Challenging a Common Assumption: You Don’t Have to Borrow Money to Get the Things You Want

In The “Good Debt” Lie, I pointed out that ALL debt is risky. Labeling debt as “good” or “bad” makes it dangerously easy to eliminate thought from the equation when deciding whether or not to take on debt.

While I expected at least a few people to argue that some debt “really is good”, I was a little surprised to see comments that flat out said you couldn’t do certain common things at all without going into debt.

At first I thought maybe the comments were because we (as a society) are just so used to going into debt for certain things that we assume they can’t be bought or done without it.

But then I thought back to the days when I struggled (and often failed) to literally save even a single dollar a week. I had a goal of saving $52 a year on what was a reasonably decent household income (for the time!) of about $22,500 per year, and came nowhere close.

If you’d told me then that I could buy even an “inexpensive” condo or a car after saving up the money for it, I’d never have believed you. I’d probably have snorted “yeah right” and moved on.

I mean, how could I save up say, $32,000 for a condo or $8500 for a car when I couldn’t even hang on to an extra dollar for more than a week? The condo would have been more money than we made in an entire year, and the car would have been about 37% of our gross pay. The idea would have seemed ridiculously impossible.

And, in fact, I did borrow money to buy a brand new $8500 car back then. Sadly, it didn’t even occur to me to do otherwise. I was just proud that I “only” took out a four year loan instead of the five year ones they were typically handing out.

Paying cash instead wouldn’t have been impossible at all though, had I known then what I know now — and I had I been willing to wait a longer than than 6 weeks or so I spent looking for that car. (Which turned out to be nothing but expensive trouble, by the way.) We’re not talking more than a lifetime of waiting either, like I would have envisioned on a save-$52-a-year-at-best rate.

I’ll tell you what I did wrong tomorrow, and then present realistic ways to pay cash for large items if you’d rather do that than go into debt.


  • Expensive Items:

    If it goes up in value buy it. If it depreciates rent it??

    I suppose the same could be said for taking out a loan against something.

    • Would you apply that philosophy to a car? Renting (leasing) a car is an expensive option.

      • The world if full of 2nd hand cars to suit every budget, I personally never buy a new car.

        I hate the fact that as soon as you drive a new car off the forecourt it instantly drops in value.

    • Johnny, are you asking me if I base my decision on whether or not to buy something vs. renting it on whether or not it will go up in value? If so, then no, that’s not what I’m saying. I’m saying that it IS possible to buy even expensive items without going into debt. If you’re asking/saying something else, can you explain more?

  • Where can you find a condo for $32,000? The cheapest ones near me are like $175,000…

    • It depends where you live, but especially with how the markets are now, you can get condos very inexpensively in some areas. (Although the $32,000 price I referred to here was me talking about the first condo I bought back in 1989.)

  • Jenna, my mama bought a cabin and 3.5 acres (complete with stream running through the front yard) for $30,000 a few years back. I think the prices in her area (rural Arkansas) have gone up to around $75,000, but those homes are usually much larger than her cabin. Of course, I live in the Los Angeles area, where you can’t buy anything for less than $250K & that’s usually a short sale!

    It’s strange how my grandmother would be shocked over using debt to make purchases whereas now people balk at the notion of saving for virtually anything, but particularly large purchases. Ah, how mindsets change when multinations can make billions off of good ol’ debt derivative markets, eh?

  • I agree that any debt is dangerous. I have friends who buy only with cash and I have friends who pile up a c/c debt. Hopefully, I will be a cash only type some day. :-)

  • Wendy Stewart

    When I mentioned to my neighbor that I would be purchasing all future cars with cash, she asked how someone does that? She honestly wanted to know how someone buys a car without a loan — and she’s old enough to remember when everyone didn’t run out to get a loan when they needed or wanted a car. I told her about saving and then writing a check and how I had seen customers do that when I sold cars 6 years ago. Also, I told her that there are people who are buying homes with no mortgages because they can save the money because they have no debt. You’re right, there really is no such thing as good debt and we have to start showing that, especially when it comes to student loans.

    • That’s cool that she was asking though, instead of assuming that people can’t really do it.

      • Wendy Stewart

        Jackie, you’re right. I am glad she asked because with my family it’s a totally different vibe. However, I think I’ve gotten through to my 10 year old brother to show him that you save for what you want and that you don’t want to owe anyone any money.

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