Is Debt Really What is Keeping you Down?

A lot has been said across personal finance books and blogs about the danger of debt and how the elimination of debt can speed you on your way to “financial freedom.” While debt is certainly a hurdle which could prevent you from maximizing your earning potential I don’t think it is THE reason you aren’t where you want to be financially.

The mere presence of debt is not the reason you aren’t reaching your financial potential. You have made choices in life which have determined where you are today. Those choices may have been to travel constantly on borrowed money which resulted in a large amount of revolving credit debt. The debt is not the reason but the result. The choices we make everyday affect our financial future. Getting ahead and on track requires a change in the way you think about your spending and how you interact with money.

Just waking up one day and deciding you are going to pay off your debt and start saving isn’t going to get you to financial freedom. It is certainly a step in the right direction, but it is only a step and not a solution. There is a reason you have so much debt, some you can’t control like medical bills others are entirely your doing like cars and credit cards.  The key to improving our finances is to identify the underlying reasons for what is keeping us back and then altering our behavior and mentalities.

I have seen many people question the need for budgeting and several bloggers who talk about budgeting who don’t do it themselves. In the progression towards mastering your finances budgeting has a role to play but doesn’t have to be permanent. Budgeting forces you to analyze your spending so you can track your progress in each of your budgeted categories.  This is the real benefit of budgeting. By forcing you to analyze your spending you will start to realize what habits are costing you the most. This will allow you to start to change how you think about those categories so you affect a change in the way you spend.

I am a firm believer that you can’t figure out where you are going with out knowing where you have been. Budgeting and tracking your spending let you figure out where you were. Once you have figured out where you were determine where you want to be.  If you don’t know where you are going you can’t develop a plan to get there. Setting goals for the future doesn’t necessarily have to mean you are 100% debt free it may be part of the means to get there but isn’t a necessity. Don’t assume that you have to be debt free to achieve your goals.  I understand the reasoning behind being debt free and I hope that one day I can say I have the option to be either debt free or not. Don’t let the dream of being debt free keep you from achieving the things in life you want to accomplish. It could be one of your goals, but it doesn’t have to be. Debt doesn’t have to be bad, if you don’t abuse it you can use it.


1 Ninja November 19, 2009 at 11:02 am

While I agree that being debt free is not necessarily the determining factor of financial responsibility, I do think it is pretty important. You will probably never talk to someone that says they hate being debt free, but I guarantee there are a ton of people that hate being in debt. Debt can limit people’s options. You may not have to be debt free to achieve your goals, but it sure will help 🙂

2 Ashley November 19, 2009 at 3:51 pm

I think for some being debt free is a little like marriage. Time is spent planning for the big day and how to get there, but not so much on the “then what happens”. Even those with debt manage to build savings and amass financial wealth. It’s a speed bump not a roadblock.

3 Kyle November 19, 2009 at 10:03 pm

I really like that analogy… “It’s a speed bump not a roadblock.”

4 Ken November 19, 2009 at 8:51 pm

I take a pretty hard stance on trying to be debt free. I think you have to scrupulous about what you spend money on. Identifying needs and wants is important. If I don’t want debt freedom right away, I need to be sure what I invest in has a promise of future gain.

5 Financial Samurai November 20, 2009 at 2:13 am

Debt has given me SO much motivation to work hard and make a lot of money in my career.

I owe my mortgage debt a lot. Without debt, I would be really bored, b/c what’s the point of making money?

Having something to pay off is invigorating!

6 Aaron November 20, 2009 at 9:25 am

Behavioral finance breaks down to psychology, I guess and that’s why we do the things we do.

As a related story, I remember a sales manager of mine years ago declaring that debt was good for the agents he was in charge of because it made them work harder. He said this right after a new agent bought a Mercedes. At the time, I really thought this was a twisted point of view.

Looking at some of the other comments here, maybe he was right. Maybe ‘selling more aggressively’ isn’t a virtuous goal, but changing our attitude about money might be.

7 Evelyn Guzman November 21, 2009 at 6:41 am

Right on, being too concerned about getting debt-free can stand in the way of progress. With all the buzz on debt and the challenges that have to be faced, it is no wonder some are just afraid to move on and try to realize their dreams. Of course one can’t go overboard on this. As long as it is under control and you are doing something about it, stay focused on your other goals.

Evelyn Guzman (If you want to visit, just click but if it doesn’t work, copy and paste it onto your browser.)

8 ctreit November 22, 2009 at 7:36 pm

Isn’t it funny how many excuses we can find when we don’t want to do anything. We always seem to be able to find all kinds of ways to justify what we are doing or what we are not doing. Getting out of debt or following a budget are no different.

9 Des November 23, 2009 at 3:29 pm

These excuses are hilarious. “I need debt to be able to work hard.” Get real. Having been on both sides of the fence I can attest that seeing your portfolio go UP is much more motivating than seeing your debt balance go DOWN.

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