Stop Working for the Bank

13 comments

in Happiness,Money

Before you read further, please be advised that I am on a rant.

Over the past few weeks, I have had conversations with people about debt – not intentionally but merely because debt seems to be thriving everywhere, including in my own backyard. Debt from mortgages. Debt from credit cards. Debt from car loans. Debt.

The people I have talked to are ordinary people. The guy who has been unemployed for a couple of years. The high-income couple who never seems to have enough money at the end of a pay period. The single mom trying to make ends meet. The retiree without sufficient resources.

Different people but the same conversation. They are wondering how they accumulated so much debt. They are giving voice to their fear and frustration because they can’t see a clear way out.

Debt is a burden they carry with them on a daily basis.

Most of us were raised with the traditional wisdom that said mortgage debt was a good debt. In other words, if you were buying a home to live in, you were buying an “asset” and that was a good thing. So, go forth and get into debt.

Car debt was described as being a kind-of-good debt in that you would have a car when you were done paying it off. And we all need new cars in order to look good, right? So, go forth and get into debt.

Credit card debt, on the other hand, was described as a bad debt because, unless you paid it off monthly, it hung on long after the goods or experiences it purchased had disappeared. But, even so, we are Americans (for those of us who live in America) and it is our right and imperative to “live richly.” So, go forth and get into debt.

But I’m starting to wonder if any of these debts are worth it.

A home isn’t really an asset. In actuality, it is a liability because we owe tons of money and unless the house appreciates (which is akin to gambling these days), it isn’t making us any money.

A car depreciates in value the minute we drive it off the lot so it isn’t an asset either. We might look good for a year or two but we aren’t making any money.

Something purchased on a credit card isn’t an asset either. It’s just a thing cluttering our space and reminding us that we still need to pay for it. The momentary pleasure of acquisition is long gone and the interest on the credit card continues to rack up – costing us, not making us any money.

With each of these debts, we owe someone the obligation of repayment. Usually to a bank. And that means the bank owns our time and money. Because, when we work to pay things off, we are working not for ourselves, but for the bank. We are, essentially, slaves to the debt we owe.

Do I want to spend my life working for the bank? Do you?

Not really.

The older I get the more interested I am in time-freedom. In being control of my own destiny and how I spend the hours of my days. If I am a slave to debt, in whatever form, I am no longer free. I must work in a way that covers my debt.

But how did this happen?

We have been trained that instant gratification is possible. Not just possible but normal. Anything else is not cool. It is stuffy. Boring. Way too frugal.

We are told, if you want a house, take out a loan and pay it off in 30 years. No one says – you should really save more for a bigger down payment, you should really buy less of a house, you should work to pay it off in 15 years, or you should make your house a partial asset by renting a room out to a student (because an asset makes money).

We are told that we need the latest car with the built-in GPS and Bluetooth because we deserve it. The neighbors have one, why shouldn’t we? No one says – you should buy a safe car that you can afford including taxes and insurance.

We are told that we deserve all the shiny new toys and experiences out there. No one says – you may deserve it but that doesn’t actually mean you should have it.

So what to do?

I think, in simplest terms as described by Adam Baker of ManvsDebt, we must learn “to hate” our debt. Get rid of it. Obliterate it by any means possible. In his words, “sell your crap.” Do what you have to do but make your debt disappear in order to regain your freedom. Powerful stuff. I’m getting an adrenaline surge just writing this.

And if hate feels too strong, then maybe we should at least make sure that we understand the consequences of our actions. Maybe we should give some conscious thought as to how debt strips us of control of our time. Our lives. Our ability to be creative. Our ability to enjoy family and friends.

Maybe. Just maybe.

What do you think?

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{ 13 comments… read them below or add one }

Scott Randolph October 26, 2010 at

There is only one type of “Good Debt” – and that is debt that you can leverage to make money off of. There are very, very few people that are in a position to do this (think borrowing to buy a rental property at 5% and making 7% in rental income + appreciation). Any other form of debt is worse than paying cash. (I realize that there are a few exceptions and nuances to this, but that works for a majority of people).

The exact sociological impulses you described are at the heart of what nearly destroyed our economy. The single greatest threat (IMO) to our future is that my generation (30-somethings and under) for the most part have no idea how money works and how to manage it. If you can afford the payments, you can afford it. It’s really scary to think about.
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Andrea October 26, 2010 at

Thanks, Scott. I appreciate your perspective and your statement that if you can afford it, you can afford it. It doesn’t get much simpler than that.

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Nathan October 26, 2010 at

I happen to like stuff, and I don’t feel bad for that. While I agree that relentlessly collecting toys for the sake of having them could lead to a dangerous place of addiction and attachment, I hesitate to swing completely to the other side as a result.

Why not have it? Is this about self-control or self-loathing?
Nathan recently posted..I am Steve Jobs

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Andrea October 26, 2010 at

I totally agree about liking stuff (I like mine and believe me, I’ve got plenty of it). I don’t think this is about self-control or self-loathing. I think it is about consciousness. If you know and understand what you are doing and what the impact is, then great. If not, then maybe not-so-great. Balance and understanding is where I’m at.

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Nathan October 26, 2010 at

I get that I think, although I disagree about a home not being an asset. If paying a mortgage is working for the bank, then what’s paying rent?

I do agree that balance is important. For example, I won’t go into debt for new furniture or a new TV, but I will for business tools or things I need to better execute a hobby.

For example, I borrowed money for my triathlon bike and a new car, but to me, that’s manageable debt.

Going in the hole 30k on credit cards scares the crap out of me. I can’t imagine how I’d spend that money.
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Andrea October 26, 2010 at

Yes, there is much debate out there about whether a home is an asset or a liability; but, in some respects, it doesn’t really matter where you come down on it. The very fact that we are having this conversation (or asking the questions) is the point. Because talking and asking suggests that we are informed about our options and the risks we want to take. Thanks, Nathan!

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Nathan October 26, 2010 at

Right on, I’ll raise my glass to that. The pleasure was mine :)
Nathan recently posted..I am Steve Jobs

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Ronna October 26, 2010 at

Good content (not surprisingly). Good conversation (again, not surprisingly). Hitting nerves. Raising the ante. Calling me on the carpet. Provoking my own internal questions. Inviting perspective, wisdom, and grace.

Good, good stuff, Andrea; and hardly a rant. Brilliance.

And I promise I’m not putting our weekly shared wine on a credit card. :)
Ronna recently posted..Not Alone

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Andrea October 26, 2010 at

Thank goodness … otherwise you might be working for the bank forever!!! ;-)

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Rita November 4, 2010 at

I like this. My mortgage is my only debt, and I like that a lot. However: I’d like to get rid of it, as my house does not feel like an asset. Because of its location, I have to drive too far to work, costing me time and gas (and damage to the environment). Because of its size and condition, it needs a lot of work (costing me time and money). Because it is not easily disposed of (and has decreased so much in value), I cannot make changes (right now) to address my growing awareness of what it costs me (costing me freedom to live as I’d really like to live).

As I wish more people in our country could understand, when we’ve taken a long time to get deep into debt, we can’t get instantly out of it. (I’m not putting my house on the market today, but I know I will be in the future, when I’ve got some other things lined up.) Recognizing the actual size of the debt we have is the first step. I think this post (and all of yours, really) are great for helping us see what we really owe, and to what/whom.
Rita recently posted..Respite- Gratitude 11310

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Andrea November 4, 2010 at

Can’t wait to find out what your plans are! You are so right … knowing what we owe (and why) is critical to having the lives we want. :)

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Rita November 4, 2010 at

PS–I’m really jealous that Ronna gets a weekly glass of wine with you!
Rita recently posted..Respite- Gratitude 11310

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Andrea November 4, 2010 at

I wish we could do the same – so many conversations to be had!

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