Debt

destroy

conquer

how to

Debt is something almost all of us are familiar with. We get loans for all sorts of things, such as college, cars, homes, business cash flow management, and even day to day living expenses.

Debt, when used responsibly, is a great tool. Obtaining capital today that doesn't need to be repaid until the future, and using that capital in the mean time for a purpose with value greater than the cost and risk of the debt, makes a lot of sense and propels many of us to financial and other types of success that could not be achieved as quickly, or even at all, without debt.

But debt is addictive, and when used irresponsibly, it is a killer. It's not only a financial killer, but the stress that out of control debt can bring actually contributes to physical ailments that can literally lead to actual death.

There are multiple costs associated with debt. First and probably most obviously, there is almost alway interest that has to be paid periodically, such as every month, as long as the debt is not yet fully repaid. Interest does not go toward reducing the debt, it's more like paying rent for the privilege of continuing to carry the debt. In addition to interest, there may be additional fees to be paid whenever the terms of the debt are not honored, such as late fees when payments are not made on time. Like interest, these also do not reduce the debt.

Because there are always terms associated with debt that the debtor must adhere to, debt reduces flexibility and gives some amount of control to a creditor. There may be restrictions on a debtors ability to sell assets, requirements to report financial information periodically, inability to borrow for more important needs, and of course the requirement to repay the full amount of the debt on time.

Debt is related to investing, interest, finance, health, leverage, real estate, the rule of 72, and many other activities and subjects.

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