Debt Slavery is Tied to Your Financial Struggle
Debt is slavery. I know that is a controversial thing to say, but consider one of the definitions in the Webster Dictionary for ‘slave’, and you will understand what I mean:
One who is completely subservient to a dominating influence
Debt is a dominating influence in your life because it significantly limits the choices you can make with your money. You are subservient to the force because when you get paid every month, you have no choice but to send the money you owe to creditors. If you feel strongly that this is not the case, go a few months without paying your mortgage and see what happens.
Five Characteristics of Debt Slavery
If you are comfortable with carrying debt, you should consider these characteristics of debt slavery:
- You are making someone else rich by the sweat of your brow
- You have accepted that you will always be paying off debts
- Financial freedom always seems to allude you because there is always somebody to pay
- You are in bondage because you cannot do what you want to do when you want to do it
- You are on track to work all your life, but have no financial legacy to show for it
When you read each of those characteristics, do they make you jump for joy?
Of course not.
There is nothing edifying about living in debt and in fact it is costing you much more than you probably realize.
Debt is Expensive
Debt is expensive in two ways: financially and emotionally. If we go back to our fictitious couple, the Mills, you can see that the most significant issue they are dealing with is debt. John has a large college debt. And they are getting further behind in their credit card debt each month as they try to live above their means.
The consequence of this financial struggle is an emotional struggle in their relationship. Money is a touchy subject. A subject that often leads to fights because they both feel trapped and don’t know how to solve the problem.
This is why my second recommendation for them last week was to work on debt elimination as a priority. There are four rules that I use to explain to them how to get out of debt.
The Four Rules to Get out of Debt
- Stop Spending
- Pay the minimum on all cards except one
- Establish a debt multiplier of at least a hundred dollars
- Stay disciplined
The first rule is the reason my top recommendation to the Mills was about budgeting. If you think of debt as a leak in your cash flow, the only way to plug that leak up is to stop the flow of money out. Next week I will give you some practical tips from my book that help you lower your monthly expenses.
The second rule magnifies the power of your money. You do this by focusing the money on one goal at a time. You take the debt multiplier from the third step and put all your focus on your smallest debt first. The early success from paying off that small debt is what helps to keep you motivated and in turn helps you with the fourth rule of staying disciplined.
This is Not Just About Your Credit Cards
If you have read this far and are thinking that you are well off because you don’t have any credit card debt, you should change your mindset right now. When I talk about debt elimination, I am talking about all your debt. So if your credit cards are paid off, pay off your student loans. If your student loans are paid off, pay off your car. If your car is paid off, pay off your mortgage. Any money that you spend paying back somebody that you owe is money that you are not able to use towards your own financial stewardship and legacy. You may not have any credit cards, but you could still be in debt slavery. So if that is you, go back and re-read the article but replace ‘credit card’ with ‘mortgage’ or whatever other debts you may have.
