JD over at Get Rich Slowly recently had a good article about the America Culture of Debt where it was debated about who’s fault was it that so many people are in debt: the consumers who dug their holes or the banks who lead out the money in the first place. In the end it is sort of both, but what stuck me about this is what kind of long term blow back are we going to see from this. Will we see the rise of the anti-debt culture out of this?
I know I’m personally anti-debt. I dislike owing money to anyone for any reason. As such I’ve been finding the concept of using debt to buy assets difficult. I can do the math and understand how debt can be a tool to build wealth at the same time my gut keeps saying to me “this isn’t a good idea.” My mortgage is my last big debt hanging over my head and I have to admit I still like the idea of turning all my excess cash flow against the beast and killing the debt as fast as possible regardless of the math that shows that might not be a good idea.
So do you think any over excess consumption culture can spawn an anti-debt culture? I think it is possible in the broad sense, but I don’t think it will occur at once. People that did not learn any money management skills will tend to make the same mistakes as their parents, but the real test is can they learn the lesson of good money management faster then their parents. This could bring anti-debt into fashion when we all wake up from our collective debt hangovers and wonder what the hell were we thinking.
The long term issue with being anti-debt is it does limit your potential. By never taking on debt you can find yourself in a situation where you have a great potential investment but you are short on cash. The obvious thing would be to take on some debt for the short term to take advantage of the opportunity, but being anti-debt would make this a very difficult decision.
In the end I see anti-debt culture rising, but only as a phase. Very few people will stay anti-debt forever. In the end we will all learn (including myself) debt is like a gun. Just because you have doesn’t mean you have to use it and if you use debt it won’t make you good or evil. Debt is merely a tool.