Debt, for our purposes, is money someone owes to someone else. The money is often lent in exchange for interest – extra money the borrower agrees to pay in exchange for the loan. However, there are times when money is loaned without that extra charge (such as a parent loaning a child some money without interest), but there are often other social considerations involved, such as a feeling of obligation to them, knowing that repayment is tied up with honoring the relationship.

You may have heard about some forms of debt being considered “good” or “bad”. Taking a mortgage to buy a house, a loan to pay for college education, or a loan to build up a business, were often considered forms of good debt. They were investments that one could reliably assume would lead to higher income levels and a better quality of life. By contrast, bad debt would be a consumer loan, paying for a vacation, food, or an advance on your paycheck. These are debts which provided immediate assistance, but generally bode for a worse financial future.

Debt is a tricky thing to navigate. It’s fine if you have enough money on hand do cover it immediately (say, in the case of using a credit card, which is paid off in full at the end of the month), or from your expected income (you have a steady job and are paying off a fixed-rate mortgage over the course of 30 years). But things get not-so-fine pretty quickly when your work hours or pay start to fluctuate, when the cost of your other expenses skyrocket, or you get stuck with an insurmountable debt you can’t reasonably pay off. Examples here could include working in a profession with seasonal swings, or PRN (as needed) in a hospital; the birth of a child into a family, or workplace benefits shifting to a new high-deductible healthcare plan; and incurring medical debt that’s not covered by insurance or having a mortgage worth significantly more than the actual value of the house. Under these conditions, having debt can be paralyzing – mentally and financially. So, that good debt investment you made in your education or the car you financed to get you reliably to that better paying job is looking a lot less friendly now that circumstances have changed.

In a way, debt is relative – whether you personally feel it is good or bad, and that can even change over time. It’s manageability depends technically upon your income and other expenses. But it also depends upon the reliability of the flow of funds in order to pay predicted payments. And then there’s the emotional feeling of debt which can be, far and away, the most significant factor. It might be the result of a divorce or relationship gone sour, or the hospital you work for is suing you for unpaid medical bills because the health insurance they provide was insufficient to cover the cost of your treatment. Chances are good that someone you know, or even you yourself, are experiencing some significant pressure of debt that to whatever degree, is not your fault. Consumer debt is higher now than ever before, education debt has ballooned to ridiculous levels, and medical debt is crippling those who otherwise have squeaky clean credit reports. These stem from the disintegration of society as selfishness replaces care and service to others, where the social contract to care for the well-being of the whole is neglected, instead for the pursuit of ever higher profits for medical procedures or drugs. On the other hand, we see a simultaneous integration taking place – sometimes along side the disintegration, sometimes in response to it. Examples are organizations that buy up and forgive medical debt to relieve the burden of repayment, or peer-to-peer lending platforms that facilitate borrowing and repayment under fair and more humanizing terms.

To the extent that you can make contingency plans, prepare for eventual larger purchases, or plan for the day when everything hits the fan and goes sideways, you’ll be able to navigate your way with little to no debt as a result, or if you do, you’ll have a better understanding of what you are taking on and will be able to approach it clear eyes and some due diligence. How to do these will be explored later in the book.

This book is a work in progress and we’ll all benefit from your input and collaboration. In the “Leave a Reply” below, please post examples, comments, questions, and needed edits. By posting, you grant permission for inclusion of any content to become part of the book, now or in the future, in whatever form it may take. I’ll give attributions to the extent possible. I know sharing about our financial lives can be sensitive, so if you want to share anonymously, please use the contact form instead and I’ll honor your request.

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