Is Debt Really a Four Letter Word? 

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Jonathan graduated with a degree in Business Administration from Ouachita Baptist University. He also holds a Masters in Business Administration from the University of Texas at Arlington. While he works for a contractor buying specialized tools, his passion is personal finance, frugal living, blogging, and stewardship.

According to an NBC News article, 8 in 10 Americans are in debt. Granted, a good portion of those in debt have a home mortgage. Yet debt accumulation can be the result of a variety of factors. This can include a home mortgage, student loans, credit cards, auto loans, store credit, personal loans, divorce, poor money management, gambling, underemployment, unemployment, lack of an emergency fund, poor communication between spouses, and medical bills. The NBC article is based on a study by Pew Charitable Trusts which examined debt through generations. The article ends with “Love debt or hate it, it seems here to stay.” Yet is this truly the situation in the United States today?

As of August 2015, here is the U.S. household consumer debt profile from NerdWallet:

Screen Shot 2015-09-11 at 7.20.26 AM

I’m going to contradict the statement by the NBC Article. Debt is not taking a foothold in our house. By working the 7 baby steps we have paid off all of our debts with the exception of our home mortgage. We will work our hardest to pay off the home mortgage in 8 years or less. What about you and your family? So is debt really a four letter word?

Four Aspects of Debt To Consider

1. Debt is Stressful.

Stress Debt

“Rather go to bed without dinner than to rise in debt.” – Benjamin Franklin

Stress that can lead to significant strain in a relationship or marriage. According to this MSNBC article earlier this year, a study by SunTrust bank found that 35% of all respondents experiencing relationship stress said money was the primary cause of friction. Another study by the American Psychological Association found almost three out of four of Americans are experiencing financial stress at least some of the time. Nearly a quarter of Americans are feeling extreme financial stress. When one spouse or significant other is spending like there is no tomorrow and the other is trying to live frugally the result is friction. Unpaid bills, loss of a job, lack of savings for a rainy day, and lack of communication can lead to serious fights. Major life events can be disastrous to a family’s financial stability leading to repossession, foreclosure, and even bankruptcy. A good emergency fund and sinking funds can curb that stress factor. Don’t let debt rob you of your joy in life.

Is debt causing significant stress in your life, family, and relationship? 


2. Debt is Slavery.

Debt Is Slavery

“Those in debt are slaves.” – Andrew Jackson

The borrower is slave to the lender. That seems like common sense but many people avoid that reality. Yet common wisdom such as Proverbs 22:7 makes it clear. What is the biggest debt besides a home mortgage Americans face today? Student loan debt. So let’s talk about student loans for a moment. According to this Times article, last year American students were well over one trillion dollars in debt. That debt is only increasing as the cost of education continues to rise and more students than ever are attending college. The cost of obtaining a college degree has risen a ridiculous 1,120 percent in the last 30 years. In comparison the cost of medical care has risen 454 percent and housing costs have risen by 175 percent. It would not surprise me if the student loan crisis is the next bubble burst.

Let’s take this to a practical level for a moment. There’s a common misconception today that people should go to college for four years or more without having to work. Aside from the fact that this creates an environment where people have head knowledge but no real life experience, going to college is not a right. Going to college does not guarantee success in life. It is an opportunity to gain knowledge and network with people. However, it doesn’t have to cost $50,000 a year. There’s this thing called community college which allows you or your kid to get a majority of the basic courses knocked out for a fraction of the cost. Also there are a lot of grants and scholarships available that can help with college expenses. Finally, I’d encourage you or your kids to work during the summers and even throughout the semester. Students, don’t be a slave to debt for the next 10, 20, or 30 years with student loans. Parents, set your kids up for success by helping them to avoid student loan debt.

Do you view debt as slavery? 


3. Debt is Deceiving.

Big Kid Toys

When you take out a loan so you can drive that new motorcycle, enjoy your new boat, go on that dream vacation you post pictures all over Facebook, or buy the latest HDTV with a surround sound you are deceiving yourself and others. If you don’t make the payment on the loan the lender has every right to come pick up their stuff. So in other words they are not your toys unless you paid 100% for them.

Home Equity Line of Credit (or HELOC) may sound like a good idea at first. But are you improving your house in a logical or ludicrous manner? The litmus test is whether your improvement will make the eventual sale of your home happy and not how you feel about it. Or worst, are you buying toys such as previously mentioned or using a HELOC to pay off other debt like credit cards based on your house’s value? Did we not learn anything from the housing bubble crisis of 2008 and 2009? Do not deceive yourself or others.

Are you living beyond your means and deceiving yourself?


4. Debt is a Distraction.

Distraction Definition

When you are in debt, a portion of your paycheck goes to your lender not towards your checking or savings account. That means a good chunk of your check is going towards someone else’s bottom line. That’s not my idea of fun.

Interest is simply the cost of paying someone else for a product you want now. Say you take out a loan for 3 years at 25% interest for $5000 for a new furniture. Using a simple interest calculator you would find the furniture would cost $8,750.00 including interest. That would mean $3,750.00 went to interest. So you would nearly have paid double for that furniture set. What could you do with $3,750.00 extra cash? Maybe invest a portion of it into retirement, put some of it in an emergency fund, or save for the kids’ college.

With a home mortgage it makes sense to buy a house on a loan provided you put 20% down and keep the mortgage payment at 25% of your net income. It’s even advisable to sign up for a 15 or 20 year home mortgage instead of a 30 year note.

What about retirement? According to Forbes, 68% of working age Americans ages 25 to 64 are not saving enough for retirement. Fewer people today are taking advantage of employer sponsored savings plans. Of note as well 54% of Americans have too little saved to produce an income stream in retirement. It is sad that an estimated 9% of near-retirement age workers ages 55 to 64 will face extreme poverty. Another 24% will live in near-poverty, with income below twice the federal poverty line. Those two combined account for 6.4 million people.

However, with car payments, payday loans, and student loans the cost of living may become unbearable. Having payments reduces the amount you can save, spend, give, and invest. I have friends who have to live with family after graduating from college because they could not afford basic rent, utilities, and daily expenses to live on their own. I also have other friends who went to expensive schools such as TCU, Baylor, etc. Some of these friends faced bankruptcy in their mid to late 20’s. These same friends had new cars, extravagant lifestyles, no emergency fund, and the concept of a budget was nowhere on their radar.

Is debt a distraction in your life?


Final Thoughts

As an individual, don’t treat debt as a tool. Debt is stressful, slavery, deceiving, and a distraction. Does debt have a place for governments or business? That’s a question for another post. For now, I’ll leave you with a challenge from Ralph Waldo Emerson to not be a slave of your own past.

Do Not Be the Slave Quote

Read Further: 

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Do you consider debt a four letter word? Is debt here to stay in your home?

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About Jonathan Key 112 Articles
Jonathan graduated with a degree in Business Administration from Ouachita Baptist University. He also holds a Masters in Business Administration from the University of Texas at Arlington. While he works for a contractor buying specialized tools, his passion is personal finance, frugal living, blogging, and stewardship.


  1. I do agree. Debt is slavery and a distraction. I know more than anything it starts with a debt mentality. I know in 2007 I wrote down all of my beliefs about money and realized I was to blame for my financial state. I replaced those thoughts with ones that supported the financial goals I wanted and my finances started to change. Thanks for bringing these issues to light in your article and the truth that there is hope!

  2. Excellent post. Debt is everywhere and yes it can be really so easy to take out the big loans and home equity loans and such but the end game has got to make you money NOT cost you money. Some smart points here. Thanks. I never want to go back to the days when I had to pay off student loans. That was crappy as could be. It took us 10 to 15 years of paying those student loans off.
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  3. This is an excellent article! I was paying 40 dollars a month on interest. So I transferred my debt to a no interest visa and my goal and commitment to God is to pay it off before the interest rate starts. It has been so freeing to stop charging and pay it off. I can’t wait until my debt gets to zero!

  4. I know all about debt. I used to drown in one but now, I have little savings but I am not in debt as well so its a win. People should aim to be debt free. Always. Great article, very informative and very detailed.
    Kathy Ngo recently posted…sana …My Profile

  5. my hubby and I are credit card haters! we had to have one to buy our home, but once we got the mortgage we just cut the things up! refuse to get in debt over things we don’t need to have.

    • That’s great Courtney! Yeah it’s a lot easier to get a mortgage with credit history. Although with manual underwriting with companies like Churchill Mortgage it is possible to get a home mortgage without it. It’s good to avoid debt for stuff we don’t need. Thanks for commenting and reading!

  6. Debt took a strong hold on my hubby and I while we were in college, they get you at college fairs with credit card applications! 🙂 I am happy to say that after 16 years & quite a few mistakes later we are debt free. After reading Dave Ramsey’s total money makeover 3 years ago we went on a mission to change our fiances-mission complete 🙂
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  7. I agree Debt is very much stressful which could lead to a very big distraction as well in life. My husband has always been alert on it & we have made sure to settle all our bills before couple of years to make life easy.

  8. Debt is definitely an illusion. Even just hearing the word feels oppressive! Freedom from debt is so amazingly, worth giving up the stuff to save for what we really enjoy.

  9. I agree…debt is very stressful! We’re doing everything possible to downsize and get it paid off, can’t wait to be debt free. It sure is slow going though! Our is mostly medical debt and tax debt. Were owner operators of a truck, decided to sell and get out of it since work was slow and truck kept breaking down. Now we owe a lot of tax from selling it. Really stinks when debt comes from things beyond your control.
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