by John McDevitt

Created on: August 25, 2008   Last Updated: November 21, 2008

When you go into debt you are spending your future now. You trade your future earnings, your future wealth for "stuff" you want now. Sound simplistic? Well, maybe a little, but there are only two ways to acquire things that you can't afford to pay for out of pocket. Save until you've accumulated enough money to buy, or borrow the money with the promise you will pay the money back with interest over time.

When you have money you can do things. You can have things. You can be secure in those things. When you lack money, you can't. People always seem to worry about money. Either they simply don't have enough and struggle to make ends meet or they worry about their future. Money isn't the end product, nor is money the end goal. Money is a way of keeping score.

It's simply not realistic to live debt free in today's society, at least not when you're first starting out. Debt puts short term goals ahead of your long term goals, and there's nothing wrong with that. After all, we want a comfortable home for our families and a quality education for our kids. Debt is the only way most people could ever hope to achieve these things.

What are your long term goals? What are your short term goals? You must ask and answer these question first. The key is balance both in our choice of goals and the means of achieving those goals. Debt that helps fulfill long term goals like home ownership or quality education is sometimes referred to as "good" debt - debt that moves you closer to your goals. But there is the "other" kind of debt. Debt that sacrifices our long term goals in favor of instant gratification.

Everyone needs a place to live, a home of their own. Owning their home outright is a long term goal especially when you consider that most people will pay their mortgages for thirty years. Going into debt to buy your home will help fulfill a long term goal, not thwart it. You continue to build equity in your home and you enjoy tax advantages so, in the long run most people come out ahead. They've fulfilled a long term goal of home ownership.

Consumer debt, credit card debt puts a real damper on your long term goals whether you realize it or not. If, instead of investing, you spend part of your future on that hot new plasma TV, you'll end up paying twice what the TV costs when you factor in all the interest you'll be paying and your TV will be obsolete before you've ever paid off the loan. In fact, the TV could very well end up in a landfill and you still have the balance on your credit card.

Debt is like the outgoing tide sucking you away from the shore of your long term goals and dreams. You can still reach your long term goals as long as you keep the current of debt reasonable and under control. The lower your debt, the quicker you're likely to reach those goals. But if you get caught in the riptide current you risk being swept under, drowning in a sea of debt, never to realize your goals. Swim out of the overpowering current by balancing your long and short term goals and you will reach that shore.

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