The King Of Debt

Donald Trump calls himself the king of debt.  He says he has made much of his money by taking on big debt.  In most instances, it seems to have worked for him.  But is this right for everyone?  When I grew up I was taught to save something out of every paycheck and not to buy anything unless you could pay for it.  As a result, Ron and I were six months into our marriage before we bought a $500 tv for our living room.  We never had a credit card balance.  We just didn't buy something if we couldn't pay for it.  We were not exactly the type of consumer America, or credit card companies, liked.

Last week my monthly discussion group of six very bright women had a lively discussion about economics.  We were discussing the pros and cons of having a paid off house at our age and of buying or leasing a car.  The bottom line was that we determined that much of what we were taught about finances does not apply today.  Of course, low, or should I say no interest rates might change your thinking.  It makes sense to carry a mortgage if you can put your money to work making more than your mortgage.  That's not always the case these days.

Senior citizens are not usually big consumers, and with our aging population, spending among older citizens is stagnant.  This is especially true now that interest rates are so low.  Millenials, on the other hand, seem to spend everything they earn and then some.  Many young men and women have significant credit debt that just keeps increasing.  Between student debt and the "I need to buy that now" attitude, they are stuck with years of interest payments.

I know financial planners are advising clients to have debt on their house, even if they can pay it off, but I'm kind of old fashioned.  I like to pay for what I buy.  Except for large expenses like houses or cars, I want to own things.  If I can't afford a fancy trip, I'll wait until next year, or take a cheaper trip.  Whether it's smarter to have a lot of debt or none at all, I don't know.  For me, I love getting card bills with a $0 balance.