No Matter If It Is The Government's Or Our Own
The big news today is the "debt deal" in Congress. We have too much debt, so now we are approved to get more debt to help pay for all of our expenses that we can't afford to pay for.
That would be like one of us making $60,000 a year, having $300,000 in debt (not that unusual for someone with a mortgage, a car loan, a student loan, and a couple of credit cards. Payments on all of it are around $2,000 a month. Yeah, we could eventually pay it off if we cut non-essential spending and added nothing to the debt. But to meet the government model, we'd have to borrow another $24,000 to make this year's debt payments, buy another new car, max out all the credit cards then get some more, and then buy a boat and a beach house. but we'll start fixing it next year... Right.
Now I'm not an economist, and my numbers are very simplistic and I'm sure my proportions are off, but that's my take on it. So how does this apply to us as preppers?
We must avoid debt. I had a friend once try to convince me to buy all my prep gear on credit at one time because he was sure we were going into a hyper inflation situation right around the corner, and I'd be paying essentially pennies on the dollar on my debt. That was several years ago, and I'm darn happy I didn't take his advice.
A little bragging here, but I am very pleased to say that as soon as a $12 check clears the bank, we will be completely debt free except for our mortgage. About 4 years ago, we took Dave Ramsey's Financial Peace University through a local church. It really opened our eyes. It's not just getting out of debt... the best part for us was learning how to budget... telling our money what to do for us, not letting it run our lives. It also really showed us what we were missing out on by paying debt instead of paying ourselves.
If you are in debt, I really encourage you to take the FPU course, and read Dave's My Total Money Makeover book. If you have some young people in your life, give them a copy of Financial Peace Revisited with the hope that they will avoid debt. Doing some very rough estimates, if I had learned and lived these principles when I was 18, I truly believe that I would now be sitting on about a half million dollars and living in a fully paid for house.
What ever the nation's economy brings us, the less debt you have, the better off you'll be. If you are debt free and have cash, the world will be on sale if/when the economy crashes, and you'll also be in a better position to offer assistance to those that you care about who will be in need.