I am what many people would call a “crazy person,” because I believe that I can achieve financial security at an early age. I want to build up a side business that can cover all of my expenses and allow my wife and I to live care free, being able to change the world without having to worry about how we are going to pay our bills.
It was just recently that I started to realize the advantage that I have being debt free, as opposed to many of my friends who are up to their heads in college debt. I thought I would explore this topic and how accumulating a lot of debt really puts you behind because it should give you a better picture of why you need to avoid debt at all costs.
How to Obtain Financial Security
There are two basic ways to achieve financial security. The first, traditional way, is to save up a lot of money so that you can safely and slowly withdraw a small portion of this as income and survive for the rest of your life on this nest egg. Many people go this route, but it often takes decades to save up enough. This can be sped up, but it often depends on how little you can live off of and how much you earn at your job.
The other way to achieve financial security, and not have to worry about paying the bills, is to accumulate multiple streams of passive income. This is income that doesn’t require you to “clock in and out” like you would at a regular 9-to-5 job. Some people achieve this through real estate, while others obtain it through a business with which they can hire a manager to run it. Regardless of how you do it, if you start earning a few grand each month from a business that runs itself, it only makes sense that you can quit your day job and not have any major worries.
Why Debt Delays Financial Security
Regardless of which route you are planning to take, or a combination of the two, having a considerable amount of debt puts you at a huge disadvantage. Not only does it give you a negative net worth and therefore a longer journey to build up a nest egg that you can live off, but also increases your monthly expenses. This means less money is going towards your savings. Having higher monthly expenses only delays it even more.
In many ways, it’s like starting a race well behind the starting line. Why would anyone want to do that? Start living a debt free life today so you don’t have as big of a challenge later.
Are you facing an uphill battle? What are you doing to overcome your debt?