I am deeply concerned about the amount of personal debt people have in today’s world. There are many misguided people and companies who so easily promote debt as a means to an end, claiming debt is a perfectly acceptable way to conduct one’s life. I wholly and emphatically disagree with that proposition!

As you look at what is happening in today’s world you get a true sense that the economy is living on borrowed time. One of the biggest culprits of the economic instability, and coming disaster, is debt…the historic amount and the historic & growing delinquency rate.

The single thing that worries me the most…what happens when people can’t pay their debts? They lose the underlying securing asset and/or worse.

For instance, what happens when that lost asset is their home? Adults might be able to cope with the sudden loss of a home, but what about the children of those adults? How do they deal with the shock of sudden homelessness?

Many wise people have made it clear about debt…

• “Look to the condition of your finances. Discipline yourself in your purchases, avoiding debt to the extent you can. In most cases, you can avoid debt by managing your resources wisely. If you do incur debt, such as a reasonable amount in order to purchase a modest home or complete your education, work to repay it as quickly as possible and free yourself from bondage. When you have paid your debts and accumulated some savings, you will be prepared for financial storms that may come your way. You will have shelter for your family and peace in your heart” (True to the Faith, 2004)

• “The rich ruleth over the poor, and the borrower is servant to the lender.” (Proverbs 22:7)

• “Our inspired leaders have always urged us to get out of debt, live within our means, and pay as we go” (Ezra Taft Benson)

• “One has neither independence nor freedom from bondage when he is obligated to others…Pay off debt as quickly as you can, and free yourselves from bondage.” (Gordon B. Hinckley)

I believe there are few acceptable forms of debt. Here are my opinions…

1. A modest home. “Modest” is relative, I understand that. But let me ask you this? Does each child need their own bedroom? Do parents need a master bedroom the size of some studio apartments? Does each bedroom need its own bathroom? How many square feet does a home need to be to meet the needs of the family? If you have cash build whatever size home your wish…that you consider “modest”. If you have to borrow for your home…go with modest…the minimum you need. And, pay as much extra each month as possible on the principle. Sacrifice your standard of living until the mortgage is fully paid off…you are a slave to debt until that debt is gone…and your home is in jeopardy as long as that debt exists.
2. While I understand that many people will borrow money for an education, especially professions such as in the medical field, I do not advocate borrowing for an education…ever. But, if you absolutely have to borrow; 1) borrow the absolute minimum, 2) pay off those loans as absolutely as quickly as possible, 3) sacrifice your standard of living until that debt is fully paid.
3. Consumer debt…a national retail tire outlet recently was offering not just 0% interest for 12 months, they were adding a 10% discount off the purchase price of the tires if you applied for, qualified for, and used their credit card for the purchase. If, and only “if”, you have the money in the bank to cover the discounted purchase amount, it would make sense to take advantage of the 10% price savings. The cash in your bank account will make the payments each month. Or, if for some reason you had to, you could pay off the balance due at any time.
4. Business debt…meaning debt related to the operation of a business venture. I understand that it is common practice to use debt in the course of conducting business. I have no opinion, other than to state that debt is not a good thing. However, as long as there is no personal connection with that debt, it is a person’s choice. If there is any personal connection, such as a personal guarantee of any kind securing that debt, then absolutely that debt is a bad thing and should be avoided.

That is pretty much the extent of reasonably acceptable debt that I can see. Be very, very cautious of those that justify debt. When someone is advocating debt, ask yourself a few pertinent questions:

• Why are they advocating debt at all?
• Who benefits from their debt scheme?
• What is the potential downside?
• What is the advantage to paying cash in this situation?
• Do you truly need whatever it is they are promoting?

The World Economic Forum (world’s global elites) are advocating that the average person owns nothing. How do you think they get to the point of people owning nothing? Consider this…if the world’s economy collapses what happens to all the assets that are owned by people who have debt and can no longer pay those debts?

You may think it is a big leap from today’s world to imagine such a thing…but who could have envisioned today’s world 20 years ago…even 10 years ago? Be very, very careful in today’s financial world…in today’s economy…when it concerns debt.

Bottom line…if you are not in debt…you have less to worry about.

FWIW…

• The U.S. just reached an historic high…more than $1trillion in credit card debt. That’s more than $3,000 for each man, woman, child, and baby in the United States. That balance went up $45billion last quarter alone.
• U.S. credit card delinquencies hit an 11-year high last month.
• The average credit card currently charges a near-record 20.53% interest rate.
• 1/4 of U.S. consumers are using credit cards to cover day-to-day expenses.

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