Understanding Interest–Avoiding Debt

We have always been told there is “good debt” such as getting an education and a house,  and “bad debt” which is credit cards and buying things that don’t appreciate, like boats and campers and cars. 

What if every debt was considered a bad debt? To be avoided only when there was no other way, and then to paid off quickly as was possible? I wish I had had this mindset when we were racking up the student loans. It felt like Monopoly money to me, something to spend easily, because there was plenty of it, with no reckoning down the road. The payback was off in the future–the far, distant  future. Because of this, while Craig was still a student,  a  friend said they lived in their controlling in-laws basement for three years to save money, before coming to graduate school, I thought to myself, “I would NEVER do that!” 

I didn’t know how smart they were being, and how much money they were saving. It took me years to understand how sacrificing early and often would make such a difference in our lives. When you are in school, you already feel like you are sacrificing, but you are just getting started if you have big student loans. 

When we were paying off debt we would listen to Dave Ramsey’s radio and then podcast program to stay motivated by hearing other’s wisdom and experiences.  Over and over, when someone had large amounts of student debt he would say, “Please tell me that you are both neurosurgeons!” meaning a high income would repay that debt back quickly. Often someone would have an expensive degree in social work, or religious studies, which doesn’t pay very well. Over and over Dave would hammer to not go into debt for school, to go to  a state university or community college to do the first two years, because it would be cheaper. 

Because I have gone through paying off a lot of debt, I like to hear other’s stories. One couple went into their marriage with no debt, and bought a fixer-upper for $80,000.00. The wife kept saying how they did not fix up the house, other than painting it, because the debt hung over their heads so much. They didn’t start fixing  up their house  until it was paid off, that’s how onerous the debt was to them. This is another act of supreme self-discipline. The colorful before pictures are at 2:46, and if you want to hear how averse to debt they are start at 4:00:

This couple learned early the real truth about interest:

 J. Reuben Clark Jr.,said this wise and true statement about interest:

“It is a rule . . . in all the world that interest is to be paid on borrowed money. May I say something about interest? Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels . . . it has no love, no sympathy; it is as hard and soulless as a granite cliff. Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands nor orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.”

If people really understood  that their 3500.00 big screen TV will cost an additional $2900.00, because they put it on a credit card at 28% interest and are paying the minimum money that is required, they would never do that. Educating ourselves and our children on these principles  will make all the difference. I wish I had known what the young mother, above, knew so early in life: debt is a burden to be avoided at at cost. She lists the freedom her family now enjoys at the end of the video. No debt= freedom and many options.

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