*Dear Dave,* I've been trying to talk my husband out of going into debt to pay for things for years now. His idea is that debt is normal and there's nothing wrong with it, as long as we can afford the monthly payments. We can afford these payments right now, but I don't think its okay and I'm worried about the future. I'd rather invest the money or save it instead of giving it to creditors.
Well, your husband is right about one thing. Debt is normal in this country today. But that doesn't make it smart or okay. He was wrong, though, when he said you can afford the extra payments. Here's what I mean.
On average, about three out of every 100 people in the United States are wealthy. By wealthy, I mean they make at least $200,000 a year and have a net worth of $1 million or more. I think it's pretty fair to say that these folks aren't normal. You might even say they're weird when compared to everyone else.
Financially speaking, being normal in today's society means being broke. According to The Wall Street Journal, 70 percent of Americans are living paycheck to paycheck. And did you know that 34 percent of the people who will retire this year will do so with an income of less than $10,000 a year? That's scary! Can you see why I don't want to be normal?
Here's another little fact on why you can't "afford" to make payments on stuff, even if you can meet the monthly requirements. The average car payment in America is $378 a month over 55 months. Do you know what would happen if you took that money and invested it in good growth stock mutual funds? That money, invested from age 25 to 65 would provide you with more than $4 million by the time you were ready to retire.
So, if managing my money properly and retiring with some dignity - and wealthy to boot - is weird, then I want to be the weirdest guy around!
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