I have a client named Johnny Filamini.  His name ends in a vowel, so you know he’s a good guy.  He said something to me during our last meeting that I thought was so profound.  He said “debt free is the new rich.” 

We were talking about how his back surgery had rocked his world. Because he couldn’t work, he almost lost his business. The good news is he was able to keep his business, albeit barely. He said the only reason he was able to survive during those three years is that he didn’t have any debt other than his mortgage, and even that was relatively mild. His disability insurance covered his basic expenses, so he was able to squeak by. Johnny learned through experience how being debt free can actually make you feel “rich.” 

Proverbs 22:7 says, “Just as the rich rule the poor, so the borrower is servant to the lender.” This verse is not saying that we are never to take on loans, but it is saying we should examine our ability to repay these loans. Because you will be a slave to these lenders until your debts are paid. In our culture, it seems perfectly normal to take on huge house, car and school debts. While nothing is wrong with this, one must consider a life of owing money to a lender.

I’ve never met anyone who has paid off all his debt and said, “I wish I hadn’t paid off my debt.” On the other hand, I’ve never met anyone with debt who says, “I love being in debt.” Close your eyes and picture a life without any debt: no mortgage payments, credit card bills or auto loans. In today's shaky job market, the image holds particular appeal – even though it may seem impossible. 

On a national level, Americans are incurring more debt and saving less than ever. This sadly occurred during an economic boom.  The average U.S. household carries $8,523 in credit card debt, according to Cardweb.com, and the savings rate is at a historic low - around 1 percent, according to Standard and Poor's. If we’ve gotten into this much trouble during a good economic period, it will only get worse as we enter into tougher economic times.  

When you want something, it's better to save for it than to go into debt to have it. I know that’s not very “American” but if being debt free is wrong, I don’t want to be right. These days, there's always someone dangling new keys in front of your face or offering you vacation package deals. But if you put a $3,000 to $5,000 vacation deal on an 18 percent interest rate credit card, that “unforgettable” vacation may cost you $10,000 to $17,000 by the time you're done paying it off.  Then it will be unforgettable for the wrong reason.

If you're spending more than you earn, you will always be spending money you don't have. That means you will always be steadily increasing your debt. Consequently, your credit card debt will continue to control your life. Now it just makes sense, if you continue on this path, you're doomed to hit a dead end.