For the past eight years, I’ve been focusing on researching and writing articles about personal finance. During this time, I’ve often come across the belief that debt is a normal and even beneficial part of life.
I strongly disagree with this view. Although debt is common and widely accepted, it shouldn’t be seen as normal. Here’s why.
Picture a life without debt—you fully own your home, your cars are paid off, and the looming costs of education or major purchases no longer affect your monthly budget.
What would you do with the extra money now available? Even those earning modest annual incomes could see an additional $500 to $1,000 each month if they were completely debt-free.
Many of us have normalized debt to such an extent that it’s just another bill to pay, similar to essentials like groceries, which is a skewed perspective.
When I talk about wanting to live debt-free, I often hear things like “some debt is good” or “you need some debt, don’t pay everything off.” Even reputable sources like CNN Money argue that avoiding debt entirely is unwise as it might deplete your emergency funds, but I completely disagree with this view.
Without debts, you can better allocate your money to savings and investments. It’s much easier to build up your emergency fund and savings when you don’t have substantial debts to pay off every month.
The long-held belief that having a mortgage for the tax break is cost-effective needs to be re-evaluated. While taking advantage of the tax break is good when you have a mortgage, delaying paying off your mortgage just for the tax break doesn’t make sense. The amount saved through tax breaks is minimal compared to what you could save without monthly mortgage payments and interest rates.
Debt is often seen as limiting our freedom. We need to shift from accepting debt as normal to challenging this mindset!
Another myth is that you need significant debt to improve your credit score. This simply isn’t true.
So, before you accept debt as a normal part of your life, think about what you could accomplish without it. What dreams could you pursue? Where could your journey take you?
Consider these common scenarios:
– “I can’t leave this job I hate because of my student loan debt.”
– “I wanted to travel this summer, but my budget is tight because of my debts.”
– “I would love to quit my job and pursue my passion for writing, but the bills are overwhelming.”
– “Retirement this year isn’t possible because I don’t have enough savings.”
Debt can confine us and take away our financial autonomy. So, before you accept debt as a regular or beneficial part of your life, think about the many opportunities that could open up if you were debt-free.
Do you see debt as normal or even beneficial? Have you fallen into the trap of believing that carrying debt is necessary to build good credit?