A very fascinating article from author Charles Hugh Smith: http://charleshughsmith.blogspot.com/2013/04/debt-serfdom.html I encourage you to read the entire article (the quotes below are but a few excerpts.) He makes some pretty valid points and may change how you view financial institutions and/or your status as a free citizen. Are you free, or have the pasts chains of serfdom been replaced by student loans and a mortgage? Agree? Disagree? After reading the article and thinking about it, do you still feel free?
Quite agree. Debt = serfdom. There is another way to live, frugally, with only short-term debts that are paid off in a few short years. We either accept the consumerist-narcissist debt-serf programming or reject it. We are neither victims nor bystanders. The choice is ours. The system has me with a mortgage but that is it for I chose the frugal life - altho' at present it seems that I have been a fool as all those with enormous personal debt have had the 'use' of the borrowed money and are not really having to pay any price for it. Whilst I, who have saved all my working life whatever I could, have seen my savings devalue with inflation being higher than interest paid and have had to use my savings to keep us going during the time of crisis that in the end took my wife away from me (because I had saved for a rainy day, I was not entitled to any assistance when that rainy day arrived).
Mortgages (and, over here, student loans) are generally "good debt", although not necessarily in the present economy. Similarly for starting a (successful) business. Avoiding unnecessary debt is good but borrowing capital can also be smart.
Aye, I agree - it's all a matter of using debt productively to advance yourself whilst still servicing and removing that debt.
Nice to see you haven't compared this to gun control Good article, I think this is is very applicable to America, the cost of education is incredible. I can see why educational institutions are being sued these days. So they should be, they are inflating costs, creating a discriminate elitism environment. They reap what they sow. But I agree with Arno too, mortgage within your capability is good debt. Sent from my Nexus 7 using Tapatalk HD
There was a time when student loans made sense; sometimes, they still do....for the time being, a mortgage is good debt-they'll likely take away the interest deduction in the next ten years, though, and then it might not be so attractive.....consumer debt, on the other hand, is generally self-indulgent.....having a "mortgage" to purchase a car is ludicrous (though using your home equity to finance a car might be seen as equally ludicrous, it is far less costly).....is "debt," serfdom, though? I like the analogy, but doubt the real accuracy of it-given the nature of bankruptcy, bargaining down debt, and the myriad other options for simply walking away from it, as well as the very real fact that people have taken risks with debt and built very large fortunes, ala Robert Rodriguez, who financed his first film, el Mariachi by maxing out a bunch of credit cards, and made his name, a fortune, and established a film franchise with Antonio Banderas, and another with his friend Quentin Tarantino-there are lots of stories like his......"debt" might be "serfdom" if you can't pay it all back, I suppose, but you shouldn't take on debt that you don't think you can pay, and hardly anyone ever does-the real key is knowing that you can.
My mortgage doesn't feel like serfdom, but I intentionally bought small. Its not very glamorous having a tiny garden-style condo instead of a nice townhouse or a single family home, but when life decided to through a few bad things my way, it meant I could ride out the rough stuff and keep going without a serious threat to my home.
I think that was part of the primary point the author was attempting to make. Just getting into college will find one's mailbox inundated with credit card offers. And, many students take advantage of these offers getting in way over their heads and they never stop this type of lifestyle even after college, even when they now have the added expense of paying back the student loan. They just keep perpetuating their debt, getting deeper and deeper until they're looking at so much debt that they may never get out of it short of bankrupcy (and those laws have changed and are likely to change further.) The other point made was that banks benefit from the amount of debt they take on, which encourages them to make these types of offers creating a "feedback loop." But to reiterate what you and the author say, living within one's means is the key to not being a serf. Does anyone know if they still teach Economics in school any more? It's been a while since I was in High School. LOL
They didn't below the age if sixteen when I was at my school. I took 'A' level Economics in Sixth Form and loved it so much I took my first Honours degree in it . I was good at 'trading' and thought that's what I would do for a living ... until I tried it for real. Soon decided it was not for me :lol:.
This makes me so angry that banks have no duty of care, and the regulators are effing useless to enforce any of the measly checks to try and stop this happening. They really need to start teaching a class's on money sensibility.. times have changed, even I find it hard to keep the sense of value of money these days as we have moved into a time of cashless society. The Wife and I trialed 6 months of taking physical cash out at the start of each week vs just using the cards for budgeting Having the cold hard cash made me think twice before any purchases, and stopped me making any impulse purchasing. Kids don't get that feel these days, it's all magical credit that comes from a plastic card. (which banks just want to throw at them)
I will probably never understand it, why do people need all those big McMansions, huge status-symbol cars and several luxury vacations a year? All seem to agree it is what is important and you should spend your life paying the resulting cost/debt.
Agree. Banks didn't really want to loan me any money for my mortgage. Even though I have paid off one mortgage and several car loans already, I don't regularly participate in debt, so it means nothing. If they don't see you as a regular in their casino, they don't think you are worth the time. I've always wondered why I couldn't get a car loan for a $40,000 house. I mean, isn't the house a more reliable asset to seize than an automobile which loses value as soon as you drive it off the lot?123
