of creative thinking.
Hi Collaroy, I thought I was the only one to never have a credit card! I am 43 and never seen the need. As you said, you can get by if you’re creative. Well done.
Hi Sam, you capture reality for so many folks very nicely in this post; you’re exactly right that debt is the illusion of success. Unfortunately in our culture today, debt is so common, so accepted, so incredibly well marketed that many folks think there is no other way to live. Debt for everything…school, cars, home, unneeded but wanted pleasures….vacations, toys and tons of other STUFF.
Starting about a year ago, I began a journey to live far more intentionally; to reduce and de-own; to simplify and minimize.
Thanks for a good article and for encouraging others to see there is a better and easier way to live!
Hi Sam! I’ve walked much of the same path as you and completely agree. Unfortunately most of us seem to need to go through the same painful story to “learn the lesson for ourselves.” It certainly took my husband and I many years but we DID learn. Now I’m happy to say that we’ve “right-sized” our lives and live completely debt free–and no it is not a sacrifice at all–it was definitely the best thing we’ve ever done. Thanks for your tips and encouragement. All we can do is continue to spread the ideas and know that people will hear it when they are ready! ~Kathy
I don’t get the American model.
Haveing a credit card is rather unusual in Germany. It is possible to overdraw your bank account, but you never have the illusion of credit cards. The whole credit card thing looks like “buy today, see if you can pay it off at the end of the money”. I just don’t get how that is a good idea.