Do you have debt? Whether it’s $5,000 in credit card debt, $30,000 in student loans, or a $100,000 mortgage, debt can be stressful for many people. Well here are some things you can tell yourself to feel better about your debt 🙂
1) I’m in my mid twenties and I have over $230,000 of debt which includes a hefty mortgage, $7,000 RRSP loan, and more than $20,000 in a margin trading account. I used to have over $10,000 of student loans as well, but paid that off early since it had a relatively high interest rate. I have plans to increase my total debt owing to over $300,000 by the end of this year after I secure a loan to buy a piece of property I was looking at. If someone like me with an average salary can go this deep into debt and still sleep like a baby at night, then you probably have nothing to worry about (^_~)
2) Debt is a depreciating liability. You know how you can stash away $100 under your bed, and by next year it’s only worth $98? What happened to the $2? Inflation happened right? The rising cost of living can be a pain, but it can also be a gift to people who have debt. If you owe the bank $100 for example, then by next year if you haven’t touched the principle, that $100 balance you owe will only have $98 of purchasing power which means it’s EASIER for you to pay it back. So my $230,000 debt, assuming a 2% inflation rate, will only be worth $225,400 by next year. Wow, I just increased my net worth in REAL terms by $4,600 without even paying back any principle :0) Thank you inflation! Take that TD Bank! lol. The US has over $16 trillion of national debt. And its growing by billions of dollars every day because their government continues to spend more than they take in. Actually our Harper government is not doing that much better (>_<) But anyone who can do simple math understands this trend can’t continue forever.. or can it? Mr. Bernanke, the person in charge of monetary policy in the US explains-
3) Interest rates are low. If you see a potentially lucrative investment opportunity whether it’s to give yourself more education, renovate the home, or start a retirement plan, then going into debt to fund these things to make your life better is okay (^_^) Don’t feel bad about taking advantage of easy credit. For example, if you’ve always wanted to buy a caravan and drive around the country, Positive Lending Solutions has options for people with poorer credit so you can still do something educational and fun.
4) Ben Bernanke still has a mortgage despite having millions of dollars in liquid financial assets. Mr. Bernanke bought his house on Capital Hill in 2004. Today his home has appreciated in value by $126,468, and the stock market has gone up by nearly 100%. This means by continuously borrowing money from the bank he has been able to free up his own savings to get a better return on his capital.
At the end of the day, just remember that DEBT is only as bad as we think it to be. Nobody appears to be losing their hair over our public debt in Canada, which sits at about $32,000 per person. However when we take on a $10,000 car loan it can become this daunting burden, and we stress over how to pay it off ASAP. But if anything, I think public debts like the ones held by CMHC, and our Provincial debts (AKA Ontario’s) should be a bigger concern to the quality of our and our children’s lives in the future. You can pretty much rationalize debt any way you want. It can be scary, or it can be no big deal. Sometimes it’s just all in our heads (＠_＠;) I’m just trying to say nobody likes to have debt, but if you do, don’t worry. As long as you have a plan to deal with it, there’s no reason to let it get you down. Just relax and enjoy life 😀