Challenging the Norm: Rethinking Our Routine Acceptance of Debt

For the last eight years, I’ve focused on exploring and writing about personal finance. In that time, I’ve often come across the idea that debt is just a normal, and even beneficial, part of life. However, I disagree with seeing debt as a standard part of living. While it’s common and generally accepted, it shouldn’t be viewed as normal. Here’s why.

Imagine living debt-free: your home and cars are fully paid off, and you no longer worry about paying off student loans or big purchases every month. What would you do with the extra cash you’d have? Even people with modest incomes might find an extra $500 to $1,000 per month without debt hanging over them.

We’ve gotten so used to debt that it feels like just another bill, similar to our grocery costs, which is a misleading way to think. When I talk about wanting to be debt-free, I often hear advice like “some debt is good” or “don’t pay it all off.” Even well-known sources like CNN Money suggest that avoiding debt entirely could be bad because it might deplete your emergency savings, but I strongly disagree with that concept.

Without owing money, you’d be in a better place to save and invest. It’s way simpler to grow your emergency fund and savings when you’re not burdened by hefty debts every month.

The old belief that keeping a mortgage for the tax break is smart needs to be questioned. While it makes sense to take advantage of tax breaks if you have a mortgage, delaying payoff solely for that benefit doesn’t add up. The tax savings are usually small when you compare them to what you could save without those monthly mortgage payments and interest.

Debt often takes away our freedom. We need to shift our mindset from thinking “debt is normal” to challenging the whole idea of debt!

Another myth is that you need a lot of debt to boost your credit score, which just isn’t true.

Before you accept debt as a regular part of living, think about what you could do without it. What goals could you reach? How might your life change?

Consider these typical situations:
– “I can’t leave the job I hate because of my student loan debt.”
– “I wanted to travel this summer, but my budget is strangled by debt.”
– “I’d love to quit my job to pursue writing, but the bills are too much.”
– “Retirement this year seems impossible without enough savings.”

Debt can trap us and take away our financial independence. So, before you decide that debt is a normal or helpful part of life, think about the endless possibilities that might open up if you didn’t have debt.

Do you view debt as a normal or even a good thing? Have you bought into the idea that you need debt to build good credit?