The Key to Becoming Debt-free

Jared Cover
Arnold Schwarzenegger in Conan The Barbarian (1982)

Being in debt cost you more than an annual percentage rate. According to the Federal Reserve the average American household carries $137,063 in debt. I want to address the importance of being debt-free in terms of having a healthy psychology and high moral. If you currently owe a large amount of money, imagine what it would feel like to be debt-free. It would likely change your attitude. Think about having assets instead of liabilities. You’d probably feel like you had more to offer the the world and less like a serf to your creditors.

When going about their day-to-day and meeting people, the debt-burden’s inner thoughts might sound like this, “Please don’t ask me for anything. I’m already in over my head and I don’t have time for you or your endeavors.” They’re always, at least partially, preoccupied with their obligation to pay back the money they owe. Their world of opportunities is small and they’ve closed themselves off from engagement and taking risks. There’s a tinge of fear in their behavior because they know, if not consciously than subconsciously, that they’ve made an agreement with someone to payback a lot of money and they’d be unwise to renege on it so they better not get sidetracked or take any chances.

Whereas the debt-free individual with money in the bank and assets generating income thinks, “Boy, what a beautiful day to be alive! I wonder if my friends and associates have investment opportunities or a project in which I can get involved and apply my resources.” They’re carefree by comparison. They’re ready to start businesses and make connections.

There’s a big difference between the two attitudes, and your outward demeanor will change depending on the one you possess. Attain the positive one, and people will notice it and admire your liberated poise. Fall into the other, and you’ll emit an air of desperation, despondency, and angst like a dark cloud that repels. One attitude is productive, the other counter-productive.

People who are deep in debt are frequently reminded of their poor financial state, several times a month perhaps, and they always have less money in the bank than they should. It’s depressing. The idea of making real progress, to them, seems like an impossibility because they’re so far from being in the black. So, what do they do? They try not to look at their statements. They put on some TV or play video games and forget about the condition they’re in. They don’t care if an entrepreneurial venture would make a few bucks, it’s going straight in the black hole debt payments anyway, so why bother. But, in truth, it would be a very significant achievement for them.

Ironically, in order to get yourself out of debt you must cultivate the attitude and habits of a debt-free person. You might be kicking yourself for taking out a student loan or racking up debt with credit cards but take heart, you aren’t nearly out of luck. A well-off individual enjoys reviewing their assets. You may not have many real assets, but you surely have some very valuable intangible ones. Good health. Your freedom. Access to books and information. Time. The ability to change your attitude. Free-will and an imagination that can envision a different future. These are invaluable assets that many people possess but take for granted. Don’t ignore your financial net worth statements, rather, look at them daily. Ignoring a problem never fixes it. More importantly, though, remind yourself constantly of your intangible assets and the innate potential with which you’re imbued. It will keep up your spirits and promote gratefulness.

If you appreciate something, you’ll put it to good use. And if you put your intangible assets to good use and avoid falling into debt, you’ll build a better life and enjoy a stronger inclination to discover and pursue new and exciting opportunities. Freedom, that long forgotten dream, shall be yours.

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