Seth Godin on Debt
Many of you read Seth Godin and hold his advice in high regard. I read his blog and usually find it challenges my normal way of thinking. And I love that.
Seth just wrote about one thing he would tell you in regards to finances.
“Only borrow money to pay for things that increase in value.”
I disagree with his advice.
I personally do not think that borrowing money (creating debt) is ever a good idea. There’s never a guarantee that what you are borrowing money on is going to increase in value. Just look at the current housing market and all the people that borrowed themselves into financial ruin. A degree does not guarantee you a higher income, therefore a student loan is not the smartest route to take. A large percentage of new businesses tank after 4 years, so to put all you have into that and to borrow money on top of it, just doesn’t seem wise. There are other options rather than borrowing. It is possible to pay for these things without borrowing, and just imagine how better off you would be by doing so.
Seth does point out that credit card debt is the most foolish kind of debt which I can agree with. With credit cards you are not only purchasing things that you have no right buying in the first place, they do not even have the potential to increase in value.
If you find yourself in credit card debt, he recommends:
Go to defcon 4, and do it immediately. Shift gears to live well below your means. That means:
No restaurants
No clothes shopping
No cable TV bill
No StarbucksIt means:
Take in a tenant in your spare bedroom
Carpool to work
Skip vacation this yearEat brown rice and beans every night for dinner. Act like you have virtually no income.
Sound familiar? Now that we’ve heard someone as smart as Seth Godin say it, we’ll give it a try…?
Have you ever had that nagging feeling that there was something more to do with your life? I don’t remember exactly when it started for me...
God says to, “owe nothing to anyone except to love one another”. Owe NOTHING! The Bible didn’t say to owe only if it appreciates or helps to higher your education. The question can always be asked, “how much do you owe on your house?” Catch that word, owe. Yeh, people have to go nuts to get out of debt. We did. You are. Just wait, your blog stories are only going to get more interested post debt. Just wait till you experience the freedom found in the slavery of love.
@Justin some good words. i have thought about what it might look like when we’re out of debt…what will there be to write about. i’m looking forward to the experiences in “the freedom found in the slavery of love.”
Great info…keep it comming
Credit card debt is on its all time high with today’s economy. Hopefully people can obtain the help they need to get out of debt. Thanks for the article!
@Natteng I’ll do my best!
@Sofia Kim it is scarily high. but people need to realize they have all the “help” they need right in themselves. They don’t need the government or some program. They need to have an income and live below their means, and they will pay off the debt, just like we are.
I both agree and disagree with the statement on student loans.
I agree that if you have any other way to pay for school and don’t need to take on student loans, then you should go that route instead. I personally *must* take on student loans to finance my education. I stay educated and informed about how much it is costing me, and plan accordingly. I budget well and actively avoid courses that have really high book/supply costs or that have extra fees. I also have grants and work to offset the cost and have applied for tons of scholarships (but I’m hampered by my GPA, which is “only” a 3.3).
I go into it completely content and happy with my decision, and educated about the situation. Barring any major improvement in my current income, I estimate that I will pay (total) $45′000 for my bachelor’s. Graduate school will be a bit more of course (doctorates aren’t cheap haha), but I’ve done my homework on that as well.
Indeed, everything has risk, but I disagree with the idea that you’re not going to have an improvement in income because of a degree. An Associate’s or Bachelor’s will more than pay for itself over ten years. If you only go for a one-year certificate program like medical assisting or something like that, you probably won’t have much (if any) improvement in your wage. (Mostly because there are so many). But degree programs always lead to an increase in salary.