Think About It

Minimalism and Personal Lines of Credit

Most of the blog postings that I read have one clear opinion on debt and personal lines of credit — that it’s a non-starter. A minimalist lifestyle means that you cannot have any debt as you become indentured to the institution lending you the money. Well, the idea of an indenture has not been around for many years. as has a debtor’s prison. So let’s have a serious discussion about debt without falling back on the standard answer that any debt is too much.

In my opinion, being in debt is not a good place to be. Being in debt is something that we should try to avoid, but sometimes it’s necessary. Few of us have enough money to buy a house outright and even fewer of us has a preference for renting for the rest of our lives if we can avoid it. Property ownership is a concept that is ingrained in many of us. I see no particular reason to avoid it or any inconsistency with a minimalist lifestyle.

So the availability of credit is one thing. Debt is another. Personal lines of credit can play a very useful role. Sometimes we have the need to access money on an emergency basis. We might otherwise have to liquidate assets, sell something at an inopportune time. So having access to funds may prevent the sale or liquidation of assets at a time that we don’t want to sell them.

There are other times where we might need access to funds that include a medical emergency, an investment opportunity or a separation or divorce. Life can throw you a lot of curveballs and we need to be prepared. Having said that we should access the lines of credit only when needed, not just because we feel like buying something. If you just can’t stop yourself from using your line of credit to buy clothes, jewellery or other discretionary items, then perhaps you should avoid having one.

The other factor to consider is that personal lines of credit have interest rates that are much lower than credit cards. Never, never, carry a balance on a credit card. If you have to for whatever reason (you lost your job for example), access your line of credit to pay it down. The savings will be considerable and the payments often more flexible when you need flexibility.

Think about what you are doing, what your needs are and how you will deal with the unexpected. There are no “one size fits all” solutions in anything. In the absence of planning, you pay more, have more aggravation and inconvenience. We need to act responsibly when it comes to debt. But it doesn’t mean that debt has no positive role to play in maintaining our minimalist lifestyles.

One Thing We Need to Remember

Looking at debt, what we should avoid is using it to finance our short-term needs — clothes, trips, vacations, jewelry, more car than we need and can afford. But financing long-term assets is a different matter — a house, a business investment and others. But here budgeting is the key, and again, leaving some room for the unexpected — a job loss, a business setback, illness. Here is where we can wisely use credit carefully to help us right the ship or achieve our life goals.

Originally published at on March 12, 2016.