Debt has become a major problem for individuals, organizations and countries alike. It is in the news every day. From soaring credit card problems and home repossessions in the US, to bail outs for countries like Greece, Ireland and Portugal.
Actually, when you come to think of it, debt is something funny. It makes all kinds of things possible, but if not handled properly it can destroy as well. Debt is also surrounded with all kinds of belief systems. On the one hand there are people who belief that debt is bad and that you should never borrow; on the other hand you have people telling you to “borrow now, worry later”, believing that things will work out any way.
What about you? Are you in debt? How do you feel about it? Good or bad? Or, do you feel miserable and trapped like I did when I had almost $ 1.4 million in debt (while writing this down I can hardly belief that one time I owed so much money).
Today, I have no debt, at least nothing I consider as debt, which I will explain later, and I feel totally free and abundant. How I managed this? Let me explain.
When debt becomes a trap
To the outside world I was an example of success. I had a highly paid job, a big villa, expensive cars and I was the proud owner of two horses. What people didn’t know was that I had debt up to my eye balls and my income, including my wife’s, wasn’t enough to pay the bills and service the debt at the same time.
How did I come to this point? Well, it probably sounds familiar to a lot of people. When I finished law school, I married, we bought a house and a new car, actually two. We got children and of course needed a bigger house and bigger, nicer cars. To make a long story short, every time I got a salary increase, my spending would quickly catch up and even exceed my income because I was able to take out more loans.
It was a spiral that lead to nowhere, but I didn’t see it that way at the time. I was just doing the same thing as everybody else and there was nothing wrong with debt as long as the banks keep providing it, right? Not really!
Every month I had to re-borrow the loan payments and then some more (I was still considered an excellent credit risk, working for a bank). It would be just a matter of time before I would go into default and if I didn’t act, I would seriously run the risk of ending up in bankruptcy; that is unless I could get myself another job that would pay more, much more.
I felt trapped in a vicious circle and I knew deep down in my heart that the situation had become unsustainable.
Changing (my) beliefs about debt
It is interesting to note that only in one generation the attitude towards debt completely changed in our society. My father’s generation was very reluctant to borrow money. Saving money was considered a virtue and borrowing money, to go on vacation or buy furniture for example, was simply unheard of. There were no credit cards, everybody paid cash, and banks were very conservative when it came to loans and mortgages. To buy a house you were required to put down at least 20-30% in cash. Those were the days…
For my generation borrowing money became the most normal thing in the world. We buy stuff on credit all the time. Saving money to buy yourself a new TV or computer? You must be joking, takes too long; just charge it to your credit card! And, it is getting worse with our children. Many already borrow a lot of money while they are in college or university, despite the many warnings. Having no debt is actually strange nowadays and might even raise a red flag with your credit card company or bank.
For me this all changed when the feeling of being trapped became so strong that it made me cry, literally. I simply felt miserable and hopeless and this completely changed my beliefs and attitude towards debt. I decided to take drastic action.
Finding (your) balance
I sold our house and the horses and paid off all my debts. After more than 20 years of hard work and professional success, I had nothing left to show for it. But more importantly, I was out of debt too.
I decided to change my financial way of living. Instead of buying, I rented houses. Instead of buying a brand new car, I got myself a second hand (I now drive a 12 year old BMW 7 series and I love it). I started to pay for things in cash and got rid of all my credit cards except one, which I pay down every month. I only went on holiday if I had the money to pay for it. In short, no borrowing for me anymore!
This process, or should I say journey, brought out and cleared a lot of personal issues and beliefs. For example, I was confronted with my ego and had to deal with the risk of no longer “fitting in” my little corner of society; I had to take responsibility for myself, often acting against the wishes and expectations of others, and I had to re-examine my beliefs about money, debt and abundance.
In the end, after having gone from a “debt is good” to a “debt is bad” position, I realized it is all about balance; feeling happy about your debt situation irrespective of what others think. By the way, I still have some debt but that is to my company, and I feel totally at ease with that because in the end it is my own money anyway. Actually, what I increasingly experience now is that I don’t need to borrow anymore because everything I need is taken care of, in one way or another, which is quite an experience.
Today, I don’t think that debt is either good or bad, although I would recommend that you watch this very short video (1:29) with Robert Kiyosaki, the writer of Rich Dad, Poor Dad, explaining his view regarding debt, because it will challenge some widespread conventional wisdom you probably also subscribed to.
If you want to read more about my journey, the challenges I had to deal with, but also how I eventually started to experience abundance, you may want to read my free workbook Choosing For You (1610).
A spiritual view regarding debt
Perhaps at this point you feel a little confused, wondering what is the best way to handle your particular debt situation. In that case you may want to listen to Abraham discussing debt in a very practical way, offering an interesting, spiritual perspective on the subject.