I have a passion for personal finance… I can’t get enough… I read about it, I think about it, and now I write about it.
Why does the Internet need another personal finance blog?
All personal finance blogs that I have read vilify debt, demonize it even… While such a stance is important for those unfortunate individuals laden with debt without the cash flow to pay it off, in my opinion, the propagation of this ”truth” is the single biggest travesty to occur to the middle and lower classes since the time of feudalism. What ever happened to the American Dream? It is being buried in the avalanche of the debt snowball.
The American Dream isn’t about scrimping and saving every penny like a frugal miser to pay your debt (unless it makes you happy.) It is about Life, Love, and the pursuit of happiness.
I’ll be the first to admit that I am an American consumer. I have a house, a vacation house, 2 nice cars, a boat, a gym membership, I graduated from a first tier Ivy League institution, I belong to a secret society, I belong to one of the most exclusive country clubs, and hopefully one day at least partial ownership of a personal jet (dare I even dream my very own island?). That I have used other peoples money for leverage in my pursuit of happiness does not make me a bad person.
To me the American Dream is all about leverage. Money, income, cash flow, interpersonal connections, and even debt are but resources to be leveraged to create monetary wealth. Monetary wealth brings freedom of time and freedom of movement.
In the end, even the wealth is a resource to be leveraged. One personal finance writer I happen to agree with is LazyMan… He often talks about multiple income streams and alternative income. Not only should you diversify your assets, but you also need to diversify your income. The classic networth equation is that net worth equals assets plus income minus expenses. I actually think that balanced and diversified wealth comes from a 5 part equation, networth equals appreciable assets plus income producing assets plus income producing debt plus asset producing debt minus cost of living minus debt maintenance.
The nuance of this equation is that if one is taking on debt to maintain a cost of living then one is clearly living outside of their means… For these individuals and families, Dave Ramsey and the debt snowball might be important… If on the other hand you are producing long term net worth gains with your debt then you are living the American Dream.
Ask yourself did the Rockefellers or Carnegie or JP Morgan or Vanderbilt or the Kennedys or the Donald achieve wealth without debt?
Which brings me to the travesty of the debt snowball. I mentioned above your cost of living must be below your income, but there are two ways to achieve balance. Cost reduction and the Debt Snowball is clearly one path, but that path also has a limited ability to produce wealth. The way to wealth is through increasing your income, not limiting your expenses. The path to stability is diversification of your income, not eating only Top Ramen. The way to get Rich is to leverage Credit Debt and Loans to build a diversified portfolio of income producing assets, not slave away paying interest on your groceries to a large conglomerate bank.
Good luck on your personal journey and I hope you enjoy my blog.
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