tisdag 27 december 2016

Reasons to avoid Debt

woman drinking coffee from a take-away mug

We live in a world where you can consume even when you can't afford the things that you crave for, especially during the month of January that generally speaking is the poorest month of the year. But you still crave for things..

So lets list all the reasons why we should avoid debt.
  • Either you can afford something or you cannot.
    Instead of taking the easy way out and buying on credit try to figure out why you can't afford it at the moment. 
  • It's cheaper to buy with your own money then with the banks.
    You do not need to pay interest rate, billing fees etc. Imagine that you buy a new TV, smart-phone, playstation, laptop, tablet etc one year. The interest that you pay over the coming years would have allowed you to upgrade the thing in a couple of years. Instead, you are probably going to continue to pay the interest when the smart-phone breaks. Not a nice feeling if you have been there.
  • Work to Live, Don’t Live to Work
    Without debt, you don't have to work. If you can get food on your table in any other way, you can do it. But with debt, you still have to earn even if you could survive in other ways. 
  • Respect your money.
    You are less likely to buy things that you do not actually need if you need to buy it with your own money that you put an effort into saving.
  • Peace of mind.You do not have to worry down the line
    You bought it, its yours. You don't need to worry each month if you can afford to pay the fees.
  • You can work on your long term plan
    Put away money into your own money machine, instead of feeding a machine that is owned by someone else. You do not get rich by giving away your money.
There are a lot more reasons but these are from the top of my head.
If you already are in debt, make sure that you have a plan on how to pay it off. We have 3 items (not counting our educations). 
  • The house we live in,
    Where we put in money each month. It seems popular to only pay interest these days but I really want to get rid of this debt. So each month, we put in a payment and I have calculated it into my retirement plan
  • Our 2 cars.
    One could argue that we do not need 2 cars, but we live on the country side.
    One could argue that we could have bought used ones, but been there done that and in the end this is cheaper for us as neither of us is a mechanic.

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.

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