Everyone I talk to has a reason why their debt is good, or at least tolerable. Their house will appreciate in value (are you sure? the latest housing report suggests that home values nationwide are down 3.2%). Its ok that they have credit card debt, they only used it on what they really needed. I need to get to work, so its ok that I have a loan out for my car.
No.
I understand that for some, the above things are a vital cost of everyday living. However, I can’t stand the thought of it. These people loan you money so you can pay them back and more. In the case of a house, a lot more! Being in debt means that you are constantly reliant upon that next paycheck. You are mired down by monthly payments that have to be made or the house that you supposedly own won’t be yours anymore. Add up enough of these (credit card, car, house) and you spend all of your money paying bills and interest and precious little income that you can actually call your own.
I’m hardly a doomsday scenario kind of person and I’m an optimist by nature, but I like getting to the end of each month with money that I can decide to move around, invest, etc. as I see fit. The more we borrow, the more money we have locked up somewhere and the more we have to work to pay for someone else’s salary/earnings (like the bank!). If you rent/own outright, keep your monthly expenses low, an save a sizable emergency fund, you are prepared for whatever the economy can throw your way.
-Xias