May 30, 2012

0 debt is best

 I believe that 0 debt is best. I grew up in the society where you needed to create surplus to afford anything. If I needed to get new cloth, new toy, pay for my school, university, anything, you name it, me or my parents needed to put money a side or already have it. Once we would collect the amount that was needed, I could go ahead and buy things. I lived with the same understanding in Germany. I was studying and finding part time jobs to support my study. I was paying for each semester I was taking and after graduation all my bills were paid off. I struggled, was not easy, but not impossible.

Arrived here I quickly noticed, had to, that society breath and thinks differently this regards. I had to get a credit card I don't wanted, cause I had to show my credit rating to get a cell phone (weird, for the cell phone? really?) and to be able to rent an apartment. I felt it was unjust not to be able to buy a cell phone without having a credit card, but anyway I did and surrender.

With 0 debt you are free person, but with debt you are somewhat stuck. Problem is though, that here everyone finds it easy to grad the money from the bank. Let's say if I want to buy home and it costs $700.000 I won't buy it cause I have no 700.000 surplus yet. If also others won't buy it, prices will get realistic. However here you can pay 10.000 and get 'your' home. If it ever be your home, you still don't know for the rest 30 years or more. And if it doesn't, your kids will be going in a same cycle of hope thereafter, hopefully with success though.

Banks have it best. Price is not dropping. As I already mentioned one reason is that there's always buyer since people find it OK to borrow from the banks huge amounts. Why should price go down, when there's just right competition? Salaries however are not going up. And that's even better for the banks, now you have to borrow even more.

Said all these, I really don't know how one person can brake the cycle that has been well established here. I also don't believe that society with debt till dead is truly free. If I had 50.000 debt, I am sure I couldn't easily decide where to live, move, go, change careers, experiment, take risks. I couldn't afford to respond to @TVO's question. My debt would define who I am and what I do. I don't think with $700.000 debt I would have time to be engaged and follow politics, research, read, or paint as I like unless these activities would make me earn my remaining debt. If you ever had a debt, you know how it differs from the stress of not having enough money. While you have not enough (unless you have at least something) you can adjust and make less expenses, while with the debt YOU HAVE TO MAKE THE MONEY. And now I remember Charlie Chaplin's speech in "The Great Dictator", we are not machines.

I believe in making surplus and going ahead and buying things. For home some needed 10 years to get the amount, for study part-time job must be enough. (Semester fee in Germany was ca. 120 Euro, now they increased it to 500, but still possible to pay.) I only understand borrowing in emergency situation, for instance no work, health complications, no other way.

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