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Debt is a thief...

Oh, don't the happy 20-somethings (buried in debt) look blissful?

In my quest to become the capitalist sensai to my 23 year old nephew I have engaged him in more than one discussion about the power of debt to undermine his future. (Yeah, sure, you can make the payment, but what is it REALLY COSTING you?)

Ultimately, I would like to see my nephew in a home some day (if purchased wisely, this is one of the only 'good debts' we can have.). So, I have taken it on myself to make sure he can get there some day.

I shared this simple formula with my nephew: "If you are paying 15% for money you borrow, 9 minutes of EVERY HOUR you work is going straight to INTEREST on your visa bill." (Or, to really get to the heart of this generation: "The MAN".) And I continued, "Sheesh, that does not even TOUCH the principle you have to pay back." (Get a 20-something to envision a FAT CORPORATE MAN in an expensive suit and sweet car...then get him to understand that HE is actually paying for it. Next have him take a good hard look at his own Goodwill wardrobe and 1987 Stanza...and you will get him to see how STUPID debt truly is, unless, of course, you ARE 'The Fat Man in the Expensive Suit and Sweet Car'!)

To take the lesson a little further, I had my nephew do some math to see what the sum total of INTEREST payments cost him by the week, month and year. I had him look at BOTH the time and the $$ he was throwing away every day so he could have what he wanted RIGHT NOW. I also had him do some math to check out how quickly he could SAVE the same $$ to get what he wanted, if only he was not paying interest to "The Man".

Surprisingly, my pleadings with him to live frugally (and differently than 99.9% of the people his age) has not fallen on deaf ears. To my great pleasure he lets me know regularly how he is attacking the debt he has accumulated with a fierceness rarely seen in his generation. (He can almost snatch the pebble from my hand and will soon be able to walk across the proverbial rice-paper on his way to a successful, debt-free, future. Whew, one nephew down...5 more and a daughter to go.)

Along the way, I have shared with him a series of books that was life altering for me. They made an impact on him as well. I figure if these books could change the way a 23-year old can see his future...well, heck, maybe I should share this resource of wisdom with everyone I come in contact with.

For those interested, the books are by Dave Ramsey, titled; Financial Peace, Total Money Makeover and More Than Enough

In these times where "Easy Street" has evaporated into "Bankrupt Boulevard", it is wise to look to some solid financial advisor's and to remember what those interest payments REALLY mean. Dave Ramsey, with his no-nonsense approach to debt-reduction is a great place to start.

My wish for each of us is a prosperous, healthy, debt-free 2008!

DEBT IS A THIEF.

Live good. Be happy. Live debt-free.

-Mimi

Happy New Year

new years party

Posted by Mimi Osterdahl on 12/28/2007 07:58 PM

Comments (28)

live good be happy, mimi osterdahl, goals, bellingham, washington, whatcom, debt reduction, future

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28 Comments on Debt is a thief...

DEC

2007

Dave Ramsey also has a mighty fine website with lots of good stuff.

Check it out on www.DaveRamsey.com

-Mimi

You are so right. Debt is easy to accumulate and hard to get rid of.

You are scary right!

Debt will make you a slave. Debt needs to be controlled and managed.

Mimi

I could not agree with you more infact we have both the same views on the subject see my blog:

http://activerain.com/blogsview/282130/Your-Home-is-Not

looking forward to the same.......

Vicky-

I hope you read the books. Financial Peace, by title and description is a great place to start.

Live good. Be happy.

-Mimi

"Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law."

May 2008 bring about less debt, and greater net worth to you. Thank you for your blog and reminder of the cost of debt. Happy New Year.
Lu

This is a great post and timely because most of us charge Christmas and them pay for it the rest of the year!

Bonnie-

Hopefully, the post was not too late to help the Christmas spenders.

Cheers!

-Mimi

Lu-

What a beautiful quote. I collect them, and will add that one to my collection.

Cheers!

-Mimi

If you have everything you need, you won't hanker everything you want. Your kids are watching and they, the next generation will survive within their means and with moderation. Good post!

No doubt, these young people graduating from college with a load of debt before they even start working.

DEC

2007

Andrew-

I could not agree more! It is so very important to model good spending habits for the next generation. It is also important to help them become critics and cynics in response the slick marketing campaigns that prey on them every day.

This mom/aunt/Realtor is out to raise good citizens...contrary to the constant message in the media that seeks to make them into insatiable CONSUMERS.

(Whoops! I think I just started to rant!)

Live good. Be happy.

-Mimi

John-

I agree. What a shame it is to see our young people already buried by debt when they should be building the nest egg for their future!

If all of our young people start life out like this, how will they ever be in a position to buy the homes that have traditionally been the cornerstone of personal wealth and security in this country?

It should be the decree of all Realtors that we will help the young people in our families realize a greater future than bill of goods being sold to them currently by credit card companies.

Thanks for bringing up the debt incurred by our COLLEGE EDUCATED generation.

Live good. Be happy.

-Mimi

Mimi

It is just crazy seeing high school and college kids maxed out to the hilt in debt. Financial planning takes a back seat, What ever happened to working and saving for you desires. Credit can be a rat race wher the rats will feast.

BY the way, that Oliver sure was cute. Mimi , you have the greatest smile.

Mimi, sell all of Bellingham with a great attutude, and being happy my charming friend!!!!!!!!!!!!!!!

Sincerely

Tom Braatz

Hey Tom!

Nice to see your friendly response to my rant on debt.

I am certain that Oliver and Lars would be good friends too. :)

-Mimi

Mimi - How True "In these times where "Easy Street" has evaporated into "Bankrupt Boulevard", it is wise to look to some solid financial advisor's and to remember what those interest payments REALLY mean" I loved your analogy of the fat man with the sweet car. I can't think of a better way to get the attention of the me/now generation than by showing them how the fat cat just loves their self indulgence now at any cost.

Kathy-

You have got to be able to get the me/RIGHTnow generation understanding this stuff in a way that makes sense and makes them a little (if not a LOT) MAD.

They have been the 'target audience' of slick marketeers for their entire lives. They need some guidance from those who have "seen that, been there, done that, couldn't sell a home to people who did that...".

Schools are not teaching it, many parents are not teaching it.

If we don't help them navigate young adulthood with some solid understanding of financial principles-vs-buy me now at any cost...few of them will get the opportunity to own real property.

Hope the post inspired you to take on the task of helping a young person you know navigate the perilous financial waters of today's culture.

Live good. Be happy.

-Mimi

DEC

2007

Mimi - great job on this post. Thank you for sharing. I have close to the same discussion with my nephew constantly and am hoping it prevents him from ever putting himself in that position.

Melissa-

So glad to hear that there are others out there doing what we can to save the next generation from a lifetime of merely trying to 'catch up'

Live good. Be happy. Be a debt fighter.

-Mimi

JAN

2008

Mimi -Many years ago I had this conversation with the son of a friend, he had just finished his apprenticeship and celebrated by purchasing a muscle car, his insurance was over $5,000.00

I told him that if he sold the car and used the insurance money I could put him in a house of his own. He did, I did and a few years later he introduced me at his wedding as the lady who made him rich...he had netted almost 100,000.00 on the house. He has always thanked me.

JAN

2008

We have got to spread the word about debt and change our country's obsession with it 1 person at a time. It's taken too much of a toll, just look at the state of our economy.

JAN

2008

Kathy and Christina-

Rock on sista's...spread the word to every kid you know. Tell them the TRUTH about debt!

Live good. Be happy.

-Mimi

Mimi, excellent post. I think it's wonderful that you are taking time to help your nephews. Dave Ramsey is really on the ball. I enjoyed what I have read from him so far. He does seem to want people to cut up all their credit cards, which will eventually end up pulling credit scores down. As a credit consultant, I think we should keep 2 revolving accounts open, and used sparingly. That way, we can qualify for the best possible rates when we do need financing.

Some positive news - my company just returned from Capital Hill, where we had a 3 and a half hour meeting with Senator Levin (D-Mich), to discuss the current credit crisis. Senator Levin will be introducing legislation to bring about changes in the credit card industry in the near future. Their unfair practices are hurting a great many people. There is a good article about it here.

Russ

JAN

2008

Mimi, Thank you for a great post and the subject of one of my favorite rants. I particularly like the aspect you demonstrate with your nephews -- modeling responsible attitudes towards spending. Actions do speak louder than words.

Within our country, within our community, and within our homes we should be acting responsibly about spending. What do we really need? When and how should we purchase?

Yes, our consumerism helps the economy, but not if performed with debt. And certainly not if we demand more resources than we reasonably need.

Retail therapy? Try taking a walk instead -- it works better and is healthier too.

JAN

2008

This is a great topic! My own resolutions for 2008 included finally getting rid of the debt (and the fat man in the expensive suit with the sweet car, LOL). I will be sharing this information with my grandchildren, you can bet on that!

Mimi, some recommend no credit cards and just use debit cards. But your post made a reminder to me that the debtor is a slave to the lender and when interest rates charged are high you are just pouring money down the drain.

SEP

2008

Written 12.28.2007!!! Prophetic!

Except now, the Fat Man in the Fancy Suit and Sweet Car is selling all of that awesome STUFF at a loss.

What, oh, what has this nation become???

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Mimi Osterdahl

Seattle, WA

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Real Living NW

Address: 6551 21st Ave SW, Seattle, WA, 98106

Cell Phone: (360) 220-6787

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Live Good. Be Happy. ..."A Fresh Approach To Real Estate." "Go into the world and do well. But, more importantly, go into the world and do GOOD." -Minor Myers Jr.

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