Debt is a Four Letter Word

I am astounded that I had not written something with this title before (in fact, I was positive I had). As has been said previously, there is no such thing as Good Debt, but I guess the word Debt as a social obscenity was missed. But make no mistake, Debt is a four-letter word.

I was happy to see noted financial expert Preet Banerjee using this same sentiment in a presentation to financial writers. Given the low-interest rates we have lived through, folks have no idea the impact that a quadrupling of the prime rate (to say 8%) might have on folks. Could you live with the Interest portion of your mortgage payments to Quadruple?

The explanation that resonated with me (from Preet) was you are not borrowing money from the bank. You are borrowing it from your future self (and you had better hope future you is successful).

The numbers do not lie. Every dollar you borrow today, future you has to repay, with interest on top of it. Currently, interest is low, but how much longer will this last? Look at your Mortgage statements. Does it tell you how much interest you pay off for each payment? If it does triple that, ask yourself, “Can I afford this?”. If you want to figure it out yourself, try my Mortgage Payment Calculator.

I am not even going to touch the levels of consumer debt (i.e. Credit Card, short-term loans, auto loans, etc.), the amount out there right now makes me shake my head.

Other Debt Posts from me? I can’t put them all here. The post would go on for pages, but here are a few of the latest.

• Debt Consolidation and Tattoo Coverups , didn’t think I could make those connections, I did.
• Another Quarter Richer but Deeper in Debt, Stats Canada points out that consumer debt is too high.
• Symptoms Your Debt Load is Getting Out of Control, just a few symptoms.
• Questions with the answer, “Get out of Debt” , sounds repetitive doesn’t it? This is why I haven’t written about debt as an obscenity.
• 10 Steps to a Debt Free Life, can you guess how this one might go?