Welcome To The Dis-Empowerment Life Cycle, This Is How It Works:
Graduate High School -> Car Loan -> College Loan -> Credit Card Debt -> Home Mortgage
Now that you are up to your neck in debt, get married and have some kids with that. Soon you will be over your head in debt and chained to a job you hate for the rest of your life because your top priority is to pay bills.
This is the debt cycle, but it should be called the death cycle, because our system is designed to keep you in debt for as long as possible and keep those interest payments flowing to the top of the pyramid. The Matrix works through energy control, and money is simply stored energy. So money plays a big factor in how The Matrix works to harness your energy.
Debt is a parasitical appendage on your soul that will suck your life from you until you end up becoming a burden on the system yourself, ensuring that some poor soul after you will have to sacrifice their soul to pay for your social entitlements, and the cycle repeats.
Now that Americans and Europeans are fully saddled with debt, the greedy bankers are going after Asia, Africa and the rest of the world. This is what is meant by “emerging market”, millions of new people who will take on more debt to pay more interest on money that was never earned but lent into existence. Our entire economy depends on debt growth, or as the bankers prefer to call it, "credit growth".
Why Are We Never Taught About Debt?
Ironically, through all of the 12 years of grade school we never learned a single thing about debt, personal finance, or wealth management. Even after I completed a four year business management degree at a top University, there wasn’t any discussion of personal finance. Sure, we learned about GAAP accounting, balance sheets, assets and liabilities, but there was no practical advice about how to manage one’s own money. For that, I had to turn to books and the school of hard knocks - the school of life.
Unfortunately, most people become saddled with so much debt right out of the gates they never get the chance to achieve escape velocity and build real wealth. In this series of guides, I’d like to give anyone who cares about their financial future a quick lesson on personal finance and building wealth, learned after years of real world experience.
Understanding Debt
If there is one lesson every kid should learn about building wealth, it would be to avoid debt like it's a toxic chemical (only to be used in extreme circumstances). From the moment we graduate from high school, the peddlers of debt show up at our doors (malls, high schools, college campuses) like used car salesmen with cheap suits and free coffee. They want to give you a credit card and, if you’ll take the bait, a student loan and a car loan. They want to give you what sounds a lot like “free money” and many people cannot resist the temptation. After all, everybody else is doing it.
Society has convinced us that the first thing we should do if we want to “get ahead” in life is to take out a loan, not just any loan, but a big loan, a five figure loan, so we can go to college. This is false. This is not how to build wealth. The way to get ahead in life is to avoid debt, except in very specific circumstances (which I will outline in a future lesson). I am sorry but I have to say it, if you can’t get through college without taking a loan, you are better off not going!
How To Get Through College Debt Free
The way I did it was pretty simple. I didn’t want a student loan, but I had no money, and neither did my parents. I got through college by living in my grandma’s basement suite paying $150/month in rent (that was back in the early 90s when the minimum wage was $4/hour). Instead of planning to finish my degree in four years, I planned to finish in six. I lowered my study load from 5 courses per semester down to 3 courses per semester. This strategy lowered the cost of my books and tuition each year by 40%. This plan also freed up time so I could hold down a part-time job while going to school. It worked, I graduated six years later debt free. I even took a semester off halfway through to save up for a 2 month trip to Europe, albeit on a tiny shoestring budget. Only later would I learn my degree was worthless, but that's beside the point.
I also knew credit cards were a scam - 18% interest are you nuts? While I did get my first credit card around the age of 19 or 20, I was very tight about how I used it. My summer job left me with some savings that I would gradually deplete through the school year. I would start to put some expenses on my credit card in the Spring knowing I could pay them off once I started working in the summer. I actually held two jobs in the summer, the part-time job which I worked year round plus an additional full time job all summer. While the “easy way” would seem to be to simply take out a student loan and party during my free time, this is not the easy way. I still did more than my fair share of partying, but I made a few sacrifices, for example, working late every Friday night so I could go out Saturday.
So Lesson #1 is avoid debt and don’t take out any student loans. If you get into debt early, you are setting yourself up for a much more difficult lifestyle going forward. Frankly, if I could do it again, I don’t think I would go to college at all, but that’s another story. Stay tuned for more financial lessons from the school of hard knocks.