Consumer Debt is a Slaver with a Pretty Face

Are you a voluntary slave to the monthly payment? Most Americans are to some extent. Take a moment to calculate exactly how much of your money is tied up paying interest to institutions that loaned you money for another new car, a bigger house, a kickin’ stereo, or a tropical vacation. The problem with this kind of consumer debt is that you have no say in where your money goes.

Financial advice guru and popular talk show host, Dave Ramsey, likes to remind us that the secret to financial independence is learning how to tell each and every dollar we earn exactly where it should go. That way you control your fate, not the accounts receivable department of your credit card company. Each time you incur more consumer debt you willfully chose to make yourself a further slave to lenders who gleefully gave you money to buy something that lost a huge chunk of value the moment you bought it.

Is this savvy personal financial planning? Good grief, no! This is the road to ruin for too many of your friends and neighbors. You should call this frittering away of your hard-earned income exactly what it is – lost opportunity. Instead of writing out that check to cover your credit card purchases, you could be investing in inflation or creating a financial cushion for you and your family in the event of a job loss or medical emergency.

Here’s the bottom line – real wealth building and consumer debt cannot co-exist.

To avoid consumer debt means we must avoid a temptation that never goes away. America is characterized by an endless parade of those who will gladly loan you money to satisfy any transitory urge. Sorry, that’s the nature of our country today. You’re going to have to rise above it to succeed. The good news is that once you establish a way of life where value is valued, and mindless debt scorned, it gets easy to pass all the silliness by.

The question before us, though, is this: Is there a deeper, Machiavellian plan afoot here? Have you noticed that debt and consumer spending are now considered a positive economic indicator by the federal government? Yes sir and madam, our beloved leaders openly proclaim that rising consumer debt is a good thing. They want

us to stay distracted with our bright, shiny play toys, our fancy televisions, sporty cars, and houses with a two car garage. The reason is simple. The less attention paid to Washington DC, the easier it is for them to proceed with a national economic scorched earth policy.

It’s not that we think our politicians are any more evil than the rest of us. They just happen to have the opportunity to stick their fingers in a large pie (tax revenue) and don’t do a stellar job at resisting their basic human nature to grab as much as they can while we’re not looking.

Without appearing too negative about the whole consumer debt issue, the reality is that few people have the internal wherewithal to change their circumstances. The modern western lifestyle is a slaver with a pretty face. Purchases made on credit means that you WILL send off money every month to pay for it. But what if you pay off your balance every month and incur no interest charges? Well, then you’re not involved in consumer debt are you? Except most credit cards come with other usurious charges and administrative fees. Plus, if you slip up even once and miss the due date, you’re suddenly an economic slave.

What would happen if we all decided to stop living in debt? What if everyone all at once decided to stop buying so much – how to put this delicately – CRAP and begin paying off debt instead? This would be the perfect example of choosing short term pain for long term gain. Yes, our nation would momentarily feel the effects of a slower economy, but we’d emerge on the other side as a true economic superpower once again.

Don’t worry, this will never happen, but it doesn’t hurt to dream, does it?

Before you fire off a hate letter to our editor, keep in mind that we’re not referring to ALL debt as slavery. Only the consumer kind counts. Good debt would be something like a long-term, fixed-rate mortgage tied to a piece of income producing property. Why is this such a good thing? Think about it. A properly structured mortgage is actually an investment, one of the few that profits in inflationary times, and if there’s one thing we know, we live in inflationary times.

The American Monetary Association Team

Flickr / Vectorportal

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