10 reasons why staying away from debt is important
My wife and I wish someone had taken the time to teach us why it is so important to stay away from debt when we were younger.
Working as a personal banker, I was able to identify just how important staying debt free is. In addition, staying debt free holds a tremendous value as you grow into your life.
Anyone can take value from this, but if you are 18-20 years old reading this, then I would take notes.
I have seen many clients of mine at the bank rack up enormous debt and I have lived through their experiences.
Here Are A Few Reasons Why You Should Stay Away From Unnecessary Debt:
Buys You Time
Our time is valuable to us. If you haven’t analyzed how you spend your time, then I would advise you start. Where you are putting your time, generates a result. The more you start to zero in on this, the better. Staying away from debt buys you time. You have more flexibility on how you choose to use your time. Not having to owe anything means that you can use your time to your advantage and not the other way around. If you were to have monthly payments that you need to pay, then you most likely have to spend a lot of your time at any job working, just to pay off debt. If you do not carry debt, you now can use that time to do whatever it is that you want that can really propel you to a stronger, more fulfilling future.
I have been working since I was fifteen years old. I am all for hard work. From experience, I believe that we need to put more emphasis on choosing our work. You want to go into something because you like it, you enjoy it, it helps you to grow. More often than not, you have people that are picking up any job. All because they have bills that they have to pay. Which is understandable of course. We all have bills that we need to pay, it is something that is required to live, one way or another. However, by not accumulating unnecessary debt we are now able to choose jobs that will give us more of a return on our time. Unnecessary debt just gives us more bills to pay. Nobody needs this in life. Don’t live above your means, it will only bring you problems.
I don’t know about you, but in our home we try to limit stress as much as possible. There will always be stress in life. It is how you choose to look at it, that makes all the difference. Working in banking, I saw way too many people stressed out because of debt payments that they need to make. These payments are eating up their cash flow. Money comes in from their hard working jobs, and the money goes out just as quickly as it came in. We put thousands of hours into our jobs. The worst feeling is seeing that money vanish, all because you chose to have an $800 car payment when all you can really afford is $400. Over spending and creating debt for yourself is just adding stress to your own life.
Helps You Build Wealth
Dave Ramsey says it best: “Your income is your most powerful wealth building tool.” If you are starting out and making $1,000 a month and you have a $600 car payment, then how are you supposed to move towards building financial confidence for yourself? This doesn’t include food or gas. I can understand, maybe you are living at home still. Looking back, I would take more advantage of this opportunity and not blow the money you worked so hard for. The less money you have going towards debt, the more money you are able to keep. This allows for you to grow your savings and begin investing your money early on and not later. Unnecessary debt will only slow you down drastically from building financial wealth.
Keeps You Out of Trouble
The beautiful world we live in today, can also be quite ruthless too. It is ever changing and ever evolving. You can lose your main source of income over night. I have lived this first hand. Being the bread winner in your home and losing your job is never fun. Things are totally different when you just need to pay your rent or your mortgage, compared to 5 credit card payments, car payments, and loans. I have seen this with many of my clients. It is a whole different ball game. Jay-Z has a saying: “If you can’t purchase it twice, you can’t afford it.” When you let that sink in, you really start to come down to reality and start realizing that living below your means is always more beneficial to you and your family, than living above your means.
Helps to Keep Up With Life’s Responsibilities
Life only gets harder and more complex as you get older. Anyone who says otherwise is lying to you. You think things are complex now, wait till you start a family and move into a career. This is great because it will challenge you to improve. On the flip side, as things become more complex, debt can quickly add up if you are not paying attention. I have made this mistake before and I want to pass this wisdom forward so others can avoid this trap.
Responsibilities are slowly going to creep up on you and so are expenses. Staying away from debt is only going to make things easier for you. It will give you breathing room for you to be able to focus your energy into something that is going to push you forward and not keep you in a stand still.
What I Saw Working in Banking
Working in banking, I processed a lot of different loans for my clients. I processed business loans, credit cards, both personal and business, car loans, personal loans, and equity loans. I did this for years. Within those 6 years, I saw a consistency within my clients credit reports. That consistency is, they were carrying too much debt. The excessive debt was weighing down their credit score and they were being declined for financial products the banks were offering. The worst part of my job was trying to help someone improve their finances and I couldn’t, because their credit would not allow me to proceed. This happened often. 👎
It wasn’t until witnessing this, that it made me take a cold hard look at my own finances. I wanted to see if I was doing the same thing to myself. Which turns out, I was. I was falling victim to overspending on things that one, I could not afford and two, did not need. By doing this I created a habit. A financial habit that was not gearing me towards the right direction. In fact, it was doing the complete opposite. I have found that we fall victim to unnecessary debt because we are not digging deep enough into the numbers to actually see what we are doing to ourselves. A lot of times my clients didn’t want for me to break things down to the cents because they didn’t want to see the hold they have put themselves in. They were in denial, they rather look the other way. Rather than come to terms with the truth and start working to get out of there.
Debt Is Like Quick-Sand
Debt is like Quick-Sand. Once you step in it, it slowly starts to consume you. Believing in help is important. Being truthful with yourself is important. It is vital that we stop and look at our finances to see where we can improve. We should frequently audit ourselves and ask ourselves are we moving in the proper direction. If the answer is no, don’t panic. Understand that whatever situation you have created for yourself, you can always make improvements. You can turn things around. You just need patience. I have helped clients climb out of 20,30,40 thousand dollars worth of debt. You can do the same if you are willing to educate yourself, create a plan, and stick to that plan.
Life Becomes Simpler
Staying away from debt makes your life simpler. You don’t have to worry as much. Not carrying excessive debt makes things so much more transparent to you. Working in banking, you get to see just how important financial health is. You get to witness how much it can complicate your life.
Many people don’t do it because they want to just screw themselves over, they do it because they don’t have knowledge on anything different. They truly just don’t know any better. I don’t judge. I was once there with them. It wasn’t until I entered that line of work, that I figured it out. This is not being taught in our schools. Most parents, already struggle with money. This means, it’s not really being taught in the home either. When you start to realize these things, you start to see how important these conversations are.
Helps to Stay Focused on What is Important
Staying away from debt helps us. If you cannot afford to keep up with your friends and your social circle, then don’t. Make it known. Don’t shy away from it. It is okay not be able to move at the same speed as other people financially. We all want different things out of our lives. Therefore, we are going to move in different paths and at different speeds. Don’t allow for society to make you feel as if you you need to be at a certain point financially, at a certain time. This can impair you and your focus. It is noise and it is a distraction from you aligning yourself and going after what is important to YOU.
Making sound financial decisions is important in order for you to secure your financial future. Making incremental improvements and stay away from debt will help you regardless your current financial situation. Learn to save for the things you want, and steer clear of unnecessary debt.