So What About Interest Free Debt?

I have posted a lot of stuff here including some good guest posts cautioning you about debt. Debt is evil. Debt smothers the life out of you. Debt buries you.

OK, I agree that debt is generally to be avoided. Debt should only be incurred when you have absolutely no alternative and it and it is for a good purpose then it is OK. I still like to avoid it at all costs.

Today, you might argue, you can get interest free debt on some credit card offers and even if you do pay interest on some forms of credit (like car loans) you can get ridiculously low rates.

Yes, that is true. But even if the debt is “free”, an illusion by the way, or the interest rates are very low, I’d still say incurring debt has a dark side you need to be wary of.

First, all debt has its risks. You might read Trent Hamm’s article on some of those risks (Some Thought on Interest Free Debt) But beyond that I think there is a much more important reason to avoid debt.

It has to do with the mentality about money that debt creates. It is insidious and creeps up on you. If you buy on credit you in effect deceive yourself into believing you can afford something you actually cannot afford. This leads to buying more on credit since it is so easy. The ultimate result is that your net worth goes negative and you still have all that principle to pay.

If you lose your job or face any kind of financial downturn you will then find that debt an incredible burden.

Interest on debt is a terrible price to pay for nothing. It is generally a fee you pay because you do not want to put off immediate gratification. You do not want to wait for that new car, that new house, or that new piece of furniture.

Teaching yourself to wait, to buy only when you can afford it, is a wonderful gift to yourself. It helps you build that positive net worth. It leaves you more prepared to survive a financial downturn.

Interest or not interest, low interest or not, avoid debt. It is a bad habit and only makes you financially weaker.

One final note on this. When I discuss debt here I am talking about personal debt. Business often has to incur debt to succeed and if done responsibly business debt can be a wise move to make. It still involves risk, but it can be a calculated risk worth taking to generate a larger return in the end.

On the personal level though you are far better off avoiding debt as much as you can.

Wishing you success and prosperity,

Daniel R. Murphy
Helping People Learn to Build Wealth

Wishing you Success and Prosperity,

Daniel R. Murphy

Wishing you well,

Daniel R. Murphy
Educating people for building wealth, adapting to a changing future and personal development.