by Heidi Hyde

Created on: August 30, 2007

There is a lie among the American population that has spread like a virus. It's attacking our children as early as high school, and keeping our senior citizens from retiring with dignity. The culprit? Debt.

Here's the truth. There is no such thing as "good" debt. Step back from the computer a minute and let that sink in. Are you ready? Let me say it again.

There is No Such Thing As "Good" Debt.

I know your shocked, and I'm not surprised. You have been brainwashed into thinking that you must have debt to succeed. You've been bombarded with credit card adds, home-equity loans, and a media that pelts you with stories of "have it now!", "no need to wait!", "no credit? bad credit? no money? no problem!". You may be thinking you aren't silly enough to buy into those schemes-but what about a house? What about a student loan? Those are good debt...right?

No. No debt is good debt.

The first thing you need to do is make the decision to never buy another thing you can't afford. Take a minute to process. Never buy another thing you can't afford.
That means if you don't have the cash in your hand, you don't buy it. It's as simple as that. Make the commitment to never again give away your freedom to debt.

I realize that critics will insist that mortgages are good. There good investments, good equity builders, "good" debt. I disagree. If you must finance a home, do it with a 15 yr. fixed mortgage. When you are debt free, you are free to make your money work for you. Get 15% of your income into a retirement fund. Put funds in a money market account. Save for your children's college education. Not only will you find yourself monetarily richer, the peace of mind that being debt free offers is worth an 850 FICO score in my book any day of the week!

How can I do this, you might ask, when I've already made the mistake and loaded up my life with debt?

The answer is simple. I'd be willing to bet you have items or services in your life that you can't afford. Do you need cable television? (the answer is "no" by the way.) Cut out all extraneous expenditures with the knowledge that this won't be forever. Do whatever it takes. It's a small price to pay to be debt free.

Make a list of all your consumer debt- minus your house- in order of lowest to highest balances. Tackle that smallest debt with all your vigor, throwing every extra household penny at that debt until it is paid off. Celebrate. Repeat with the next smallest debt by adding all the money you were paying toward the former debt to the minimum payment on the next debt. Celebrate. Repeat. Continue until all consumer debt is paid off.

Finally, share the learning. Don't let your children or your children's children bury themselves under a mountain of debt, "good" or "bad". It's time to start changing the way we feel about debt.

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