January 9, 2011

A Happy Thought

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“The truth is that this recession has changed everything. Homes are going down in value and people with college degrees are looking for jobs. Forget what I was just telling you. Forget about the idea of ‘good debt’ and ‘bad debt.’ The truth is that when you’re in debt, it doesn’t matter what you’ve borrowed the money for. The only thing that matters is whether or not you can afford to pay it back. And if you can’t, all debt is bad debt.”

My friend smiled sadly. “Tell me about it,” she said. ”My home is underwater, and my mortgage rate is going up and I can’t refinance because my credit score has dropped.” She shook her head and sighed. “So what do I do? What’s your advice to people like me?”

This time I stopped and thought before answering. “Here’s what I think,” I finally said, “and this is what I’m going to be telling everyone now. The best investment you can make over the next five years is going to be paying off your debts. So my advice is to pay off what you owe as fast as you can. The faster you pay off your debt, the faster you will achieve financial freedom.”

Excerpt from David Bach’s book Debt Free For Life

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