I received a comment the other day about choosing to go into debt again. It was prompted because I discussed the possibility of a car loan. I thought I would reply in a post because it brings up a good point to make on how I feel about debt.
When it comes to debt, I am not anti-debt. Do I like being in debt? Heck no. Especially since it was due to us being irresponsible and spending more than we made. While I’d love to blame the credit card companies for our debt…I can’t. They didn’t make me use their cards. I did that. I swiped it each time or plugged the numbers into the computer to make an online purchase. They didn’t do that. Sure, they have questionable practices. You miss a payment and your interest rate can skyrocket. I don’t agree with their business practices and I think they are shady. I’ve always felt that if I concentrated on that and gave them the blame – we wouldn’t learn our lesson. So I’ve focused on the fact that we used the cards when we didn’t have to.
When it comes to student loan debt, I’m not against that either. Tuition and room and board can be expensive. To have that money up front at 18 can be hard. I probably could have taken out less in student loan money if I saved some money while working the summer before college. I didn’t. I spent it and because of that I took out more in student loans than I had to. So I don’t regret all of the student loans I took out.
For mortgage debt, given our income it would be tough to purchase a house mortgage-free. So I am not anti-mortgage debt. It would take us many years to do that. I think the thing to do is to still try to get the best deal when shopping for a mortgage and to not buy more home than you can comfortably afford.
Lastly, for auto loan debt, I am not against that either. I don’t want another auto loan, but I also don’t want to make a mistake of buying an inexpensive used vehicle. The last one we bought was such a horrible vehicle – it only lasted a few months. Like with a mortgage, you still have to be responsible and understand what you are getting into with an auto loan and the car you are purchasing.
I don’t want to have debt. But I have to be realistic and responsible. I bolded responsible there because I think it sums up the one thing we lacked for so many years. We weren’t very responsible with our purchases. We settled on a high mortgage interest rate because we thought it was the best we could do (although we didn’t agree to an ARM that was offered to us – whew!). Same goes for our last car loan. The interest was high, but it was the first auto loan we got without a co-signer so we took it. Thank goodness we agreed to the five year loan versus the 6 year that was dangled in front of us.
We’ve made bad choices in the past. We have learned a lot and with that knowledge are going to make the best out of the money we make and spend. We may not be able to have the best scenario (no debt at all), but we will make the best choice given all of the resources we have. We will be smarter consumers. We are shifting our finances to be more proactive than reactive.
Such is the case with saving up for a new car (which doesn’t necessarily mean brand new – just new to us). Our car probably has many years left to it. It’s a darn good car and although I really didn’t like that car at first, I have a lot of respect for it now. We will start saving up the money for our next car purchase. Here is where my realistic tendencies come in (some may say pessimistic, but I view it as realistic in this case). What happens if our car has to be replaced sooner than expected? We can settle for a cheap used car using funds saved up until that point, but that is not always the best choice.
Our goal is to make the best choices given all of the resources we have. We also want to get to the point where we have more resources since that gives us more options. After being so far in the hole, I feel I am being realistic with even hinting at the possibility of another auto loan. When faced with a problem, I like to look at all of the choices and not exclude any unless it is determined that it is not the best choice. I will not avoid debt if it ends up being the best choice for the situation.
We are actually going through this process right now due to some substantial upcoming medical costs that are not covered by our health insurance. We could pay in full and deplete our savings. We could enter into a payment agreement with the medical provider and have medical debt. We could research to see if there are any programs we can qualify for to help with the cost – maybe even get new health insurance. Etc., etc. We could even decide to not have the medical cost at all (it is not life-threatening, but does affect quality of life). There are many choices we can make and we will dig into each one to determine the best choice given the resources we have.
Going deeper into debt is not an option I like, but it is an option that I have chosen to keep as an option until it is determined to not be the best choice.