What If You Couldn’t Finance ANYTHING?
What then…
Don’t Forget What Life Looks Like Without Financing
If you didn’t have access to credit cards, mortgage loans, car financing, and personal loans, how would your life look right now?
For some of you, it might look completely different. It might look the same for a rare group of people because they either don’t have access to these financial options or are not reliant on them.
Debt is a tool that can be used to your advantage or disadvantage. It is more common to use debt irresponsibly and use more than required.
Why do you think most take their debts to the grave? Because it’s easy to spend your lifetime managing debt instead of doing the opposite: building wealth.
Financing Usually = Out Of Your Budget
Financing may be required in business cases until you gain the necessary capital to grow it.
But for other cases, like purchasing a new car, a new house, or your education, these are all optional.
You don’t have to finance these things.
Automobile Financing
You could purchase a car that aligns with your budget and cover entirely with cash. But this is not the most attractive option.
The average price of a car continues to scale upwards (~40,000-$50,000). On top of this, many people aren’t willing to settle for the baseline version of a car because it doesn’t look or feel good enough.
But consistently investing in too much car will cost you big over your lifetime. The money lost on a depreciating asset (e.g., maintenance costs and interest fees) does not help you build wealth.
Follow the 1/10 rule for car buying to eliminate any financial strain or stress.
Property Financing
You could continue renting until you save up a downpayment or a net worth that would cover the cost of your home.
Sometimes it is cheaper to live in a home, but you’re still renting it until it’s yours, which usually takes 10–30+ years.
The pros of renting are that you don’t have to invest capital or pay taxes or maintenance fees, which can keep your pockets and bank accounts more flush.
Aim to spend no more than 10–30% of your income on housing. Less is best.
Educational Financing
You don’t have to go to a private or more expensive school for name recognition.
It’s more about what you do with your education than where you go.
Where you go can help. But people who have degrees from who knows where or who don’t have degrees fare exceptionally well.
Student loans are some of the most overpriced and wasteful loans you can get wrapped up in.
Avoid them if you can.
Aim to get as many scholarships as possible or work through school. If you must take student loans, be confident you can pay them off at an accelerated pace.
Become Less Reliant On Financing
Make it a habit to spend less than you earn. Not only do you ensure you avoid unnecessary debt, but you decrease your dependence on debt.
The less financially dependent you are on others, the more freedom you’ll have.
If you want to succeed financially, do the opposite of most. The average person will spend their lifetimes chained to debt.
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This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.
Hey Destiny, I've never had debt in my life. My life is good :)