Principles Over Tactics- Debt

I cannot talk to you about debt. That’s because I have never had to carry debt for very long in my life.

I owed my mother about 50K after university. But I think I paid that off in less than a year.

I only had a mortgage for about four months.

I pay for almost everything with cash.

Even when I tried to carry debt for my car at 0.9%, I had the cash sitting in a bank account to pay it off.

I used to believe that that’s what everyone else did. The thought of buying something without money I already had was anathema to me.

That was until I started to read PF blogs. Like whoa, the debt games folks played were interesting….maybe…not really.

That is why I could not write about the best way to get a mortgage, the best way to hack this or that. I have gotten where I needed to go without needing to do any of that.

Maybe I’m simple but the mental gymnastics required to perform some of these strategies would make my eyes blurry. I don’t think any of this money stuff is that complicated or needs to be.

I say over and over that all you need to do is to work more, save more and keep at it. I don’t care how you work more- with your career, side hustles, or an inheritance. I don’t care how you save more- stick it in a tax free, tax deferred, taxable accounts or an ole savings account.

I barely even talk about investing since even with that there are many roads to Rome. Nobody has a hold on the one and only way to get anywhere. There are many strategies to choose from.

If you can not make the money and you can not save the money, you’re in a world of pain. You can do backflips till the cows come home and you will not get anywhere. Your financial life will look the same one decade to the next.

My first partner in practice was such a person. He always had the new business idea, the best investment guy, the best tax guy….

And he ALWAYS had some debt strategy ripping around in the background. He would often think that that was the solution.

And every year, he would be constantly in debt after another financial emergency had erupted.

Thankfully he has come to terms with this. He has settled with a career that he can continue till he is a very old man.

At least he no longer makes excuses about it. He has heard me say enough times that he has a spending problem NOT an income problem.

He always says “I plan to work till I die cause I love what I do!”

I always say, “You need to work forever since no passive income could overcome your expenses. They are simply too large.”

Only good friends can say things that clearly to one another. I judge him ruthlessly but he hasn’t changed a damn thing.


2 replies on “Principles Over Tactics- Debt”

  1. For auto I saved some every month for my next car, since transportation was going to be an obvious need. At some point I had enough to buy an off lease car (or 1 yo used with low miles). I then calculated how much life the car had left in terms of finance value. Cars with a lot of miles are hard to finance but cars with low miles can be financed leaving a bigger market and a higher residual to sell my car into. I would then save up the difference between my predicted residual value in the present car say over 3 years and the predicted cost of my next car and when the sum saved plus residual value crossed the next car’s cost I’d buy the next car. It usually worked out to be something like a 20K mile car I drove to 65K miles which was before it needed brakes etc. I would usually wind up putting in 1 battery and one set of tires and regular oil changes. My cars were not beaters and reliable usually Hondas which are always in demand on the used market, so basically I was self leasing and paying myself the lease fee profits. I was saving about $230 a month for my next car which would have cost me 320 bux a month if I had just leased a new Honda. If there was job trouble or needed that money for something else, I owned the car and had no one to pay as far as a lease fee, I just drove the car an extra year. That never happened but it was built into the plan. I did the same with my wife but she often liked to drive her cars into the ground, so I would just keep piling up “lease money” in a safe account for the eventuality, then go pay cash.

    1. Hey Gasem!

      I am more like your wife. I drive my cars for at least 15 years. I also drive Hondas and lately a Subaru.

      I don’t think there is much of anything the FIRE crowd could teach you. Me either for that matter.

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