Yes, you read the title of this post correctly.
I’m in debt, lots of it.
I run this personal finance and investing site, and enjoy doing it even though I have over $200,000 in debt. Debt sucks.
Maybe I’m not much different than you. We have a house but we don’t own it yet. The bank owns almost half of it, we own the rest. My wife and I hope our debts will be gone for good in another 7.5 years. There are no guarantees in life but we are working on it.
Most Canadians need to borrow money for a house or a car. Most young adults have a student loan as well. Borrowing money to pay off appreciating assets is not a bad thing. In fact it’s a good thing so long as you can make the debt payments on schedule and your borrowing costs are low. Borrowing (lots of) money to buy depreciating assets or just stuff is wasteful. It’s even worse if you can’t make any repayment schedule. Some people don’t have a choice; they are in a financial struggle because of circumstances beyond their control. I get that. Taking on this mortgage debt has been our choice.
Mortgage debt limits our cash flow for investment purposes, even with the low interest rates of today. Debt payments limit our options on how we can spend our time. Our income could be used to buy appreciating assets like (more) dividend paying stocks or equity ETFs to fund our financial future. Instead, a good portion of our income services debt. With debt we pay other people first.
Having a mortgage over $200,000 is pain in the ass. I don’t like owing other people money. I suspect that’s because being on-the-hook for something feels like a ball-and-chain. When we’re debt-free we’ll be shackle-free. In a debt-free world our income will not be spent making other people wealthy. There will be no financial obligations to others. I can spend money earned as I please. Money earned will provide direct financial flexibility. Debt doesn’t provide that.
I run this site because I enjoy personal finance, saving and investing and everything in between. There isn’t anything about debt I enjoy.
What’s your take on debt? Are you in debt? How does that feel?
Are you out of debt? How does that feel?