Episode-369- The Cancer and Slavery of Debt

Today we back up and take a deeper look at the topic of debt and how it both destroys lives in good times and bad.  Debt is a cancer that is destroying America.  We have been sold a false dream, a false dream that robs the true dream of America’s legacy of freedom.

Join me today as we discuss…

  • The basic rules of survival
  • The false dream of debt vs the real dream that is America
  • Why debt really is cancer and why it will make you act in fear
  • How debt leads to bigger government
  • Why financial management and debt elimination cannot be separated from survivalism
  • The cost of debt must be measured in time, not dollars for the horror to become evident
  • The only way to eliminate debt
  • Why people in debt out spend people who are debt free
  • Why you must at least start eliminating debt if you want to be a modern survivalist
  • The main way to be a survivor is to reduce dependence
  • Inflation punishes savers, save anyway
  • We are forced into risk, debt makes that worse
  • The solution is in your hands

Additional Resources for Today’s Show

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24 Responses to Episode-369- The Cancer and Slavery of Debt

  1. As much as I enjoy the more ‘traditional’ survival topics discussed (bobs, rifles, etc.), I credit Jack’s analysis of debt with waking me up, saving me, and helping me become a real survivalist.

  2. Debt IS indeed a cancer that is treatable.

    Getting out of debt was our prep wake up call. We paid off everything but the house, a la Dave Ramsey. It helped so much. The feeling is indescribable. Still felt like we had not yet discovered part of our path, then we found TSP.

    It really helps solidify that we made the right decision regarding our finances. We save, and the \"bumps\" don\’t hurt as much. It has also helped us get a LOT farther in preps not having to worry about the CC companies jacking with our rates!

    Like so many of the good things. It wasn\’t EASY, but it was worth it.

  3. Great show Jack!

    I really hate debt and credit cards even if ppl say they are important to have in case of an emergency.
    So I don’t have any. Never have.

    My wife and I are in our 20s and we got married last June. We paid for the wedding and honeymoon ourselves – before the wedding. It was a great accomplishment we are proud of. We saved for a year.
    😀

    Keep up the great show, eh!

  4. Proud to say ive never had a credit card.And dont want one period!Always have a little spending money hmm i wonder why.I saved money for almost a year and paid for my tv with cash it was worth it walmart had a look of shock when they said cash or credit and i pulled out almost $1000 and gave it to them.

  5. Alfonso Crawford

    Greatly, I’ve only $~100 worth of debt to a few utilities I couldn’t pay when I lost my apartment. I’m still looking for income enough to pay it and still eat.

    I’ve given this episode to alot of folk important to me, Jack. Thank you. I may not be anywhere near rich, but episodes like this remind me that I’m still free. You’re wonderful, man.

  6. Curtis Horton

    Great Job!! Two years ago my wife and I decided paying off our debt was the best thing we could do to increase our survivability. We are debt free including our house 1 week before we turned 30. I\’ve been trying to explain this same point to our friends and family and they just seem to miss the point.

  7. We have lived for a little over two years without a credit card. I have stayed probably 150 nights in hotels, rented cars all over the country and traveled to the US, Canada, Mexico, Germany, Sweeden, Norway, Denmark, China and Taiwan using a debit card. I agree with Jack, there is no legitimate reason anyone needs a credit card – don’t follow the lemmings off the bridge by listening to the hype developed by the big banks. Credit cards and credit scores are not necessary for life on this planet – they are the means by which you get sucked into the slavery.

  8. great show
    we decided in the mid 90\’s to pay off all debts including mortgage – it is great to be out of debt – i know ppl in their 70\’s and 80\’s still struggling with debt and house pmts – it is depressing to realize that some are truly slaves for life – we have no cc and don\’t miss it -I wish everyone would realize how important it is to become debt free – we live a simple modest life style – the real richness comes from our anxiety-free financial state – priceless.

  9. Jack,
    I (and my wife) were lucky to have parents that taught us ‘If you cant afford it, you don’t need it’
    We owe NOTHING to anyone. We’ve always lived within our means. No mortgage, no car payments.
    I’ve had to help my two sons buy a their own homes,
    I could afford it and I didn’t want them going into
    more debt than they could afford. My Grandparents lived through that depression, and tought me the lessons. Keep up the good fight!
    ~Val

  10. I had 13k in cc debt in 2006. I made my last cc payment last month. Now the ball and chain has been lifted and it feels great. The sky is the limit.

    Thank you Jack for helping us all keep our eye on the ball here. I can say without a doubt if not for you Jack I would still have cc debt. Thank you for motivating me.

    Frank

  11. In 2002 I lost my job we had some savings and thought we were good for a while. I wasn\\\’t worried since the last time I had put out my resume I got 300 contacts in 1 week.
    Weeks stretched out into months, money was running out, I started using the credit cards to pay for health insurance, then car insurance finally food.
    I spiralled down into depression. I was taking odd jobs and I even took a job I knew was not going to pay us enough but it was a job. By the 90 day I was one of their top 1% workers, but I would get home and not be able to remember what I did all day. On my 100th day, my body rejected work I turned yellow and the supervisor wanted me to stay on. I left anyway. I went to urgent care and they sent me straight to the ER. By this time we had dropped health insurance because we couldn\\\’t roll the debt over anymore.
    Our debt went from bad to OMG in 3 days.
    We took drastic action. Sold the house at a slight loss and paid it all off in one fell swoop. I wouldn\\\’t recommend doing that but it worked for us.

  12. Average household has $40k in debt, out of which $20k was spent on stuff that cannot be accounted for.

    Obligatory short film on the subject:
    http://www.storyofstuff.com/

  13. I restored Eric’s comment it was deleted by accident. Jack

    —-Eric’s Comment as Originally Posted—–

    Jack, you missed one of the big advantages of not using credit cards.

    While I have used credit cards for years, I have never carried a balance on one. I always paid in full every month. The reason I did this was to get the rewards points which came with the card. After saving my points for years (including company travel), I cashed them in for nearly $1000 of Home Depot gift cards when we bought our house. I had spent probably around $60k on the card over the years to get that reward. Cool, right?

    About a year ago I started to entertain the idea of switching everything to a cash basis. I stopped using the credit card in the spring. In August I stopped using the debit card which pulled directly from my checking. I started going to the bank and pulling cash which I use for all my purchases.

    The nice thing is now I have to exchange something tangible for whatever I am buying, and that makes me think twice. But that is not why I am writing.

    When shopping at local stores I always ask for a cash discount. More often than not, I get one! On the small end, I bought a $300 DVD/home theater system. They gave me $10 off for cash. There is NO WAY the credit card reward points on $300 would be worth that much.

    On the big end, your comment today about buying a car with cash struck home. I recently bought a new Kubota tractor with a number of options & implements. The price was just over $20k. I asked for a cash discount. They took $1500 off. Yeah, that is like a 7.5% discount for cash!!! Top that with reward points!!

    (As promised, I showed up with around 190 Ben Franklin’s. It is not that much money to physically carry around. The dealership then told me they would have taken a check. No worries as I live in a strong 2nd amendment state – but that is a different subject).

  14. TSPers… about 6 years ago I, much like many others, had consumer credit card debt, student loans, car payments, etc. Since I am a big computer nerd I made a website which amortizes your various debts and gives you a payment plan, by no coincidence my plan happens to be the “debt snowball” though I have never heard of Dave Ramsey until I listened to TSP.

    On the website you can see your interest savings and time savings… so whatever motivates you it is on there.

    So after listening to tonight’s show I got motivated to bring my website back from the dead.

    So I just spent about 3 hours reworking the site to remove the registration process and the sign-up process. You can now use 100% of the site without registration or BS

    It is 100% ad free and 100% obligation free. I put it up there to help people out who are in debt. There is no monetization in the site.

    I also added this podcast to the homepage.

    Please view my site and give me your feedback. I would really appreciate it! The URL is:

    http://www.debtmd.com

    My email is on the homepage.

  15. Thanks for the motivating post! My story highlights an area of personal finance I don’t remember hearing you covering in the show and it is the importance of a sizable cash reserve. I work and co-own a small software startup and we had two clients delay payment late last year. We fell behind on payroll and were forced to cut benefits temporarily. This meant having to purchase COBRA coverage and going without pay for nearly 3 months. I don’t have consumer debt so I figured a smaller cash reserve and CCs would cover me until in case of bad times and I was wrong. For most of 2009 I diligently paid down our mortgage but when they paychecks stopped I worried heavily about providing for my family and when the business would get paid so we could receive paychecks. COBRA was way more than we anticipated and we had less than 1 month cash on hand before the clients paid up. The stress was really not worth it, and as you mentioned in your post we were able to stop all unnecessary purchase to get buy without using the CC. Had we had 6 or 9 months accessible cash on hand I would probably have less lines on my face and a more enjoyable holiday break with the family.

  16. We eliminated our credit card debt about 5 years ago. We paid off our last vehicle about 3 years ago. We love to listen to Dave Ramsey, and I know he would agree with your podcast today. Our only debts left are student loans and house. We are currently looking to sell this home (on a small lot… less than a 1/4 acre for sure) to purchase a slightly smaller home on a lot more land. The one we\’re looking at the hardest right now is only 5 acres, but it would give lots of room to grow food and for the kids to run and play. Doing this, we would actually be able to buy the new place outright with the difference between what we would make selling this house and what we owe in mortgage. We are well on our way to improving our situation 🙂

  17. Enjoyed the show about getting out of debt. We cut up our credit cards in 2004. Paid off everything but the house a couple of years ago. We haven’t looked back. We used the debt snowball cutting expenses to the bone and putting everything we could toward the debt. Sure is easier to make ends meet when you are tied down with debt payments. Takes away a lot of the pressure when it comes to paying the bills. Thanks Jack.

  18. A very informative and powerful show. I have shared it with my college age children who get it and are spreading the word about the slavery of debt to their college friends. Thank-you for this show!

  19. Eric is right. I used to be an accountant and thing have changed a bit in 10 years. I now work at a independent garden center as a grower and was talking with the accountant yesterday. As it turns out, not only does the retailer HAVE to pay a fee for the customer using a credit card, they also have to pay an additional fee for the “reward” type credit cards. Some reward cards have higher fees than others. There is no way to exclude those rewards cards, other than eliminate taking credit cards. So, this is another transfer of wealth, as any sane business owner raises his prices to cover the fee. In other words, the credit card company doesn’t pay the reward YOU DO. The card company charges the retailer, the retailer raises prices to cover the fee, and the consumer pays the fees through higher prices. So I agree with Eric, ask for a cash discount, you may have to explain why, and now you can tell them. Remember the days when gas stations had two prices, one for credit and one for cash? Take the cash discount that you ask for and sock it away for more preps!

  20. My wife and I are both pretty frugal (even our frugal friends call us cheap!). So when I took a new job with a NASA contractor (since I was laid off from my previous job, which I loved) and completely hated it (I always heard of jobs that people didn’t like, guess it was my turn to be depressed at a job I didn’t like). Since we had lots of money saved up we were able to quit (after working there for 2 years and trying out different positions). Now I’m starting my own business once I finish the project to get it started…It feels great to be liberated!

  21. Another thought provoking, insightful show. I found it very astute that you pointed out the damage that debt causes in relationships. As a former divorce attorney, I know from experience that more marriages are destroyed by insidious debt than by infidelity. In fact, I have seen examples where infidelity was the by-product of a marriage stressed by financial issues.

    I for one have no desire to “owe my soul to the company store” and am taking efforts to reduce and eventually eliminate my debt load.

    Thanks for the insight and inspiration.
    Chad

  22. when i turned 18 i became a slave to debt….i took out a loan to buy my first car, when i finished with that loan i took out another loan to buy another vehicle…i ended up having 2 loans at a time… i then decided i \"needed\" a newer car so i took out a loan again. by the time i was 21 i had almost $16,000 in debt… i switched jobs to make more money to pay my bills, it worked for about 6 months until i got laid off… then i was living on my reserves… i found a job that didnt pay even enough for my bills… i lasted about 7 months. i was scrambling to sell my car, and i was able to sell it, and have the money to the bank about 1 day before it was going to go against my credit. so after a short time i took a loan out for a small car with good gas mileage, and for a truck i wanted, which put me back to where i was before. finally i wanted something different so i took out a loan again to take a truck driving course. i drove for a short time got my debt down to about $1,200… quit my job, and moved to puerto rico to get married to my girl friend…. my wife is real careful with spending… and she\’s helped me out a lot. i am now debt free, and my wife will be done with her car loan in august. and when she\’s out of debt we dont plan on getting back into debt. i think credit cards make it too easy to buy, and if you dont have one you wont buy. it feels great to be 26, and debt free. i\’m glad that jack has been stressing the issue with debt because not many people realize that when you by on credit the bank/credit card companies basically own you…. and in turn your not working for yourself anymore… your working for someone that doesnt care anything about you or your family… so jack keep up the good work!

  23. Woodman's Wife

    Hello Jack,
    This episode really inspired us to get out of debt. My husband downloads your podcasts and we listen to them in the evening when time allows.
    We have put ourselves on a budget to pay off our debt following your instructions. It is month 2 and we once again have found another $1,000.00 to put on our outstanding debt. It is amazing to us at how frivolously we spent. I will say it is not always easy. Tonight was one of those nights. We were thinking about eating out and then said “What would Jack do?” and it wasn’t but a second and we looked at each other and hurried home to make dinner. Our background music, so to speak, was listening to another one of your inspiring podcasts. Thank you for your enthusiasm and keeping us on the straight and narrow.

  24. Here’s a couple of videos that talk about money as debt that Jack mentioned…although the conclusion the person came to is off the main gist of the videos is pretty good. Granted if you really want to understand a lot just go to mises.org.

    http://preparednesssubculture.blogspot.com/2010/01/i-killed-bank.html
    http://preparednesssubculture.blogspot.com/2010/01/money-as-debt-ii-promises-unleashed.html