Is Debt Bad for You?

by Guest Author on August 20, 2013 · 2 comments

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Consumer debt has exploded in the past several years and it is worthwhile looking back to see just why. It is reported that nearly 50% of all marriages fight over money. It is among the leading causes of divorce

Until about the middle of the 20th century if you wanted to buy something that you could not afford right away you had to specifically apply for a loan. For example suppose you wanted to buy washing machine. You would go down to the merchant and select the model you wanted. And you would fill out a seven part credit application which would be submitted to the bank if you wanted to finance your purchase.

The bank would then decide whether you were going to get the loan or not. They had no credit bureaus then so it was individually determined. Assuming you got the loan the merchant would receive the cash and you would get the washing machine. You also received a coupon payment book. If you did not make your payments the merchant would have to pay the bank and repossess the washing machine. This was known as a recourse loan.

Consumer credit until the mid-fifties was very cumbersome indeed. We saw such things as Christmas clubs and layaway programs.

Originally plastic cards were known as "charge cards." You had to pay off the balance at the end of every month and they were used essentially for travel and business entertainment. Then, bankers decided to introduce a consumer credit card. To do so they had to sign up merchants who would accept the card and consumers who would have the card. This took a long time because most merchants had their own credit departments.

By the turn of this century nearly all merchants accept credit cards and all consumers have at least one of them. They have become known generically as "credit cards" because in truth they are simply a streamlined way to borrow money.

Research has shown conclusively that people will spend more money with their charge cards then they would if they had to spend cash. And this creates a problem. No longer do people have to put off something when they can buy it on the spot. Instant gratification has replaced discipline and savings. People tend to live beyond their means when they can just "charge it". The merchants sell more goods and the banks lend more money. They are not looking out for you!

Which leads us to a discussion of "good" and "bad" debt. Some advisers make this distinction. I believe there is no such thing as a good debt. For one thing it raises the cost of anything you buy on credit. I prefer to think that there is "necessary" and "unnecessary" credit.

Most of us need to finance our house with a mortgage. We also probably need to finance our first car and maybe our education. Disasters may be beyond our means to pay for out-of-pocket. Beyond those very few things most of our purchases can be put off until we can afford to pay cash for them. The benefit is that our money goes farther.

Be completely out-of-debt has advantages. It gives you the maximum number of choices for the money you have. You no longer have to use some of your paycheck to pay for things you bought in the past. Unexpected things are no longer a crisis but are a mere inconvenience because you can pay for them. Finally, being out of debt gives you a psychological feeling of well-being.

So, it pays to get out of debt! Your life will be richer and more satisfying.


 

Gordon Bennett Bleil is a financial educator, former banker, bank consultant, entrepreneur, business executive and business owner. He has been a professor teaching in MBA programs and he holds an MBA in finance from the University of Southern California. Gordon hosted a radio show in finance entitled The Path to Financial Freedom and has authored courses in personal financial management. He is renowned for his ability to present complicated material so that it becomes simple and understandable.

 

 

DrFacilier-kotecki

We need to spend more time IN our comfort zones.

There, I said it.

In the self-improvement culture we live in, we're constantly advised to shore up our weaknesses and do things that are out of our comfort zone. It's apparently the magic path to success, riches, and enlightenment.

And I think it might be robbing the world of the best we have to offer.

Of course there is a pearl of wisdom in this adage. Trying new things is a great way to grow, build courage and collect wonderful experiences. But it also has the potential to lead us astray. Here are a few pitfalls:

It can trick us into thinking that we can be self-sufficient.

Its easy to get caught up believing that we can achieve anything, provided we're brave enough to step out of our comfort zone and take it. But we were designed to rely on each other. That means nobody is great at everything. Each person is great at some things, okay at most things, and terrible at others. Although it goes against the myth of the self-made hero, we're most efficient when we're using our strengths to help others achieve their goals while relying on other people's gifts to achieve ours.

It can subtly send the message that we're not good enough.

No matter how big our comfort zone is, it's always too small. There's ALWAYS something else we're afraid of, uncertain about, or uncomfortable with. I could spend all my time running on the treadmill of expanding my comfort zone, trying new experiences that scare me. I could go streaking. I could sky dive. I could eat snails. I could go deep sea diving and play pinochle with sharks. I'm sure I'd collect some cool stories, but at the end of the day, what have I built? What value have I added to the world?

It can downplay our strengths.

We have a level of comfort with the things we kick butt at. Give me a paintbrush, some tubes of paint, and a blank canvas, and I am in my comfort zone. Slide me under a car to change the oil…not so much. Sure, I could step out of my comfort zone and learn how to fix and maintain my own car. But try as I might, I'll never be more than a mediocre car mechanic. The world's all stocked up on mediocre, but it could always use more greatness.

I believe that we're called to be great. And the only way I know how to be great is to spend a LOT of time doing something you're already pretty good at. There are no shortcuts. Spending a lot of time expanding your comfort zone is an excellent way to collect stories, but it can also be distraction that keeps you from focusing on what it takes to become great.

I'm not convinced that the comfort zone is the enemy we sometimes make it out to be. Perhaps it's there to give us a clue as to how we should be really spending our time. Maybe we should actually be spending more time IN our comfort zones.

What do YOU think?


by Jason Kotecki

hiker

When my life was on the fritz, here's what I found when I looked under the hood…

I've always been the financial provider in my family, supporting my husband as he pursues his dream of writing the great American novel, but one day, I just wasn't happy with it any more.

I had noticed, too, that what I loved most about my work as a nurse midwife was talking with my patients about their hopes for their lives and their families. I realized that I was not only helping them give birth to their babies -­ I was helping them give birth to their dreams.

And then, four years ago, I had an epiphany. "These women need a midwife for their LIFE." And my personal coaching business was born. I built it while I continued to work the same hours at my hospital job.

It required me to work a lot of late nights and weekends, but when my clients told me that I had helped them accomplish dreams they had all but given up on, it made it all worth it. In fact, it became all I wanted to do.

And so my business grew a lot over its first two years, but not enough to support my family.

So I should've stayed at my hospital job, right?

But I couldn't do it.

I saw my friends being supported by their husbands as they pursued their creative dreams, and I looked at my husband, and I thought, "Why should they get to pursue their passions and I don't? When would it be my time?"

It made me feel jealous and powerless and taken advantage of, and I couldn't stand it. Yes, I want my husband to become the next JK Rowling, but I can't wait forever. I was using food and mediocre television to fill the void of wanting what I couldn't have, and that created more pain I didn't need.

And then, in February of 2011, I had another epiphany: I was coaching people to step out of their comfort zone, but I wasn't willing to step out of mine.

You know, I talk with people every day who dream of quitting their soul-sucking job to do work they truly love.

And I ask them what they're doing to achieve their dream and the answer almost always breaks my heart. There's a huge discrepancy between what they say they want to do and what they're actually doing.

That was me – and if that's you, if you're one of those people who don't know what your purpose is, OR you say you want to do your purpose-driven work, but you're not taking action to get you closer to whatever that is, then you probably feel like there's something wrong with you.

You probably think you're lazy or unmotivated. Maybe you think you don't want success that much, or that you are somehow broken.

Well, here's what you need to know and I want you to remember it:

There is nothing wrong with you.

You are not broken. You're not unmotivated. You're not lazy. And it's not hopeless.

Whether you know your purpose or not, I have learned from my life and from my clients' experiences that the pain you feel as you compare your life to your dreams comes from having tried to achieve those dreams-and having failed.

You may have tried multiple times; you may have given your dreams varying degrees of time and effort. But all the other demands on you made you lose focus, or you met with a barrier that seemed insurmountable, and it didn't work out. And when you think of trying again it hurts too much.

But here's the thing: You're in pain now. And re-engaging with your dreams may hurt even more-for a while. But it won't hurt for as long as you think it will.

And the only way to make the hurt go away is to start now.

The REASON that you HURT when you think, "Who am I to want more? Why can't I be happy with what I've got?" is because, quite simply, it is NOT TRUE that you shouldn't want more and that you CAN be happy with what you've got.

You are here to give so much more and it is a disservice to your God-given talent not to. And that's why it hurts. Because you are betraying yourself and your purpose.

OK, if I haven't scared you off or offended you, and you're still with me, you KNOW you have something more to offer, something really great, but you just don't know how to get it out in the world.

Here's what I want you to know: a breakdown is ALWAYS followed by a breakthrough. It's always darkest before the dawn, you know?

And it's actually Universal Law – you WOULD NOT be given the challenge without the opportunity for healing it, right in front of you.

That's what I realized back in February of 2011.

I knew that I didn't want to stay on staff at the hospital , but I believed that our family needed the "security" that my job provided. I thought my coaching business and writing career could support us, but I had no guarantees…which led me back to wondering why I couldn't just be happy with my job at the hospital.

It wasn't that bad, was it??

Those stressful thoughts are what led to my breakdown – and my breakthrough. I couldn't believe I was in such a bad place – overwhelmed by doomsday scenarios and too scared to think straight.

But along with all the dark fears, I'd also get a moment of clarity when I knew I should give up my staff position. BUT then the moment would pass and my heart would start racing again and I would be in tears thinking that I couldn't possibly leave.

And then I would get another flash of insight. It was like I was walking on a dark road and every once in a while a car would go by and its headlights would illuminate the path and show some sign, like a guidepost, and I would know again that I was on the right track. But the insights and the clarity always seemed so fleeting.

I would get them and almost immediately I'd be back in the land of fear and despair.

I couldn't believe that I was in such an undesirable, untenable position. I couldn't believe that I had been brought this far to fail. All I kept thinking was about what I didn't want. At some point in the depths of that despair, I heard a small voice inside that said, "What do you want?"

As soon as I got clear on what I wanted, I received a gift in the form of a thought-a thought I want to share with you: I don't know what the future holds, but I know I can figure this out. I will figure out how I can do what I love and support my family. No matter what .

It's now been over 2 years since I stepped waaayyy out of my comfort zone and quit my hospital job. While it hasn't been easy, it has been possible for me to support my family from doing work I love.

What's possible for you when you replace, "I can't do it." with "How could I do it?"

Please let me know in the comments below!


by Stacey Curnow