Proverbs 22:7 the rich rules over the poor, and the borrower becomes the lender’s slave.
Last month, I spoke about getting out of debt and gave five quick tips. Without consumer debt you can build wealth much faster. Think of all the cash you pay on your debt and how much you could have saved if you did not have those payments.
The debt problem
I understand that sometimes people get into debt because of unseen catastrophes but this is only 10% of the cases, 90% of debt is a result of spending more than you have. This writing is focusing on the 90% of cases and not the 10%.
The debt problem boils down to one thing: Lack of a clear vision. Without clear vision, people are easily swayed to take actions they would normally not take. For the most part, most people want what makes them feel good now regardless of future consequences. Without a clear vision, people find themselves still:
• Living in traditions that no longer pay dividends.
• Doing things they have been subconsciously programmed to do.
Living in traditions that no longer pay dividends
To live in traditions that no longer pay dividends means to do things without questioning just because it has always been done that way. It does not matter that the strategy is no longer successful in today’s world. The biggest example of this that comes to mind, is going to school without getting an education.
In the United States, student loan debt is one of the biggest burdens for young Americans. In the past, having a degree was promise of a better job and a better live. Today, with intense global competition this is no longer the case. The piece of paper you have does not carry as much weight. Employers now expect you to demonstrate your knowledge and skills. Gone are the days of going to school just to get good grades: You actually have to learn something that is relevant to your desired job.
Education, is one of the areas I see people waste money. Taking extensive loans to get a piece of paper without putting the time to actually learn. People have no problem paying for an education but they have problem working for an education. In other words, they go through school but the school does not go through them.
This mindless behavior has caused a lot of people huge debt burdens they cannot pay. Since they lack the desired skills needed by their employer, they cannot get good paying jobs and so cannot pay the debt.
Spending we have been subconsciously programmed to partake in
Society subconsciously programs us on how to do bad math. The buy now and pay later industry will keep booming as long as people keep partaking. Five mindless things people do that keep them in debt are:
• Buy a new car after you just paid off your old car loan
• Take out the equity from your home to finance your mindless spending
• Eat out more than you can afford
• Buy brand name items even though it is above your means
• Live in neighborhoods you cannot afford or buy more house than you need
The bottom line of any debt reduction plan is to live beneath your means so you can reap the benefits the later. In other words, live poor now so you can build real wealth. This takes discipline and motivation. If you have a hard time doing this yourself then get help.
Remember, having consumer debt is overwhelming and to have a calm mind you need to address this aspect of your life.
Long term impact of debt
Lack of planning not only affects your life but your children’s life. When you are in debt you cannot give your children a leg up in life. So your children have to fend for themselves and end up digging themselves in debt too.
To make things worse, when you get old your children will be left to take care of you with their already strained budget. Since you left them no resources with which to take care of you, they cannot afford to give you the best possible care.
Be mindful – think for yourself!
If you do not have a plan for your money, society has one for you. You have to learn to think for yourself. Unless there is a mindset shift, you will never get out of debt. Mindlessness is not an option for anyone who wants to be financially free. You need to tap into the mindless things you do that keep you in debt!