America is a country of debt
I have been debt free for about 4 years. I do not know the exact date, sometime during 2020 I paid off the rest of my student loans. It really is an amazing feeling, technically, I owe no one nothing. Everything I earn goes into my pocket, and my credit card gets payed off with every paycheck. I do not pay interest, I do not see my paycheck disappear towards bills and loans. Not only this, I plan to avoid debt for as long as possible. This means no large purchases without cash such as a car, wedding, or honeymoon. Unfortunately, if I want to buy a house at somepoint then my dream of debt free might be gone. That we will worry about another day.
I know some people are going to say something along the lines of ‘some debt is good debt’. They will point out that buying a house is good debt, because it is an investment to get on the property ladder. They will argue that student loans are great to increase your earning power. To this I say, sometimes, sometimes people get loans for a career that pays lots of money, lots of people do not. Sometimes people purchase a house, and make money on it. Arguably money put in the stock market will make more money over a long enough period. That argument is for another time though.
77% of Americans are in some kind of debt, we have $1.115 trillion in credit card debt, with 47% of those with credit cards have carried a balance at some point in the last year. That means you are paying way more for the things you purchase due to interest on your credit card. We are generally purchasing way beyond our means.
In America the total student loan debt is now over 1.6 trillion dollar, with 43.2 million Americans holding some type of balance. That comes out to about 13% of Americans sitting on student loan debt. With about 44% of Americans going to college that means of the people that went to college, ~30% hold some type of debt. Some 3 million of those people are in student loan default, meaning they have completely stopped paying their loans. Another larger group is behind on their student loan debt. Honestly, I feel for these people, at 18 we are told to go to college and choose a degree, many do not realize just how hard paying back these loans are going to be. If you are paying back a tuition of $30,000+ and earning $50,000 a year, how are you supposed to pay this back, I do not know, you tell me.
The American dream is a path way to debt
Debt makes it impossible to pursue things further or follow your dreams. When you need a paycheck to pay your bills how are you supposed to find time to pursue something meaningful. Debt makes good wage slaves because people have no other option.
Does this pathway seem familiar, finish high school, go to college, get a job, buy a car, buy a starter home, have kids and send them to college. This is the pathway most of us have been told to follow. The problem with it is that all of that requires extreme levels of debt, and you will be working to 65, if you are lucky, just to pay it off. The thing is this is great for the American economy. Debt creates good workers, living paycheck to paycheck makes good workers, people working past 65 adds to the workforce and workers push the economy up.
I told you that I have been debt free just to iterate this is not the required path. It is possible to pay off debt, live debt free and still live a fulfilling life. Being debt free gives you peace of mind, renting apartments and houses leaves the work to the landlord, not owning a car could save you millions. I talked more about this here and here. Credit cards can be zero and your credit score in the high 700s.
It is up to you to choose what is meaningful for you and how you take on your debt and finances. In my opinion debt is a prison that keeps us pursuing work and paychecks that do not fit our needs. My interests is the pursuit of freedom and to do that I do not want to owe people anything and live within my means.