Growing up, my dad taught me through action that you don’t borrow money to buy things. He taught me that you only buy when:
- you have the money saved.
- you’ve thought about it in advance.
- you’ve discussed it with your spouse (if you have one).
Even though I learned that from him, I borrowed money in my early adult life to help pay for college and to buy myself a shiny new car after college.
The thing was, I was young and stupid. I can look back, shrug it off as idiocy and move on with my life. What I should have done is worked a little harder, saved my money instead of buying stupid crap with it and FIXED my car when it broke down in southern California instead of giving it away and upgrading out of my league on credit. But like I said, the past is the past and it’s over. I learned my lesson the hard way.
After some quick Google searching, I can’t find any credible statistics on young adult debt, but it sure looks and feels like it’s out of control. Most of my friends and co-workers have debt. I’d guess that 75% of the young adults I know have debt. Is that scary? Regular people might not think so, but I think so. The real scary thing is that 90% of those I know in debt don’t seem to be concerned about it. They go about their lives buying expensive gifts for Christmas, going on fancy vacations and going shopping for Black Friday or Cyber Monday. What the ….?
But there is a small percentage of us young adults in our twenties and thirties who aren’t going to live like that for the rest of our lives. We’ve decided that debt will kill us. It traps us in financial bondage and holds us to a job we don’t like, a house we don’t want to live in anymore and a stress level that we can’t escape. I decided that I wasn’t living like that anymore several years ago and it was one of the best decisions I’ve ever made. When things are going well is exactly the time that you need to kill your debt.
Now to the sensitive topic of the future. If you’ve managed to kill your debt, what’s next? Are you committed to never borrowing again or are you setting yourself up to get back into slavery again? Aw, the two biggest questions are likely:
- What about buying cars?
- What about my buying a house?
Cars should be purchased with cash. Anyone who has any money can tell you that. It’s not really even up for debate. You just buy them with cash. Houses, on the other hand, can rarely be afforded in cash. That makes a lot of sense. I don’t believe home debt is a terrible thing as long as your financially ready to buy and put a good chunk down to avoid PMI and offset the risk of becoming upside down.
But as for me? I’m more and more committed to waiting to buy my first home until I do have the cash. It just feels right for me. I look ahead to borrowing 80-90 or 100 grand (yes I’m thinking modest), and it scares the living daylights out of me. I’ve been there, granted I was only under $25,000 of debt, but it felt like $100,000. It had a crushing weight. Why would I want to go back underneath that crap? I don’t.
To all of you who are out of debt, you worked so hard. Don’t entertain the idea of getting back into that mess. Run away as fast as you can from any pressure to borrow money. Doing just that has gotten me to a place where:
- I own my car (with 61,000 miles on it and in great condition)
- I have 3 years of living expenses in cash and liquid investments
- I don’t owe anyone a dime
- I am not under any contracts of any sort and am free to cut any of my expenses at any time
- I don’t have financial stress
Gone are the days where I worry about how my rent is going to get paid. I have friends who have to worry about that. Gone are the days when I worry about becoming suddenly unemployed. I have co-workers who have to worry about that. Gone are the days when I’m trapped where I am. I’m not trapped and don’t plan to ever be. It’s no fun living that way.
And besides getting out of debt and staying out of debt, I have two other recommendations along the same lines:
- Keep learning and pushing yourself mentally and never stop
- Set big goals for your future and work diligently towards them until you achieve them
I’m out of debt. I’m not a slave to my debt or my job anymore nor will I ever be again. Now, I’m off to work on bigger and better things. Forward I go, not backward. Debt is a thing of the past, something I’m not revisiting.