Don’t get into (more) debt

This is an extract from my book, The Poor Man’s Guide to Financial Freedom: A Realistic, 10-Step Manual to Building Liberating Wealth on a Low to Medium Income.

Step 1: Don’t Get Into (More) Debt

. . . and in a word, [a wise man] watches himself as if he were an enemy and lying in ambush.
– Epictetus

Stop living on credit. Take on no more debt. Purchase only what you can afford with the money you have.

Debt and living beyond one’s means are by far the biggest causes of people’s financial distress. Living on credit is like running on a treadmill, regardless of your income. You run and run, working hard and paying monthly interest, sweating like a bush pig, but you never get anywhere. Unlike at the gym, you don’t even derive any benefit from the exercise. If you seriously want to get off the treadmill and start moving towards financial freedom, you MUST stop living beyond your means.

There is no other way.

This is a short but essential chapter because there’s no point reading about how to budget, save an emergency fund, or even how to get out of debt if you’re still taking on new debt. As a wise man once said, if you find you’ve dug yourself into a hole, the first thing you need to do is to stop digging.

If you have a debt problem, it is likely that you are the kind of person who is better off not borrowing money at all, for almost any reason. Is that you? Be honest with yourself. If you are your own worst enemy when it comes to getting into debt, very seriously consider cutting up every last credit card you own.
Yes, I said it. Cut up the cards and never get another one, for the rest of your life.
Most people throughout history have survived without credit cards. You will, too.

Lenders want to make them seem essential, but they are not.

You do not need a credit card.

It is true that credit cards have some advantages such as convenience and rewards for those who use them carefully – paying off the monthly balance within the no-interest period and building up a good credit score. If you are battling debt, you are probably not such a careful person. Do yourself a favor and dump the lot of them.

Get yourself a debit card instead. You can use it in exactly the same way as a credit card for store and online purchases, but it takes money straight out of your own bank account. No borrowing required. They are most commonly offered by Visa or Mastercard through banks, although there are other players in the market.

Not many people get direct mail or cold calls offering debit cards as the returns on these products for providers are much less lucrative than for credit cards. You might have to go looking.

From now on, only buy things up front. There is no need to borrow for consumer purchases if only you have a little patience. Is your car a bomb? Start saving up for a new one. If it takes two years, fine – drive (or push) the lemon for another two years. Is your washing machine broken beyond all repair? Wash your clothes in a bucket until you can afford a new one. Your great-grandma did this and so can you. Somali pirates have kidnapped your brother and they’ll cut his eyes out unless you pay a heavy ransom in 48 hours? Tell him he won’t have to worry about misplacing his glasses any more. If you can’t afford something right now, do without.

Does your bank account offer some form of overdraft, i.e. allow transactions when you have insufficient funds available? Ask the bank if they can remove that facility, or see if you can do it yourself online. Do friendly people often get in touch offering you credit cards and loans and special deals? They may be doing that because clever algorithms have identified you as one of those highly profitable customers who only pays off the minimum and who ends up turning a harmless little $200 loan into a $500 return in the long, long run.

As Nancy Reagan might chide, ‘just say no’.
According to the Wall Street Journal, there are people these days who use installment plans and similar to buy everyday items like sweaters, trainers and shirts, paying them off over several months. One person interviewed said, “I’m not making a whole lot of money, so this is really helpful.”

No, it is not helpful. If you can’t afford to pay for that shirt right now, you can’t afford it at all. Reduce your spending. These schemes are trying to make you buy things you can’t afford in order to profit from the interest rates.

Sometimes there is no interest, but even there they are profiting by tempting you to buy things you wouldn’t otherwise purchase right away. If there’s no interest, you’re still buying more than you can afford at the moment, which is too much. A plan of four monthly payments of $25 each sounds a lot less than $100 up front, but if you do some cunning arithmetic you’ll find that actually they are equal. These options are not designed to make it easier for you to pay. They are to make it easier for you to spend unwisely.

Future You will suffer for what Present You does, just as Present You is currently on the treadmill trying to pay off all the debts and put-off expenses that Past You racked up. Do Future You a favor and avoid such payment plans altogether. Save up or do without the item. Future You will thank you. No one has ever said, “I wish I got into a whole lot more debt when I was younger.”

End of sample.

To learn more about reaching financial freedom, buy my book:

The Poor Man’s Guide to Financial Freedom: A Realistic, 10-Step Manual to Building Liberating Wealth on a Low to Medium Income

Also available on many other platforms.




  1. Allen · July 7, 2020

    One southern California TV commercial for decades was “Cal Worthington and His Dog Spot!” Cal sold cars new and used and Spot was variously an elephant, a giraffe, whatever. Old Cal had a sense of humor, and he was quite smart. He became a very rich man with those loony commercials. He always said he never made any money selling cars, he made his money off the interest on loans for those cars. It’s kind of like a casino in that the house always wins. The lender always wins it’s set up that way. I’ve been the lender.


  2. Pingback: Friday Finance: our biggest financial regrets | SovietMen

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