Why I Don't Ever Want to Borrow Money Again

Kraig | June 16, 2012 | 22 Comments · Getting Ahead

Borrowing money is a very socially acceptable thing to do these days it seems. In my circle of friends, family and colleagues, people congratulate you for saying things like these:

"I just bought a house with a 30 year mortgage where the payment is less than I was paying in rent."
"I just financed a brand new 2012 Nissan Altima, Honda Accord, Mazda 4 or Hyndia Sonata at a 0% interest."
"I just opened a Kohl's credit card and saved $30 and got access to all kinds of future deals and promotions."

I have to ask, "What's so good about being able to borrow money to buy things?" Based on my experience with debt, I want to congratulate those who don't borrow money to buy things they can't afford. It's so much better for them and it's actually something to be happy for them about.

Why Is Borrowing Money the Social Norm?

I'm not a research reporter so I'm not going to look up exact stats on this topic, but I do know that consumer borrowing has increased throughout the recent century. If you're around my age, think about your parents and grand parents. What was life like for them when they were in their twenties and thirties? Was borrowing money as common as it is today? I bet it was more common with your parents than it was with your grandparents. I bet it's more common with you than it was with your parents. That's certainly the case for me.

Today, the thought of not having credit cards is absurd to people. "If you don't have credit cards, you don't have a good credit score", or so people say. "If you don't have a good credit score, you will never be able to buy a house or get reasonably cheap insurance. Buying a car just can't be done with cash. It would take years to save for one." These are the words all the people I know say. Why is this the common mindset among young adults these days?

I think it's because everyone overspends. Everyone tries to keep up with each other. Today, college students and twenty somethings are driving nicer cars than their parents, going to top of the line colleges and universities and living in the nicest places in town, while all the older people are living within their means and driving used paid-for cars. Young people these days are getting spoiled way too early and are expecting that they will always be able to live upper middle class lifestyles, no matter how horrible their financial situation is. No matter how much debt you have, no matter how little income you make and no matter how terrible your work ethic is, you will always live an upper-middle class lifestyle. I think that's the expectation people have these days. It's out of control in my opinion.

What's So Bad About Borrowing Money?

I can tell you exactly where an upper middle class lifestyle will get you when you have little income and a big pile of debt. It will get you, and keep you, in a state of absolute reliance on someone else. You will either be a slave to your employer, to the government or to other people who support you. With this kind of lifestyle, you will be living paycheck to paycheck and at the mercy of those people who are keeping you afloat. It's a state of slavery really, where you're slave to the lender, just like Proverbs 22:7 says.

Think about going to work each day to a job that you hate. It's not a far stretch to relate with that huh? Well, when you borrow money and live paycheck to paycheck, you have no choice but to go in every day. If you don't, you'll lose your source of income that is keeping you afloat. Think about having to live with your parents, your boyfriend/girlfriend or your annoying roommates because there's no way you can afford to live on your own due to all the debt payments you have every month. Debt holds you in a place of financial dependency on others. If you ever want to become independent from other people, you need to stop borrowing money. It will only keep you in a state of slavery.

How Do I Think I Can Pull Off No More Debt?

Having gotten myself out of the debt I had, I have confidence in my ability to save up lump sums of money quickly. Of course, I'm blessed with a good income and that may not always be the case, but I do realize the good situation I'm in right now and am taking advantage of it. Knowing that I can save money if I put my mind to it, I've gained the confidence in myself to believe that I can save money in advance to buy anything that I could possibly use a credit card for. Therefore, I believe I could do without my credit cards and will never NEED them again in my life. Due to that, I stopped using them.

The next concern most people have are cars. I successfully paid my $20,000 car off within two and a half years. If I can do that, I know I can save cash for my next car and every car I'll ever buy again. I've decided that I won't ever take out another car loan to buy a car. If I have to, I'll buy a beater to get me by until I can save more.

All that's really left after regular consumer purchases and cars are homes. That's the only purchase where I contemplate ever using debt for in the future. I know, homes are incredibly expensive and most people take upwards of 30 years paying for their homes. Thirty years? I'll be almost 60 in 30 years. You've got to be kidding me that I'm going to borrow money and take that long to pay it off. With my past of hating debt along with my present of having confidence in my ability to save, I strongly believe that I don't need debt to buy a home either.

Do I think I can save up the entire purchase price of a home in advance? Yes, actually, I do. Am I nuts? I don't think I am. I just think I hate debt that much that I don't even want to use it to buy a house. I can't imagine being in debt for even one more year, let alone 30. I know, I could pay it off early, but I don't want that kind of stress. Having a mortgage to me means:

I'm dependent on my employer because if he lets me go, I may lose my home
A lot of my monthly income is tied up every month in mortgage payments
I have years of payments left and therefore years of being dependent on others to keep my house

Yuck. I don't want that. I'm actually going to pursue doing the rest of my life without debt. I don't want a mortgage.

Many People May Not Think They Can Do It, But I Think I Can

In case you don't think I can do it either, here's a little insight:

I've only been debt free for a year and a half
In that time, I've saved a fully funded emergency fund of 6 months of living expenses
On top of my emergency fund, I've saved 25% of a potential home's cost

Yes, I've been VERY blessed, but that's all just in a year and a half. Not realistic, huh?

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22 Comments

Lance@MoneyLife&More says:
June 16, 2012 at 2:58 PM
I don't think you're nuts! I think it is great you want to pay for a house in cash. It is definitely doable but it takes a lot of willpower. My question is what is your current living situation? In a sense I bet you're depending on your employer to pay for that as well. If you're renting and don't pay your rent you could get evicted just like losing your house. Hopefully that gives you another thought to think about :)
- Kraig @ Young Cheap Living says:
  June 16, 2012 at 3:53 PM
  I rent. As a renter though, I could easily downgrade to a cheaper place and/or move in with friends/roommates. Getting out of my apartment here would take zero capital, where as getting out of a house would require selling it. In a down housing market, you could be looking at losing major money having to sell immediately. My situation is much more flexible as I'm not on a long term lease. I don't see the two as even close comparisons.
  - Tom Hughes says:
    November 5, 2016 at 5:30 PM
    Houses are also Money Pits... IF YOU COULD PAY CASH then Perhaps... But a Typical Home Mortgage for 30 years = You Paying DOUBLE the Price of the Home. A $200,000 Home Will Cost You $400,000+ by the time you Pay it off after 30 years of Interest... Come On People... That is Insane. Oh The Value goes up... Nonsense.. Only if you keep Pouring Money into the PIT... A Home Owner will have to PAY for Roof Repairs, Plumbing Repairs, A/C Units Need Replacing and Repair about every 10 years, Electrical Problems, Windows Wear out and have to be Replaced, Driveways Need to be REPAVED, Lawns need Constant Maintenance, Etc. Etc. Etc. Etc. Oh And By the Way.. The Only Way your Home Goes UP IN VALUE is if you keep SPENDING $$$$$ to make Worth Something to Someone Else... That means you have to Keep it Updated, New Kitchens, New Floors, New Bathrooms, Etc. Etc. Etc. MONEY PIT... It's MUCH CHEAPER to Simply RENT a Nice Apartment or Condo or Even Rent a House and let the Land Lord Pay the Major Repairs. If I could pay CASH then Perhaps... Otherwise.. I'll Just keep renting for $700 per month and Know that My 1 year lease means I OWN IT for 1 year. If I want to move, EASY... Just pay off the Lease and Move on...
Charlotte says:
June 17, 2012 at 12:57 AM
Your blog is really awesome! This post is so refreshing too. It's so hard in our culture to not want to borrow, and is definitely seen as weird by a lot of people. I love when Dave Ramsey talks about not listening to most people though, because "they're all broke." But even when this isn't the case, like my parents who are doing well financially but still keep their house mortgage and tell me that it's much cheaper than renting, they keep it for the tax break, etc., I just feel that the PEACE that comes through knowing that if something horrible happened you are a) renting and therefore not responsible for a loan or mortgage you can't pay or b) own your house and therefore not responsible for a loan or mortgage you can't pay is worth the wait and putting down the money for a house. Bravo for sticking to your guns and not wanting to borrow!
- Kraig @ Young Cheap Living says:
  June 17, 2012 at 9:06 PM
  My blog is awesome? Well, thank you!! Way to make me feel great about my stance too, Charlotte. Thanks for that! :)
Canadianbudgetbinder says:
June 17, 2012 at 10:08 AM
You know I never really thought about it but you are right. There have been many times at the office or in my circle of mates that I hear congrats on obtaining credit to buy something lol.. I for one absolutely hate owing money unles it's making me money. Mrs.CBB and I thought about buying a bigger home with a bigger lot and pool. We would love to have what we desire because we worked so hard for what we have and know how to manage our money. The problem is where we live housing is very expensive and we simply don't want to owe any more money to the banks once our mortgage is paid. When you understand money like any financial blogger does or comes to understand, debt is not a happy place to be. I would be just like you, wanting to congratulate those that have no debt... that would mean more of a party to me than any new car would bring. Lots to think about, thanks for sharing. Mr.CBB
- Kraig @ Young Cheap Living says:
  June 17, 2012 at 9:07 PM
  How about when we all hear that people bought something on credit we say, "Oh no!! I'm sorry to hear that!!" That would certainly be a change.
Barbara Friedberg says:
June 17, 2012 at 6:03 PM
You are not nuts. You are smart and sensible. I think societal norms are nuts. My take, don't borrow unless you can pay cash! That includes all loans, except maybe a mortgage. That means cars too!! I'm with you all the way.
- Kraig @ Young Cheap Living says:
  June 17, 2012 at 9:04 PM
  I'm glad to hear someone thinks I'm not nuts. Thanks, Barbara!
SavvyFinancialLatina says:
June 18, 2012 at 6:28 PM
I have been thinking the same thing. Great post timing. I just bought my first new to me car with cash. It was tempting to buy a new car, but I decided I did not want debt. We have no debt, and I don't want to start out with any debt. Right now a mortgage is not an option, but I have been thinking about the future. When will we buy a house? Should we buy in cash? A lot of people talk about how buying a house can sometimes be cheaper than rent. But you are paying interest to a bank to stay in a place for a long time. This may hold you up if you get offered a job elsewhere. With an apartment you can just pick up and leave. You may pay a premium for it, but at least your paying for the location and amenities, instead of the bank for lending you the money? I would love to buy our house in cash! It would feel great.
SavvyFinancialLatina says:
June 18, 2012 at 6:30 PM
Maybe we should start a movement? CASH FOR HOUSE MOVEMENT! :)
CJ Belle says:
June 19, 2012 at 8:53 AM
You are not nuts, I am right there with you! I agree with SavvyFinancialLatina too, a "cash for house" movement would be awesome, and I'm sure Dave Ramsey's already taken the lead on that too. We just got out of credit card debt (22k) and we are now working on the student loans (67k!) and hope to NEVER carry any debt again! We live in the DMV area, so it will be especially challenging for us to buy a house for cash, since the cost of living here is astronomical....but we are certainly going to try! We're thinking a "smallhouselife" may get us there...and we're getting inspiration from smallhouselife.com :-) Stay on that soapbox Kraig! :-) Btw, you are a great inspiration, and I really like your candid honesty, I'm just 30 as well and just beginning my professional career (thank goodness grad school is over) and we're working on DFF --> debt freedom forever!
Kris @ BalancingMoneyandLife says:
June 19, 2012 at 1:16 PM
When I look at my mortgage payments, I know you're not nuts! Deciding to swim upstream against typical behaviour takes courage and commitment. I'm struggling right now because I know I'm trapped in my job due to our debt load, but there are two of us who have to be willing to make the big changes - and right now, my other half is not. He's willing to make some small sacrifices (good!), but radical changes are still too uncomfortable. We'll get there through baby steps.
Tim Richmond says:
June 19, 2012 at 1:42 PM
I think that, realistically, most people don't WANT to borrow money but they don't think about it as logically as you do. You're definitely not crazy, this is all very well thought out and reasonable. I will say, though, that unless your circumstances are very unique, buying a home will require some borrowing. A little bit of research on your part and it doesn't need to be a nightmare, though.
Luke says:
June 30, 2012 at 12:39 PM
I got rid of my credit cards several years ago. Now I just use my debit card which means I can't go overdrawn at the bank, nor do I have to worry about paying credit card bills. It's the best thing I ever did.
Bart @ Anti-debt Community on facebook says:
August 1, 2012 at 4:50 AM
Hello Kraig, I think that your blog is great. For 2 years me and my fiance we are saving money for our house, it is only 2 years left to get the money. I know that wen we have one it will be 100% ours and we have a lot of time to think about it. "Cash for house" movement rules :)) Greetings from Poland ;)
Nicole says:
June 5, 2013 at 10:31 PM
30 years of interest payments? I DON'T THINK SO!!!!!
- Kraig @ Young Cheap Living says:
  June 5, 2013 at 10:32 PM
  Nicole, Agreed.
Toni says:
February 9, 2015 at 4:03 AM
Really excellent blog post, very inspiring. I have had a similar experience with debt, likewise I do believe you can buy a house for cash, just like our parents and grandparents did.
Sarah says:
November 1, 2015 at 5:06 AM
Very informative and very well-researched. I stopped using my credit card long back and now only debit card rocks.
Alice says:
November 7, 2015 at 5:31 PM
I don't think you're nuts, either. I've heard my friends with good jobs complain that with their student debt and their mortgages, they'll never be able to retire. A simple internet search I did found a $2,500 property with $65/year taxes, where a decent house could be built for pennies without significantly raising property taxes. It's out in the middle of nowhere, but since I travel a lot, it'll do for someone like me. Making sacrifices along the way, pave the road for financial independence. More time to do what you want to do.
Tom Hughes says:
November 5, 2016 at 5:04 PM
Common Sense is Common Sense. Few people today have it. Life can be Very EASY if you simply Don't Go in Debt. I am 44 years old. I have NEVER ONCE in my Life Purchased a New Car from the Dealership and I NEVER WILL. Buying a New Car is the DUMBEST THING you can ever do. In Fact, I have NEVER ONCE in my life Paid more than $8000 for a car and That was the Most Expensive Vehicle I Ever Purchased but it was a Jeep Rubicon in Absolutely SHOW ROOM condition and I got it for $8000 Cash, New it cost the original owner about $40,000 and He had put about $10,000 in high end off road upgrades into it. This Jeep was a STEAL at $8000 and I could probably sell it tomorrow for $10,000+ if I wanted to but I will never sell it. Over the years I have Owned Porsche, Volkswagen, Jeep, Subaru, Triumph, etc. The Cars I own are Beautiful Well Cared for USED cars that have 100,000+ Miles on them but the previous owners took very good care of them. My Current Car is the Jeep I described above And my Daily Driver 2002 Subaru Forester with 116,000 Miles on it, Runs Like Brand New, Completely Paid off and I got this car for only $5000 Cash 2 years ago. It should run upwards of 300,000 miles. I have 7 Credit Cars but ONLY USE 1 of them because I get 3% cash back and Zero Interest for 2 years. The other 6 Credit Cards are ALL PAID OFF and NEVER USED unless I go on a Trip and have to put the Hotel or a RENTAL CAR on them... Then I pay the balance off IMMEDIATELY when the Bill comes due. I earn just over $35,000 per year. With ZERO DEBT I am RICH compared to people who make DOUBLE MY SALARY and are UP to their EYEBALLS IN DEBT WITH NO WAY OUT... Screw that... I'm Retired as SOON AS I HIT 62. I'm taking the EARLY Social Security and Never working again as long as I LIVE!!