Solving the Consumer Debt Problem
11 June 2008
Photo by emdot
First: Seth Godin shares this "urgent" thought:
If I could only share one piece of personal finance advice to grads or to just about anyone, it would be this:
Only borrow money to pay for things that increase in value.
It’s a short list: your business, your house and your education, mostly. Stocks if you’re smarter than me. That’s pretty much it.
If you have credit card debt, you’re in big trouble. Your bank account has a huge leak in it, and it’s getting worse. Hence the urgency.
Although the premise is true–credit cards are a huge problem for a lot of people–I’m not sure why he considers this urgent all of a sudden. Folks like Dave Ramsey and others have been saying this for years. Still, coming from a guy like Seth Godin–a guy with a big megaphone–it may help.
Second: J.D. cites a report summarized in the New York Times that worries over America’s problem with debt. The solution: thrift (saving) and frugality (spending less).
My wife and I have been on a mission to do this very thing. Years ago, before we had children, we chose to live a lifestyle that would enable us to live off one, modest income. We bought less house than we could have at that time. We have two cars but our "newest car" is eight years old. We don’t eat out much, we haven’t taken expensive vacations, we don’t buy stuff. To be fair, we haven’t done this perfectly and we’ve made some mistakes along the way but we’ve also managed to avoid many of the problems that come with the burden of debt. And for that, I’m thankful.
Put away the credit card, start saving, learn to live with less. Your happiness does not rest in stuff.
Related post:
Money Advice for College Grads
Filed under: Money by Michael
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