While food & water, shelter & security, and firearms & ammo are all great prep categories for SHTF, – in today’s modern world one of the best preps to have is ZERO DEBT.
This concept is quite contrary to that which is promoted today, and here’s why…
The system wants (needs) you to be in debt. The system ‘works’ on debt. It’s ALL based on debt. As the saying goes, “The joke’s on you”.
While there is such a thing as smart debt (for smart responsible people), the problem has become that ALL debt is portrayed as smart, good, or necessary. This is so terribly wrong, and is contributing to our perpetual slavery as a people.
Today, lots of young people are so strapped with debt upon leaving school (e.g. college) that many cannot afford to live on their own – and many are back home living with their parents. For some of those same young people who are able to afford to pay for housing – they will continue to strap more loans on their back as they begin their adult life (a new car, credit cards, etc..). Children are brainwashed from a VERY young age to ‘keep up with the Joneses’, and to covet ‘shiny things’… and it’s so easy to pay for those things today with invisible electronic digits…
The system wants you in debt.
As the young adults get older and enter the prime of their life while working their careers, there is constant bombardment to compete in the game of materialism. The so called winner is the one with the most ‘shiny things’. The BIG house (and the BIG mortgage). The problem is – the perceived winner (at any given moment) is in debt even more than you are! They are not really winning at all – most are losing big time…
With rare exception, most of those who appear to have lots of things, the new cars, the big house, the lavish vacations, lots of ‘toys’ – most all of them are saddled with debt up to their eyeballs. They actually have nothing at all. These things don’t really belong to them – unless and until they pay off their loans. And then, at what cost?
The more loans that you have, the more pressure and obligation to work hard in the system – so that you can keep paying…
The fewer loans that you have, the less pressure you feel. And if and when you reach the day that you have zero debt and no financial obligations, you will become unbelievably enlightened – and powerfully independent compared to your earlier life of enslavement.
Having zero debt, your mindset will change from one that feels the burden of being trapped (perhaps feeling locked in to your current stressful job situation and geographical position) to one in which you have options. You may no longer feel permanently tied to a particular job or career which is paying well – but with a high price and personal toll… You will have new choices and more freedom of movement.
With zero debt, the money that you do earn will go to YOU and not a bank. You will no longer be ‘supporting’ the current system. Instead you will be your own banker, making your own decisions. The things that you buy will be YOURS.
With zero debt and a little patience, you can save cash ahead of time for your purchases (rather than immediate gratification from a loan).
You might use that cash to build a nest egg for emergencies. Some recommend a nine month cash supply to cover all your expenses (just in case). Save cash for car repairs (which ALWAYS happen). There are all sorts of reasons to have a nest egg of cash. When you have no debt, it’s so much easier to do…
When it comes to preparedness in today’s modern world, I encourage you to consider your personal financial freedom and to consider reducing and eliminating your debt. Even though today’s economic policies do not encourage savings (basically, zero interest rates), having cash is still ‘having cash’!
My wife and I have been debt free for the last three years. What a glorious feeling not to owe anyone! Retire in June of this year happier than we have ever been.
At one time we were so deep into debt that we had to refinance the house in order to consolidate our debt to a more manageable level. When we did though the mortgage company had us over a barrel and knew it. So our interest rate skyrocketed even though we had never been late on a single bill in our lives. It was pure anger that gave me the will to pay them off asap. Then of course once we had the mortgage paid off, they kept calling us to try and get us to borrow again but at a much more tempting rate. I finally told them that after the way they screwed us, I would never do business with them again. They stopped calling. We only went into debt for a short time after that to put a new roof on the house, then finished our basement. Have been debt free ever since.
We have been debt free many years. It always gives me a giggle at the looks on people’s faces when they hear the words, “I don’t have a mortgage.” Those words are conversation stoppers. People don’t get it. My emergency funds has a special section for future property taxes. I figure if things go badly, the tax collector doesn’t want a property worth less than owed on, but would gleefully come after mine.
Debt free! Gives you that sly smile that makes folks wonder what you’re up to!
After I bought my house WITH CASH two years ago, I answered some survey on the phone about how the whole process was–everything from dealing with realtors to if I did any major repairs/enhancements when I moved in. When the person got to the questions about my mortgage company, and I said that I didn’t have one, there was a problem. The computer wouldn’t let her continue the survey without filling in those answers. She said that she had never surveyed anyone who didn’t have a mortgage.
Buying my home took virtually all of my savings, but I don’t regret it. I didn’t have much of a job when I first moved, either, but I could manage because I didn’t have a house payment.
Preach it brotha!
The borrower is truly a slave to the lender.
Being debt free we save over 50% of our income and are also able to be generous with our favorite charities.
Money is a tool, used wisely you can build great things, used poorly it can kill and maim you.
My 2¢ worth, pun intended
Debt and the availability of credit are, while thought is a “bad” thing, may not always the evil thing most people/preppers think it is. The only way to build that evil “credit score” is to use your credit. Now that may sound a little counter intuitive, but, let’s say your truck/car blows and engine? Do you have $10-60K to buy a new one or that $10K to get the one you have fixed? How about an extended hospital stay? Maybe a moderate house you’re looking at and getting out of that apartment? Or for me= it’s that 15-50 acres in middle Colorado and building a nice Cabin/Bunker BOL. You MUST have credit.
NOW the key, use those credit cards, go ahead and buy that truck, BUT and here’s where the smart person lives. Pay those CC’s off every month, and I mean every penny, Even if you have the cash to pay for it, put it on a CC and then pay the CC, OFF!!!! If you have to borrow credit money for that truck or other HUGE expenditure than double or triple the payment amount until it’s paid off.
I personally have a HELOC (home equity line of credit) on my home; it’s at 2.5%, cheap money when I need it. AGAIN the secret is to keep it paid off. But having the availability of $250K if needed is rather comforting. After all, wouldn’t it be fun as the last hurrah to blow that $250K on a trip to Dubai?
And just to be clear I understand the Article and Kens intent, Long-Term-Debt and useable “credit/debt” are two different animals. Just learn how to manage both.
JMHO
NRP
One of the best … is being financially free and unencumbered. There’s nothing as free as having no debt or financial contract that can regulate and/or destroy what you are wanting to own.
There are some persuasive arguments toward having “credit”, but it’s also important to examine a few other issues that involve having “credit”. Those other issues are what some of us call “the rat race” or “wage slave”. Personally, my 2-cents is that a person does not NEED credit if they live low, very frugally, are resourceful, and have a solid mindset to not fall into that “rat race” in the first place.
I am one of those who once had early mortgage debt (a real estate investment at age 21). It took about 13 years of adulthood for me to realize that the harder you worked, the more was demanded of you. I got out of that “rat race” by moving out of the area, chucking the career, using the previous earnings from investments to buy a small farmstead and living low. All of those changes enabled us to pay off that mortgage in 15 years. But that was then, when the system wasn’t nearly as corrupt or rigged as it is now. I would not get a mortgage at this time. If you can’t pay cash, you can’t afford it… this is the new world to adapt to!
Real estate financing is so corrupt now, I wouldn’t advise anyone to get a mortgage for a house. Now, it would take a financial advisor and an attorney to read through all of the contractual obligations and “fine print” shenanigans before signing a contract. Contrary to the belief of the average home buyer now, a real estate “associate” is only a salesman who took a real estate course, passed a basic licensure test, and can earn a commission for a sale — advising a buyer is a conflict of interest. Buyers beware!
Homes, land, and buildings are all over-priced and inflated because of cheap credit. It’s that simple….by going down the road of “credit” you are playing the game and it’s at a very high expense. A mortgage includes the property payment, the interest on the loan, and requires force-placed insurance to cover any/all losses against your home (read: their investment). YOU ARE OWNED and you’re playing the game that TPTB made for themselves, using you to enable them to get rich on your hard work and earnings. No thanks!
At this point in the the continued decline of the USA, housing prices will continue to decline. Why buy now if the price will undoubtedly drop (as might your income?) Since 2005, new housing starts have gone from 2.2 million to 1.1 million… but that little tidbit tends to be left out of the news.
So about that infamous “credit rating number” — that highly commercialized scheme has been touted for the past 15 or so years and it’s nothing more than a new method that was employed by the financial institutes to help THEM. It was cleverly crafted so that those-in-debt (and those wanting to be-in-debt) would hopefully set a personal goal towards a higher credit number that would benefit the lenders more than the individuals borrowing. In brief, the financial institutes wrote a dumbed down version on “how to optomize borrowing from us moneybag-slaveowners.” To me (and many others), I’m not playing their game. That rating scheme is nothing more than a tool for the financial institutes to use at their whim. It is used only when they need/want to utilize their scheme — remember there are hundreds of thousands of individuals who miraculously qualified for those zero-down ARMs and they didn’t have good “credit ratings” or the income to cover their monthly mortgages once the balloon payments were cut loose. Yet those potential borrowers were sold on the idea that they could “afford” to buy that beautiful house (nothing more than a guaranteed-default scheme) which became a component in the derivatives mess the global economy is now in.
The other point I’d like to make is that false sense of faux-security that a home equity line of credit provides to home owners. You wrote, “I personally have a HELOC (home equity line of credit) on my home; it’s at 2.5%, cheap money when I need it. AGAIN the secret is to keep it paid off.”
Here’s the bottom line on a HELOC — once you jump through all of those hoops to “qualify” (home inspection, proof of insurance, property assessment, fees, etc), the BANK now has a lien on your home. In this economic climate, and seeing that banks and financial institutes continue to re-define banking and finance legislation, a lien on your home is a very precarious situation to be in. The bank has that lien on your property whether there is credit extended or not. And that lien remains until the contract expires and/or is paid-in-full. At that point, the assumption that a bank/financial institute releases said lien can only be determined through your own deed search (or a professional title search). VERY risky!
I love being debt free and wouldn’t sell out for anything. As others here have said, unless you have experienced it, with or without owning a home, you can’t understand the depth of power you OWN when you are free from those shackles.
Lynn, Wow! That wasn’t a reply, it was an article and a very good one at that!
LOL Lynn. So easy to say if you can’t pay cash you can’t afford it now that you sit in a home with no mortgage and have your money set. How many people have 200 k in cash to buy a home? How do they pay rent while trying to save that money? Or do you think that paying rent to cover someone else’s mortgage is a better idea? How many can buy a decent car for cash? I have a paid off home thankfully and can afford to buy a decent car with cash but I am sure I am the exception. JMHO but it sounds like you are not as in touch with the real world as you could be.
Poorman, there are so many other ways to work around the debt-entrapment system. I am most assuredly ‘in touch with the real world’ — in fact, I discuss these things with one of my sons about these very issues. He remains debt-free and has not plugged into the debt-entrapment, has a career that he absolutely loves, and lives within his financial means.
Most Americans follow along and they tend to do as others have done. Most everyone wants a place of their own. And most want to live by themselves or with their family. Very few Americans want to ‘share’ — and that is one of the downfalls of our current society.
What is now missing in our society is a more family-oriented and/or community-based system where individuals are part of a chosen collective and cohesive group where folks help one another. Some of the younger, more ‘liberal’ folks have realized this. Many church groups already know this. But there are millions upon millions of Americans who live as separatists and every service, product, or item needed is usually bought, rather than borrowed or shared among a small group of folks. People talk of this among preparedness groups, but groups are not a concept that came about from the prepper world — it began here in America with our first settlers.
Contemporary times show that people are opting for a smarter way of life — that includes off-grid living and the tiny house movement. Also, rentals are increasing and it’s not just because of the economy. Many people don’t want to be burdened by home ownership and all of the responsibilities it entails.
The American Dream with a 30 year ARM is a con-job. There are many ways to achieve a PERSONAL dream without huge debt. Some people are realizing their dreams because they are creative and determined. Folks buy a small piece of land and live in a yurt while constructing their own off-grid small home. Folks are constructing tiny homes on wheels. People are buying old vans or RVs and living more mobile. Other people buy some wooded acreage and timber their logs for a small cabin. These things can be done, unfortunately the “modern” American has been propagandized and lulled into believing the only way get a home is through a 30 year ARM. That line of thinking only proves the effectiveness of propaganda.
Bernays wrote: “We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. …In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.”
Lynn: “the BANK now has a lien on your home”: thank you for stating this. This is one of those too-good-to-be-true situations to avoid like the plague. When we naively signed up for one of those to buy a USED CAR! We could’ve lost our house if we couldn’t make car payments of $120 a month, plus we had house payments. This is no different than paycheck/car title loans. As soon as I realized this I cancelled the loan and the availability, and they charged me for the paperwork! Why? Because they want you to fall into taking out a home equity loan as they have so much to gain by your default. If you default on a car loan, they get your car, but on a home equity loan default on a car payment they get your house! And if your house is worth $250K that does not mean you are going to be able to take out a $250K loan to buy MRE’s. Too risky, nobody should have one of these. If you think you need one, sell the house and buy the stuff the loan would buy you.
For someone with a great deal of self control this might work, but consider this. What happens if just one month you can’t pay off that credit card? Something comes up and you have a major expense, and you’re paying it off for a year–and that interest you’re paying is cutting into your income and making it so that you can’t pay the full balance the next month…you’re used to buying everything on credit, and the adjustment is difficult. It becomes a vicious cycle.
Actually the BEST is to have lots of credit and no debt. Your credit rating is based on available credit compared to debt–a percentage. If I have $10000 in credit and no debt, I’m better off than someone with $10,000 of credit and $1000 in debt–a 10% credit usage. I have that “credit” available if it becomes necessary, but without that level of debt I have the cash to pay for a new car, car repairs, etc, WITHOUT going into debt for them (which I did this year). See, a 20,000 car at 10% interest is $2000 per year in interest. Yes, that’s simplistic, but it makes the point. If I save that $2000, in ten years I can BUY that car. Which I did. I have a high credit rating, a perfect credit score, and I have never owed anyone in my life. I don’t now. I may not have everything I want, but no one can say my house or car belongs to anyone but me. And THAT is worth everything to me.
Actually Lauren if you are using the cards and paying them each month the odds of you having a high bill is fairly slim. Also the concept is to use the cards to purchase things you would already be buying so you would still have had to pay that money either way. An example would be I spend 100.00 at the grocery store and instead of using a check or debit card to take the money from my account I put it on a credit card. I still have that money in my checking account to pay that card at the end of the month with the only difference being that I received a 5% rebate from the credit card company for using the card so I really am only paying 95.00 back to them.
NRP I agree with you on this. Too many people confuse credit with debt. I personally have excellent credit and use my credit cards every single day. I rack up rebates and points to the tune of aprox. 1000.00 a year (most on my Cabela’s card ) that I use to purchase more things that I need. The simple secret is to pay them off every month in full. I have no mortgage,no car payment and the one card I do have a balance on is due to it being 0 interest for a year so I used it to buy duel pane windows for my home and I could write a check and pay it off if I wanted to, but why use my money when I can use theirs. Debt and interest on the other hand is a bad thing in general unless you are in an emergency situation as you described. Learn to make money work for you people. credit cards are just another form of payment just like cash, checks, ATM, pocket change etc.
In early ’09, I was forced to take on a second job to pay down our $80k unsecured debt. My wife and I ended up going to a debt consolidation service. For the next four years, we paid $1844 per month towards the debt, closed all credit cards, and lived only off of what we brought home. It was tough. There were some weeks we did not buy groceries. All out of debt now except for mortgage. What a relief!
Great article.
I’m debt free for a long time now. When the SHTF with my health I had no debt. Now I’m saving a little at a time. Investing in prepping. That is a great morale booster. It gives me a great sense of purpose. I need that.
When I look around in my town, if we’d remove the credit for all those peoples living in borrowed artificial luxury, you can bet there would be a lot less new houses, cars, atvs, boats etc.
I’m far from rich but with no debt and a love for life, for peoples, for my kids, being a prepper (since the 80s) hell I’m a billionaire!
I choosed to BE better rather than HAVE lots of. Can’t speak like that around, I’d be labeled a terrorist.
I am debt free and about to reverse that. I am selling a rental house and will buy a different one. I intend to put 20% down on a mortgage and finance the rest, perhaps $200K. Debt is a tool, like a hammer or a gun and when used right makes it easier to do some things. I will use the profit (tax free profit) from the sale to buy gold AND I will use the interest paid on the rental property to offset taxes. Since it is a rental the rent income will pay the mortgage, property taxes and insurance and provide a small profit each month. While I could have a large profit each month if I choose to pay cash for the rental I wouldn’t then be able to invest/gamble in gold. So do not fear debt; use debt.
Well written. Debt is a tool used by those who understand money and how to use/grow it.
Take credit cards, “IF” the balance is paid off every month, it is nothing but an interest free loan. If not paid off monthly, they are pure economic hell!
Debt used in business is not the same as personal debt. Through the rental property you intend to purchase on credit, you can depreciate the rental, deduct numerous business expenses, etc. Depending upon how you have set up your business, your personal risk can be zero to nominal. Business debt, when done correctly and under the right circumstances, can probably grow the business more rapidly than through the old-fashioned way to profit. Too much debt though, especially during difficult economic times like now, may not return the hoped-on profits. I hope in your case that the investment works out for you and that rentals remain active. Here in our area, we are a little under the national average unemployment at 5% (if you believe that farce) but rentals are slow moving and real estate sales are almost non-existent.
I agree with your comments but would like to suggest a slight modification. I also own my primary residence (in fact I went personally today to the county to pay my outrageous property taxes). I am thinking of refinancing it too. I would get a loan for 80% of the value and invest the money. The interest rates today are unbelievable and to not take advantage of them is to miss a once in a lifetime opportunity. Not for everyone and anyone considering this should be careful.
Unfortunately this is one of the things that led to the LAST “great depression.” Many people mortgaging their farms, homes, businesses, in order to play the market. They lost and lost big. The only people who won were those who refused to play the game and the big banks.
I hope it works out for you, but I doubt it will. When you play the game their way, they make the rules. They can change those rules at any time.
Don’t be mislead by the media. The last recession was the direct result of a mandate (laws and regulations) by congress to force banks to make home loans with zero down and disregard for ability to pay. There may indeed have been people who mortgaged their home and subsequently lost their home when they later lost their jobs. But generally they misspent their gains and were over extended in other areas of their lives too. Ironically if I mortgage my home and buy gold my worst case scenario is that things get better. I’ve been there before; I’ve held gold in the past for over 20 years before I was able to get the profit I wanted. I can sit on it if the economy booms but something tells me that the odds are against that. But if it happens I’ll be quite happy. I would rather see the economy get better and everyone get jobs than see gold reach $2500 an oz.
I was talking about the “great depression” in the 20’s, 30’s and 40’s, not the hiccup in 2008. Should have been more specific.
It’s none of my business what anyone does with their money, but wouldn’t it be obvious that anyone who really thinks we are headed for a collapse would be spending every dime on preps for teotwawki?
@taxdn2poverty, I understand what you’re saying. However I would not recommend that someone ‘put all their eggs in one basket’ by an assumption that the next economic collapse will become entirely TEOTWAWKI. While it might, it might not. Or be somewhere in between.
@ taxedn2poverty
Actually this may be an answer, http://modernsurvivalblog.com/modern-survival-ideology/what-if-shtf-never-happens/
I, like a lot of people, hope like H#LL the SHTF never happens, so what would happen if we said at 3:42PM on Jan. 12, 2016 I’m spending every dime and charge $35K on credit. I’m thinking “maybe not such a good idea” on the other hand if I knew for a fact that the world was going to end and I’m toast…. well…
Food for thought
NRP
NRP, yep 6 of one half a dozen of another. Good article and thoughts.
Debt free for quite awhile. After we went broke farming in the late 1980’s, we worked hard to pay off debt & never went into debt again. Now we even pay ahead like our land taxes are paid up to 2019 approx. depending on where taxes go. We can give generously to charities of choice & not feel put upon. We paid cash for our last vehicle & a few other major purchases. Sometimes we pay by credit card like this year when we bought a new freezer on line from Sears but paid it off right away. It feels so good to be free. Until you are debt free you won’t understand the feeling but go for it anyways. You’ll love the results.
@canadagal, Congrats to you (and to others who have managed to climb out of debt – or are working towards it) !
Your quote,
“It feels so good to be free. Until you are debt free you won’t understand the feeling but go for it anyways. You’ll love the results.”
…is so very true.
I hope that it is a motivation for others. To have a roof over your head that is entirely paid off (no rent, no mortgage), and no other debt, is extraordinary liberating. While we will always have to pay the ‘tax man’, one’s outlook tends to change for the better being debt free 😉
Note: There are certainly those in this world who are able to manage debt in a ‘smart’ way, and there are those who have no problem with debt or have no particular feeling of burden when they’re saddled with debt. This post is not for you.
As I stated above,
“While there is such a thing as smart debt (for smart responsible people), the problem has become that ALL debt is portrayed as smart, good, or necessary.”
…without a doubt, the MAJORITY of ordinary people have fallen into the debt trap – and I would speculate that most of them would love to get out if they could. As others have already said in these comments, it is a wonderful and liberating feeling and way-of-life to be debt free. Hopefully others are inspired to work towards that day…
I believe this notion is tied in with general preparedness because it enables you to be beholden to no one, and/or not to be hinged with the requirement that funds are always available to service one’s debt. In a way, it’s a MAJOR step towards self-reliance.
Ken, I had this very conversation with a younger friend at Church yesterday.
He told me that him and the wife have had a rough couple weeks. He had to replace a tire on his truck and the starter on her car. They barely had enough to put gas in both vehicles to get to work. So they have been fighting. They both work and he said that when they put some money away something like this always happens.(That’s Life!!)
He asked for advice…
The problem is they both had to have a “NEW VEHICLE” to drive so they are paying about $800 a month plus more for insurance.
She doesn’t like to cook so she buys takeout and fast food just about every night for them and their 3 kids.They have the latest and greatest phones for them and 2 of their kids too.(why an 8 and a 10 year old need their own phone is a mystery…). Cable and internet at home. A 60″ big screen, xbox, new games every week at 40-50 bucks a pop. A MORTGAGE AND CREDIT CARD DEBT TOO…AND HE WONDERS WHY THEY ARE BROKE!!
So I prefaced my advice with changes will be hard at first but as you get out of debt you and your wife will feel a whole lot better.
The problem is they confuse wants with needs.You’er dead on about people being brainwashed about debt. Every bit of advice was met with “but we need that!”
I told him they needed to sit down as a couple and be honest about their out of control spending habits. That I would help them but they both have to be in agreement with the changes.
I bet it made for a tense conversation…
I told him that between their fast food, takeout, lunches and Starcrap coffee they literally spend more money in a week than The Wife and I spend in 5 weeks…now to include prepping in the advice will be the next step!!
@steelheart, You’re right on about the lack of recognition between wants and needs. All those ‘wants’ add up to a pile of bills, and then all of the sudden they realize that they’re living on the edge…
Unfortunately at that point, it will take a lot of dedication and ‘doing without’ while paying down their debt.
The federal government is not helping the notion, given their own MASSIVE budget deficits and out-of-control spending. Some example they are setting…
Well, the Gov. is so good at setting the example…LOL!
I knew this couple were in deep kimchee when I helped him figure out how much they were spending at Star crap Coffee. They both go there twice a day 5 days a week. They get the large specialty coffees and sometimes a snack. That’s at least $25 a day! When they have their kids with them on Saturday they drop $25- $30 easy. That’s $600 a month!
They both have good jobs. They shouldn’t be struggling but these bad habits are doing them in. That $600 could sure buy a lot of preps and peace of mind…
BTW, this is what he told me would be the hardest thing to give up…sigh
It is amazing how ‘costs’ add up so quickly. Thanks for your comment.
It has long been a genuine mystery to me how folks can afford that, even on two good salaries…
Those ones who stop every day at starcraps, often also go out every weekend to bar or such (wow..pricey), and often too do “lunches”. And, that is not counting other activities…It really boggles the mind.
Married couples that fall into the debt cycle are often enablers of each others’ spending addiction. I know of a couple that spends more on phone/internet/cable TV/entertainment in one month than what we have spent in 10 years, and they rent as their credit rating prevents them from getting a mortgage.
I asked him why they have subscriptions to premium cable TV at close to $200 a month and he said that his wife likes to watch movies all day Saturdays. That was okay with him because it justified his going out and buying an expensive fishing boat and a shotgun. He said they went to Dave Ramseys’ class at their church and then got out of debt, but never got to the root cause and found themselves with a $5,000+ credit card debt with Sears soon after. I asked him what they had to show for that and he couldn’t think of anything. “It’s just gone” he said.
the simple dollar dot com
I have a different take on managing debt than what I have read or heard about. I am debt free but that is not the smartest way to manage debt particularly just before a financial collapse. I think that a total financial collapse will be visible for several days or a couple of weeks or so before everything grinds to a halt financially. It is during those few days that I will go into a massive debt binge purchasing everything a prepper could want (and lots of it) with no intention of paying for anything, including silver. This will accelerate the collapse and screw the banks. Let’s be prepared to then barter. If there is a recovery and not a long term collapse then I will pay everything back but with a lot of negotiations with the bank if he wants to get at least some of his money back. Negotiations may well start before there is any real strong sense of recovery so that I am in the drivers seat during negotiations. This takes guts on my part and greed on the part of the bank, but the banks are known for their greed. I have made my purchasing list and am ready to move on it.
I bet this writting will draw some hostile feed back. Be well all!
When you sign up for a credit card you agree to pay back what you ” borrow ” by using the card. In fact when you sign a credit card at the store you are saying the same thing and also if you sign a loan agreement. IMHO if I did this and intensely did not pay that back it would make me both a liar and a thief, and to be honest my moral obligations to a higher power says that can’t and won’t happen. I am sure you will make the excuse that the banks rip people off all the time and I will agree with that but it also wouldn’t make it right for me to do it to them. JMHO, we all follow our own moral compass.
The moral implications are self evident, but as an example our country (GOVERNMENT) has done the same thing. We have been and are continuing to talk about our national debt being around 18 trillion, but the amount is our funded debt (with Treasury bonds) the figure that nobody wants to mention except for Ben Carson and Donald Trump (who are not politicians), is unfunded debt around 130 trillion (SS medicare Obuma Phones, give a ways to States, other countries and groups). So together we owe about 150 trillion and we cannot even pay the interest on the 18 Trillion so the big day of reckoning is about here when we or should I say our Government will declare bankruptcy on our currency and the debt. No Joke I understand what you are saying, but I cannot accept your view, sorry.
I used to have a *great* credit rating. Between seven and eight hundred. Closer to eight. About 14 years ago I ‘bailed’ out of the credit game. Multiple issues in my life. Almost died.
Tried to join a credit union. They required a credit check to join. I missed by *one* point. Kind of odd, I had four paychecks to deposit. The CU official was embarrassed.
Just got an unsolicited offer from the credit provider that does the call center ads. 24.xx% interest. Yee haw! I’d rather deal with Nunio and Sal. At least they’re honest crooks.
I won’t ever do credit again. It does require a bit of discipline. It also requires planning ahead.
I have no debt and never did. I paid for my car with cash, I own my home, and this allowed me to quit the rat-race for four years to focus on my writing. I wish I’d been able to continue, but personal circumstances interfered. I still have no debt and I’m gradually growing my savings. House taxes are paid a year in advance (that’s all the state will allow) and I can live on what I make. No cable, no cell phone, but I have money for car or house repairs when necessary.
Some may find it odd, but I love this life. Simplicity trumps just about everything. Someday I’ll trade in the house for a few acres, or SHTF and I survive right where I am. But I’ll survive, which is more than most people can say.
You know who suffered the worst in the Great Depression? Those who swam in a sea of money, and when the money dried up they had nothing left to live for.
No thank you.
I am debt free. But, I will use the banks money from time to time when it’s at no charge. This means a interest rate of “0”.
BI
Please keep the contributions coming. Ken starts the seeds but we all contribute to its growth. I too have been told to post when the discussions are going on. Ken If I might make a suggestion, it would be nice to be able to access the previous discussion pages.
Yes, it’s all about the contributions that readers make regarding a given article.
I do make available ALL of the most recent previous comments (regardless of the article topic) at the top of the page where it reads, “Discussion” – where if memory serves, I am displaying the most recent 50 comments…
I prefer to keep comments ‘on topic’ with the given article due to others who may later ‘web-search’ on a given topic and land here due to relevancy.
No debt here, but still many dip into our financial lives – property taxes never go away, utilities, phone, internet, ….. they still have you on the tread mill.
I use the credit card to my advantage by charging everything and then get a cash back every year – but you have set up the account to pay off entirely each month – so no interest.
I can not achieve total preparation for collapse to the stone age – I doubt if many can. But, I can cut back to absolute basics if I have to.
Many here asked for my update on getting a freeze-dryer – being delivered tomorrow and I will have my first report on the weekend (I hope)
My wife and I have been debt free for many years. We live very simply in all ways. I hope to retire in a year or two. Living debt free is the best but it amazes me how much it still costs just to live. We do have two vehicles because it’s still necessary. We’ve talked about just having one but as a self employed builder/carpenter, it would be hard. Taxes, insurance, food, gas, etc…….. Seems like it never stops and we don’t “owe” anyone. I can’t imagine how folks live with all the payments they have on top of the basic stuff I mentioned above. It blows my mind that anyone can live like that. I often thought it would be a conversation on here to see what others do. How many people live on a budget? Larry Burkett said that car allowance in a budget should be 15% of take home pay. That’s the payment, gas, maintenance and insurance. How can some one do that with a $500.00 a month payment? I don’t get it or I’m missing something…
We were debt free for years before we both lost our jobs thanks to Obamas economy.
When we are asked how we did it, we say, hard work and discipline.
It is not easy, some tough choices have to be made
It is worth it tho.
Nothing feels as good, except being in love!
I had accumulated $26 000 in dept by my late 20s. My payments and bills added up to where I had zero expendable income and I was struggling, going into the hole. I do not make a lot of money but I buckled down and paid it off. Aggressively in 4 years. I was young and dumb and did not have much to show for my debt. I’ll admit a lot went to useless consumable waste. Once I paid it off I felt free like I had been released from some sort of sentence, unbelievable! I dreaded paying most of my check to the bank at first but over time the closer I came to zero I felt as though I was winning a battle and sticking it to the man. Never again!
Had been debt free with a healthy savings back in 1996, then my husband came home and said he was divorcing me. Didn’t want to be married any longer. The savings mysteriously disappeared never to be found. Lost my share of our business and had to give him half of the house. He left me with a pile of credit card debt that I had to take care of. The cards were in both names so the companies came after me when they couldn’t find him.
Managed to stay out of debt for a number of years. Eventually remarried and we were careful with our money but it was like starting over again.
Several years ago it all came crashing down. Through no fault of our own, a whole lot a things happened that we had no control over and suddenly we were using the cards to keep things together. Then I got sick and lost my job. Was out of work for a couple of years while I got better. Once I was on my feet again, looking for work, the doctor said I could have cancer. Well, he was wrong but had a stroke during surgery. Ended up taking a couple of more years to get over that. In the meantime, we maxed out the cards and had to refinance our mortgage to include the credit card debt.
Not proud or happy to say that we went through hell. Learned that sometimes bad stuff just happens regardless of what you do. Now, we have a larger mortgage but zero owing on credit cards.
The only way to pay off that mortgage is to sell the house and then move back into the city and rent an apartment. We’ve decided to hang on as long as we can and then decide.
Sure do miss those days of no mortgage payments and no debt.
A few years ago (before 2008) my husband and I thought we had everything under control. We had careers, retirement, cars that were fairly new but paid off, investments in real-estate…then the bust. We had really bad advice.
We had decided to down-size and bought a house BEFORE selling the house we were living in because it was in an area that had “never before had problems selling” quickly. I know dumb! We purchased our current home convinced we were going to sell the other house quickly and with the profits we could have this house free and clear. Guess what, we bought high (this house) and luckily sold the other house after 4 years on the market. Yep, that one sold very, very low. We did just the opposite of what we should’ve done. But, that’s the way everyone used to believe real-estate would work. We used our retirement to keep paying the mortgage on the old house. We did not go bankrupt like so many, but we just about lost it all.
We still have our careers, and our same old paid off vehicles (just 7 years older), and we still have a roof over our heads. We don’t go out to eat, we definitely don’t buy coffee at coffee shops, we don’t go to movies, we don’t buy new clothes, and we’ve forgotten what it’s like to take a vacation, etc. And, that hourly wage that used to be great income isn’t anymore.
I’m truly happy for those who have posted and are debt free, and envious. But, so far we have our health and for that we are truly blessed. Stay healthy and keep plugging along ya’ll.
Regarding a cc and interest.
I had a interest-free for 12 months. Used it a lot and paid every month the balance in full.
I then used a new CC interest-free and bought a John Deere we really needed and will have it paid in 11 months. No interest.
Use them..they would do the same to you.
And, yes, I could have paid cash, but why??? I earn cash back or a gift card.
Another thing–do not pay extra on the principal of a mortgage. Think the mortgage company cares when you lose your job and get 3 months behind??
Ha!! NOT!!!
When you have 12 months of mortgage saved, THEN pay extra on the principal, keeping the 12 months set aside.
I read everyone’s comments and glad many are debt free. Only debt I have is a small monthly payment on my mortgage as much as some pay on their cell phone/internet use, and God willing, I can pay it off in 2 more years. I learned a lot from the experience I had when the 2008 crash happened and lost my business with a large debt and so I organized my finances and lifestyle to never be in that situation again. I pay cash for large purchases now, no problem with a years food storage and preps, and a year’s worth for paying bills with left overs.
Being without a spouse for financial support, it was a challenge doing it all myself on what the gov’t called poverty wages. I kept journals because sometimes I can’t believe I did it. I know I will go back to that lifestyle again someday because of our failing economy, hope not too soon!
Coming out of highschool here soon, I will be getting what jobs I can and will begin to save save save! Unlike everyone else, it seems that I am the only one not interested in asking my parents to spend heaps of money along with a school loan for post secondary. Whenever anyone asks, I tell them that if I ever go to college/university, I will have to have my own hard earned cash to pay for it out of my pocket. I’m confident that I can start small and work my way up, though, that prospect makes me a tad nervous, but that’s capitalism.
@Youngster, You sound like a really smart, conscientious human. You’re reading MSB! The other thing that we did (see my previous post) in 2008, was we got sucked into the “you must go to college in order to make a living” idea. We sent our son to college. He deserved to go, he had worked hard and had a 4.5 grade point average.
Because we were in such trouble with our two mortgages, we used some of our retirement to pay for his education. No loans. Now he’s debt free, and we’re not. He does have a good job and pays his own way completely. But, he’s learned from us and will not go down our path.
Keep up the smart good work Youngster, you deserve a great future!
Youngster, I went to art school and was so bored not learning anything that I dropped out after a year and then learned on the job training without debt and got paid for it. Higher Education sometimes is a waste of time and money, putting you in serious debt that keeps people from getting ahead for 20 years or so to pay back, especially when you have a family to support.
To Youngster: Good luck out here. I have two words of advice for you as you depart High School to join the rest of us out here: Trade School and/or Junior College. Generally the best bang for your buck as far as obtaining jobs and connections to skilled labor jobs out there.
Not to belittle hard labor but lots of young people can get jobs digging ditches or flipping burgers. Find a skill you can enjoy doing and do it well. One that is is high demand. Working your way through college as a skilled worker places you head and shoulders above your fellow undergrads when you have your diploma.
Good luck out there.
Sorry Ken, I am not debt free because my wife has expensive tastes. As we have moved into a bigger home, the mortgage is our biggest bill. My current truck is 3 years old and I tend to keep my trucks for 11-12 years per vehicle. (They seem to run better after they are paid off don’t they?) Credit card (only one) is paid off every month. My wife and I both work in skilled jobs with professional licenses required. Our debt items can be counted on one hand. My lifestyle requires some debt at the present time. My job is to make sure we do not accumulate additional debt items.
When I was 12 years old, I began to tally the number of cigarettes my father smoked per day. This led to how fast he would go through a pack and how long a carton lasted in our house. Back then, in the mid-1970’s I figured out that my dad’s smoking habit was costing him about $264.00 per year assuming price stayed constant. It was insights like these that led to me studying Economics in College.
Be merciless with the knife if you are cutting out your vices. Set aside some time and funds for good clean fun once in a while. Spend time with family and/or your social group as long as they do not drag you into trouble.
My journey to being debt free, like a lot of you, was not an easy road, never is. I spent my first 50 years aspiring towards the “get what you can while you can” philosophy, climbed the debt ladder while climbing the career ladder, new cars every year, new house whenever I moved with the career advancements and while “on top” had a Kodak awakening and realized I was being played by others. Our own greed and a false sense of achievement helped to do this.
But the real inner self realized that I and this country were heading towards a day of reckoning. I sold the castle started to buy those things which would serve me, not others. I now leave in a remote area in Northern Nevada 80 miles from ‘civilization’ have vehicles, homestead, survival stuff and the debt free lifestyle that helps me keep a straight course in life and continue to be DEBT FREE.
I have credit cards, but use them sparingly and pay them off each month, and now see and understand how our society tries to penalize people who live within their means. My insurance for example is set by my credit score, since I have not used any for about 15 years for a mortgage or keeping a credit card balance I have watched as they keep lowering my credit score (which was 845 to now around 625). I just smile and suck up that minor penalty, my inner Chi has soared now knowing I am living more like our forefathers.
To those that have traveled the same path I applaud your efforts. To those still making the journey do not give up, the reward is something that is hard to put into words but worth the effort. I was deeply moved by this topic and the responses are warming to say the least, kudos to Ken for this forum and to all of you who utilize it.
icecathook, I haven’t had a mortgage in over 20 years. The last car loan was paid about 15 years ago. I have no debt but do use credit cards regularly and pay in full monthly. My FICO is over 800.
For you and anyone else looking to improve your credit score, sign up for creditkarma.com/ It is totally free and they have many tools that help you learn what changes will have the maximum benefit on your FICO. Possibly by making a few changes you can have that score back over 800 again
It is a myth that you must be in debt to have a good credit score.
Hate to break it to folks, but those (myself included) who consider themselves debt free are deluding themselves. Every citizen of this country is on the hook for $150,000+ share of the national debt. You or your children/grandchildren will eventually pay this debt or lose your country just as surely as you would lose your home if you fail to pay your mortgage. Enjoy your “freebies” from the politicians, they are charging them to your credit card.
Wow, a LOT of really good reading here.
I need to say there are a LOT of different viewpoints, And personally I see nothing wrong with any of them, I know that if something works for me it surely may not work for someone else. Debt and credit are both a double edged sword for sure. The Debt I do have is very manageable and for me not a problem. The same debt in someone else’s hands could cause alarm. I do plan on being totally “debt free” within 8 months (paying off a CC 🙁 ), so hopefully I will be joining those of you that feel the freedom.
I would like to make a comment on HELOCs, Lynn & others mentioned that the Bank has a “lien” on your home/property if you have such an animal. This is totally true, but may I remind everyone, so does the County/City in the form if Property Taxes, as does the Feds with the Income Taxes you are responsible for. I will guarantee you if you have HUGE bills from, let’s say, a Hospital they can and will lean and TAKE your property/home. So does a HELOC worry me as having a lean on my property, No, no more than any other concern with living in these days. Personally I like the idea of having $250K of “credit” available if needed at 2.5% interest.
NRP
This topic is very important to me because I’ve been working for a Bankruptcy Lawyer for the last 6 years. I started working for him when I was 23 years old. I had been blessed to avoid debt while I finished college and then after I started my job, there was no way that I would get into debt like the people I had to help. My husband and I did buy a house, which we are trying to pay down as fast as we can. (Only $83k (now $65k to go). Several people commented $200k which is insane to me.) We paid cash for our cars. They’re old and ugly, but they’re ours and they’re more reliable than our neighbor’s brand new car that’s constantly have problems with its electronics.
In any case, I confess that I cringe to hear people commenting about using their retirement to get themselves out of debt. I’m glad for people to be responsible for their obligations, but retirement is exempt in bankruptcy, so I hate for people to lose that asset to the horrible credit companies. Almost exclusively those guys get their money, from the finance fees and interest people pay until they realize they’re in trouble. I’d really recommend at least looking into bankruptcy for those swimming in debt. For many it’s a great help.
Lastly, especially avoid student loans, if at all possible! Because they’re nondischargeable in bankruptcy (very few exceptions).
Two more years until the mortgage is paid off. I took a 15 year note, and I’m only 4 years in. I decided to throw all my spare cash into the principle. I can see the dollar signs going down… Its a great feeling. I don’t have any other debt – with the exception of the monthly utilities, and such. No car payment… I own all my vehicles out right. Dad always said “If your car payment is more than your house payment – move into your car.”
I realize todays times.. car paymens are just about the same as a mortgage payment… If thats the case – buy a used car… Who cares? Its JUST a car. If it runs, and its safe… drive it… Do you REALLY NEED an expensive car to fetch things?
@Youngest of 3, Congratulations on your attitude and being nearly debt free! I’m sure that it feels good to be so close… I enjoyed the quote by your dad 😉
One thing that I notice – whenever you see cars advertised for sale (TV ads, etc..), they only refer to the monthly payment cost (which is also always a ‘best case scenario’ with a perfect credit score and no options on the vehicle itself) while at the same time they avoid mentioning the sticker price of the entire vehicle… It is apparently much easier to trap people this way.
Why is it that so many too-good-to-be-true offers are only available on phone apps? Are they gleaning info that way that isn’t otherwise available to them?
I find it interesting that an article about being debt free is followed by not one but two ads for lending tree :0.
@hippy cow girl
Guess someone has the pay the power bill. It cost Ken a lot of money and time to run this Blog.
NRP
@hippy cow girl, Although what you saw there was indeed ironic, the two ad spots beneath every article are filled by Google – which sometimes fills them based on what they perceive as related content (sometimes not) – of which I have no control. In fact the ads that are displayed in those two spots are quite often different for everyone due to their ‘mysterious’ algorithm that they use.
Enjoyed reading all the comments. We have been debt free , except for the house for some time. We all know how much our lives are enhanced by being debt free. We had set a plan in motion to pay off the house in 2 yrs. Then in heart beat our lives changed. Social Services called us to take my nieces 7 yrs old daughter. ( we will be adopting her) Because we are debt free and live below our means we are able to do this, without money from the state or county. The house may not get paid off in 2 yrs, but we are able to give a future to a child. IF we were in debt and I had to work like before there would be no way we could afford this journey. Being debt free will open opportunities to us all that would other wise be closed.