If you are in debt, you will never get rich.

This is perhaps the most important reason that most Americans (and others around the world) have such difficulty attaining financial independence.  Your goal is to save money and have it work for you.  Think of the little green dollars as slaves, if you have a hundred of them and you put them to work, they will produce some returns for you.  You add to them and over time they add up.  But with debt, it is the opposite.  Whatever money you have in the bank and your earnings get swallowed up in interest charges.

The average credit card charges almost 20% interest.  If you put something on finance and don’t pay it off for 5 years, you will end up paying 200% the value of the item (5 years x 20% interest = 100% in interest).  If your “normal” monthly expenses are $2,000 and you put a portion of your living expenses on credit, your monthly costs may be $2,500 or more.  That $500 a month could be going into your savings account.

If anything, you want to be loaning money, not borrowing it.

I have one brother who has a great job (he is a co-owner of a fair sized corporation) and makes a fat salary.  But, he loves his credit cards and constantly carries a balance.  This “easy spend” lifestyle eats away at his savings potential and the interest charged on the rolling balance keeps him in perpetual debt.  If he would just cut his spending for 6 months and pay off the cards, he would be able to return to a “similar” spending lifestyle and be able to keep the savings (what he’s not paying in interest) and begin to build his savings.

Debt is just stupid, don’t do it!

In 20 years, I have paid my credit card off each month in full.  And the only reason I use a credit card is for the frequent flyer miles.  The ONLY debt I have carried in 20 years is my mortgage.  Even my car was paid for with cash.

If you can’t afford to pay cash for your next car, ask yourself, “do you really need it?”  I’d rather drive an old car and have people “think” I’m poor than to be poor and have people think I’m rich.

Live will bring you dozens of opportunities to get rich.  If you are in debt, you will miss them all.  A lot of people blame others for their lack of financial success – and most of these people are in debt.  Don’t make this mistake.  If you are in debt now, get out of debt.  Cut your spending, take some overtime or do whatever you must to get out of debt.  If you are considering taking on debt (credit card use or buying a new car), don’t do it!  It isn’t worth it.

I’m growing richer each month loaning money to others and rolling the interest back into new loans and investments.  My investment portfolio is monthly returning about 1/2 of what I receive in paychecks each month.  This money just compounds and some day, my investments will yield more than my salary.  At this point, I will be free to quit my job if I want, and I’m only in my early 40′s.  This journey to becoming a millionaire would NOT have been possible if I was carrying a debt load.

Good luck & good investing!

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