Why do we stay in Debt?

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Have you seen those funny AT&T commercials with the kids? There is one adult sitting around with a group of kids and he asks a simple question comparing two options.

For example: “which is better, slow or fast?” or “which is better doing one thing at once or 2 things at once?” Here the video of one of my favorite ones:

The point is to hammer down that choosing AT&T over any other mobility provider is not complicated. As I watch that commercial it reminds of our general attitudes about debt.

Which is better, having tons of debt or being completely debt free? It’s not complicated right? Debt free is the best way to go. Which begs the question, why do we stay in debt?

As of January 2013, the average household consumer debt stood around $23,000. Why do we continue to carry debt on our credit cards? Why do we continue to sign-up for car loans or car leases? Why do we assume that the only way to get a college degree is to sign-up for thousands of dollars in student loans?

I have written before about why we go into debt. Today I want to give you the 3 main reasons we stay in debt:  

1. We buy into the Culture of Debt

In this day and age we are focused so much more on what we think we need and what we want. We live in a day and age where waiting for something good to happen is almost completely foreign to us. We want it and we want it now.

So the culture says that it is perfectly ok to stay in debt as long as you can manage it. Don’t carry 9 or 10 credit cards, but 1 or 2 is ok (you know, because you can get those rewards). You can’t afford to pay for cash for a car? No problem, just “rent” (i.e. lease) one. It’s like getting a brand new car every 2 years. After all, old cars breakdown all the time and you “need to be safe on the road”.

Wan to buy a home but don’t have enough saved for a down payment? No problem, borrow from your 401K plan. Need an emergency fund? Sure, get a home equity line of credit (HELOC) so you can access it in case of an emergency (which sometimes is defined as doing that home renovation we desperately “need”).

Do you want a college degree? The culture has defined that a student loan can be classified as financial aid. They never put too much emphasis on the fact that they expect you to pay for the loan. In some corners of the financial world, they call student loans “good debt” because it’s an investment in your future. Don’t get me wrong, I think education is a great investment. But there has to be a better way to obtain a great education than going deeply in debt.

You see? Our culture today says is ok to be in debt and stay in debt as long as you get what you want now.

2. We are not Willing to Sacrifice

If I asked 10 people on the street or did a Facebook poll, 9 out of 10 would most likely tell me that they would like to be completely debt free. Again, it’s not complicated. Debt free is the best way to live.

But you will never get out of debt until you are willing to do something differently. There is no victory without sacrifice.

But a lot of people that are in debt will not get on a budget, will not get a second job, will not cut back on expenses, and will not sell stuff to generate more income.

When you are not willing to sacrifice, you will find every possible objection of why it does not apply to you.

3. We have lost all Hope

This is probably the most dangerous reason of them all for staying in debt. You may think that this is the way it will be for you between now and the end of your days. You have lost your hope that it can be better.

You may think that it is impossible in your current situation to live a debt free life. You may have convinced yourself that you will always have a car payment, that you will always need a credit card for emergencies, and that it will be impossible for your child to go to college without student loans.

You may have convinced yourself that you will never make enough money to deal with everything that you have to do. So you stay in debt, because “that’s the only way” and “everyone else is in the same boat.

Do you want to know a secret? It does not have to be that way. You don’t have to buy into the debt culture, you can sacrifice, and yes you can hope for a better tomorrow. I know this the case because I used to be in debt and deep financial distress.

But I am no longer there. I know it can be better and I know you don’t have to stay in debt. I can help you, just say the word!

What are some of your reasons for staying in debt? 

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This post is also available in: Spanish