We talk a lot about paying off debt and getting out from under large interest payments. Indeed, financial health and a good credit score make managing the financial surprises in life so much easier. It is important to remember though that debt isn’t the enemy – it is a tool.
Judicious use of debt is what allows us to live in a house where we can paint our walls and plant a garden instead of renting an apartment with loud neighbors and a nosy landlord. Utilizing a credit card for regular expenses you are going to make anyway and then paying off that card every month can actually improve a credit score (aka lower interest rates in the future) and rack up some frequent flier miles for a much-needed family vacation.
It is in using our available credit, being mindful of that magical 50% debt to limit ratio, and making timely and consistent payments that we get to fully utilize debt as a tool for bettering our lives. Having this tool available to us will help us ultimately realize our dreams of traveling through Africa, driving our own speedboat, or my favorite – Not ever having to pay an unreasonable bank fee again.
The question is: How do I get there? How do I turn debt around from evil dragon breathing down my neck to almighty sword available at my command?
The answer is: It is hard work, it can take a long time, and there can be a frustrating feeling of sacrifice as we buy that used Subaru instead of a new Lexus. But consider this – Each and every one of those financially sound decisions is a building block toward financial security. Each time we opt to forego a third black sweater in the closet and instead make an extra $50 payment on a credit card, we place another solid block in the financial foundation of our life. When we make do with the computer we have for one more year and put a little extra away in savings, we secure a safety net for ourselves against the unknown.
These aren’t sacrifices – these are the stones we move to create a financial sanctuary where we are free to do as we like with our money. The three little pigs is more than a quaint children’s story, it is an allegory for how we can secure our future with some effort and frugal choices today.
Once we are in control of our finances, we have a full tool belt – sword and pet dragon included – for managing our future. Banks and credit cards will rally for our business. Car dealerships will compete for our attention with low interest rates and free extras. We will get to make our own decisions once again, and financial freedom is the ultimate reward.