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Amanda is a wife, mom, black belt and creator of CentsiblyRich.com. Her family changed their lives by successfully paying off $100,000 in debt on one income. She is passionate about living a “rich” life with a focus on the important things.
Several years ago, I confessed my family’s latest car purchase to a friend. I remember him saying, “You’ll always have a car payment”. So, why not upgrade, right!? Both of us saw debt as a fact of life.
I had accepted debt as an inescapable part of my life. My husband and I went from one car loan to the next, effectively wasting an estimated $85,000+ over several years, not to mention the mortgage debt we carried.
But I know we weren’t alone. The average household debt in the U.S. is growing faster than ever. And average student loan debt is at an all time high of $48,000, surpassing all non-mortgage debt.
We collectively know our debt is a growing problem, but it doesn’t seem to make a difference. Most of us don’t view debt as a choice. Our culture indoctrinates that massive amounts of debt is the American way.
Student loans, consumer debt and mortgages are an accepted fact of life in our culture. We think debt is an inevitable consequence of living the American dream. And, since everyone does it, everything will be just fine, right!?
By perpetuating the cultural standard of debt as normal, we encourage it. The mindset becomes, ‘It’s okay to get a loan because it’s acceptable and it’s expected’.
Just because everyone else has a car payment (or student loans, credit card debt, mortgage) doesn’t mean it’s something you have to do. It is a choice.
Sure, you can make the payment, but that doesn’t mean you can afford it. The amount of debt you qualify for may be a far cry from what’s actually affordable. And leaving that determination up to the lenders is treacherous territory.
Believe me when I say I’m far from perfect here. Though we have paid off all consumer debt and student loans, we’re a long way from becoming 100% debt free (we do have a mortgage). I don’t know how much mortgage lenders would actually qualify us for, but according to on-line calculators, we cannot afford to borrow what they say we can. At least, not if we ever want to retire or, realistically, pay off the mortgage before we die.
What if our society viewed debt differently?
What if having a car, house and student loan payment wasn’t the norm? What if the opposite were true and few people had debt? What if debt was only used only as a last resort? What would that be like?
Debt has been around since the beginning of civilization, in one form or another. Yet, the personal debt in our not too distant history was meant to be re-payed in a short time. Today’s debt can take more than a lifetime to pay off, if it ever gets paid off at all.
Honestly, as I try to picture life in an anti-debt culture, I can’t even fathom what it might look like. I don’t even think it could, realistically, work. It’s hard to imagine, but I’m guessing it would throw the economy, supported by debt and consumerism, into a spiral.
If our society took a more anti-debt approach, what would be different?
If we weren’t borrowing money, banks would have to find another way to stay afloat. No more free checking accounts. They would have to start charging fees for checking, savings and money market accounts. (Though I doubt that would be enough to keep them going.)
If everyone was saving to pay cash for a house, the housing market would change in drastic ways. Demand for housing would decline and new construction would take a nose-dive. At the same time, the demand for rentals would rise.
The economy would change drastically, but so would our lifestyles.
We’d drive older cars. Refuse to go to expensive colleges. Make saving a priority. Start more small businesses. Delayed gratification would become routine.
Maybe we’d spend more time with family and friends, in nature, and creating with our own two hands. We’d make our material things last, rather than throwing them away and buying new. We’d develop killer DIY skills and pass them on to our kids. We’d cook meals, grow some of our own food, and waste less.
We’d appreciate what we have and what we need and we’d be more in tune with our imagination and creativity.
Maybe we’d develop a bartering system that forces us to pay attention to exactly how much an item costs, rather than simply handing over a piece of plastic. We would physically see exactly what we are trading, giving more thought to the connection.
I admit, this is a simplified version of what could actually happen if debt were a rarity, rather than a commonality. But help me dream here. Despite the economic implications, how do you think our lives would be affected in a culture that is anti-debt?