And the Ostrich in Some of Us

Why Owning Debt Is Akin to FireCredit: Image from and Released for Use for Any Purpose with Attribution to Lars TinnerDebt is akin to fire. A great slave to have, and a poor master as the dictum goes. If it is within your control, having debts can help our finance substantially; think taking out a loan to start a small business, or a college loan.

Then on the flip side, you get debts like credit card debts where some people are drowning in eyeball level. Definitely not a good sign.

Before I go on, I want to clarify that not all credit card debts are evil, just as much as not all college loans or business debt are sound.

The Ostrich

The Ostrich is an insidious creature. In some, if not most of us. Confronted with danger, they bury their heads, and choose to screen out danger even though the signs are around them.

Supposed there was Lisa, aged 22, an average teacher. She works hard, but even then, her spending is such that it exceeds her available income by $50 each month. She swipes her credit card (at 18% interest) so often to make up for that disparity.

At the end of the year, she would have owned $708. Fine, that seems harmless enough, she tells herself, while ignoring that nagging unease.

20 year down the road, she does not reign in her spending, nor does she attempt to increase her income to cover her living cost and pay off the debt. The end of it? She owes approximately $104,400. And every year, the sum owe will climb higher and higher because of compounding interest.

Lisa looks at the bill and say, “I don’t understand it, how can this happen?”

The Moral

It can. And it did. She let the debt consumed her. It has spread beyond her control. And for that, she will have to work late into her retirement age because of a foolish choice to spend more than what she can afford.

Debt grows stronger over time, and ignoring the telltale sign is not going to make the problem go away. In fact, ignoring it gave it a chance to grow into a monstrous entity that will imprison our Lisa.

Set your foot down; vanquish it with cash if you can. Ignoring debt will usually bring about great misery for your future self. And honestly, is that the kind of thing you want to do to yourself when you are almost close to retirement?