Sunday, January 8, 2012

Living Debt Free (i)

How does the word ‘slavery’ sound these days? I think it is pretty pathetic to learn that slavery is going on even these days. In real terms, this modern slavery is free of chains and shackles on ones hands and feet. However, it has taken in the form of ‘debt’. This debt, which we take out to buy big and fancy items, to meet the social demands. This debt could be in the form of credit cards, leasing, financing and mortgages.
There are certainly new gadgets in the market which make us to buy them whether we need them or not. There are also pretty nice automobiles on the road which look exactly the vehicle which I could have been dreaming for a while. And not to forget, the house of my dreams, which I would want my grandchildren to have, after I have long gone. That is why we overwhelm ourselves financially, that we must spend more than we earn. And that is why we have to take out debt to meet our ‘instant gratification’ demands.  

There are some debts which are better than others. One of them is buying a home. Getting a mortgage for a home, is a possibility that will last longer than, say, purchasing a car with a debt. Also, a home has a chance to appreciate in the long term. An automobile generally depreciates as soon as it is driven off the lot. Instead of purchasing a home, an individual would have to pay either way for living. It could be a motel or an apartment. The individual would only be paying rent each month without having to recover anything at the end of the renting period. On the other hand, owning a home can at least give a chance of paying off the whole thing at the end of certain time frame. So, may be down the line, one could hope to recover something in the end. 

Purchases made for merchandise like clothes and other perishing items with the credit cards are very short lived. Also, the interest on credit card purchases is far higher than the home mortgages. So, it is pretty naïve to think that charging credit cards would do any good to you. 

All in all, the goal should always be to live ‘Debt Free”. The general rule of thumb is to live ‘within your means’. However, it is pretty difficult to avoid the ‘urge’. But once you get in the cycle of debt, then the individual must sacrifice more to get out of this cycle. In order to make the monthly payments, one cannot leave the job, take an extra day off, do the things of his liking at the time of his choice etc. So, getting paid at the end of each pay cycle becomes crucial to make the monthly debt payments. 

So, basically, one is tied to his job to pay for the debt. Initially, the job was taken for the profession, and now it has become a way to pay for debt. Therefore, chains and shackles have been put on for the rest of the job period. You must show up for the job because you need money to pay for debt and everything. And that is how the purpose of life takes a turn.

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