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Finances & Money

Do you always have to be in debt?

loansGrowing up and hearing my parents talk about cars, I always heard one thing:

We’re always going to have a car payment

You can probably see where this is going already, but hear me out. From about 1984-1998, my parents leased a new vehicle every 4 years (Hondas and Nissans) , unless I wrecked one (sorry Mom) or a major recall took one away. I liked it because as we approached my 16th birthday, I knew we would be getting something new (and thus the wreck). But let’s think about this concept further. Why did my parents say that?

Sure, we got a new vehicle, but it’s not like my parents used the opportunity to grow into something more useful for hauling a family of 4 with a grandma and a dog. Rather, they eventually “grew” into a 2-door Honda Civic and a Nissan truck, not a minivan. So why would they keep entering into payment contracts when they weren’t using it to adapt to the family’s changing needs?

Because they were stuck in the mentality that debt is a required way of life.

And most of Americans think the same way too, don’t we? I went to college assuming I would leave with student loans. I bought my first car with a giant loan. I left college with about $12k-15k in credit card debt and grew that to over $20k at numerous points in the last 6 years. We financed our first home purchase 100%. But did I/we have to live that way? Did we really need to go into so much debt?

Let’s look at some of our decisions over the years regarding debt, and the main “debt-free alternative”:


For my undergrad, I only had 1 scholarship, which covered about 1/5th of my total tuition by the end of college. I went to a state school, so I wasn’t paying private school rates, and this was 10 years ago when tuitions were still relatively low compared to now.

Debt Free Option: Obviously I didn’t try very hard during high school to secure enough scholarships, grants, or even savings to take care of my college years. I know scores of people who have graduated college with no debt, and some people who even got PAID to do it (undergrad and masters).


You probably know some of the stupid mistakes we made when buying cars in the past. In fact, we lost $14,500 on those decisions, not counting interest paid! Let’s just focus on my first car purchase, which I made back in my senior year of college before I even had a job lined up to cover the payments! Yeah, that’s right. I bought a $20,000 car (Saturn L300) and didn’t have a post-graduation job to pay the bills yet. Luckily I got home from the dealership and the offer envelope for my first corporate gig was waiting for me. Whew!

Debt Free Option: I made it through college without owning a car for almost 5 years (I changed majors late), so why did I have to buy a $20,000 one in my last semester? I didn’t. Other than driving home to visit family more often and one trip to Toronto for “spring break” (yeah, we drove NORTH when everyone went SOUTH), I didn’t really use the car much. Oh, and I leased it.

Anyway, the debt free option would be to save enough to buy a junker car when I neared graduation, simply for the move down to my new job in northern Virginia (from PA). I could have gotten something decent for about $2,000, which would have taken about a year to save for at my rate of spending in college. And no, my parents couldn’t help me with the costs without going into debt themselves.

Credit Cards

Here’s something simple:

Debt Free Option: Don’t buy all that crap on credit. I bought $1000s worth of guitars, a $400 bike (expensive for a college kid), probably hundreds at the Chinese restaurants, and just a few cases of alcohol. I really have no idea what else I spent the money on (oh, CDs, movies, a home sound system, $600 Sony TV). Dang, buying stuff on credit when 1) you don’t need it and 2) you can’t afford it is stupid!


I’m not going to go crazy here and say we should have saved $400,000 in the bank before buying our house because that’s just silly. However, there is a technical debt free option:

Debt Free Option: Rent. I say it’s “technically” the debt free option because you don’t have that loan burdening you, but you still have to make a monthly payment to the landlord, even if you pay for the lease all up front (which would be a dumb thing to do). Obviously, you can save money to buy something decent eventually, but until then you have to pay someone for a place to stay, unless you’re cheating your parents by renting their basement and not paying them or get your house as a gift from your grandfather (not naming names here).


Looking back at my own life, I’ve had numerous opportunities to lead a debt free life before, through and after college, but I chose not to. I didn’t understand the value of saving money, even though people told me I should save it. Honestly, the people telling me to save were also in debt up to their eyeballs. But guess what, I’m in debt now, and I’m telling YOU to try and lead a debt free lifestyle. If you have debt, get out of it. If you don’t, then don’t get into it. Period.

You have alternatives. Map out your options before taking the leap. If you can’t afford that fried wonton, then don’t buy it. Go for the 10 cent pack of Ramen noodles, however unhealthy they are.

Inspiration for this post came from DebtFREE-Revolution. I decided I wanted to put my spin on it.

Image courtesy of Omar Omar

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Clever Dude


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