The Most Popular Way to Stay Broke

The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

Do you know of anyone that has voluntarily signed a piece of paper that will keep them broke for the next 30 years? I know it sounds crazy, but I have many friends that have done this very thing!

They get all jazzed up about how they can look important to others so they sign up for a 30 year debt that they can barely afford, which then keep them in bondage for much of their adult life. Is this the American Dream that all of us are searching for?

Buying the House of Your Dreams

I have a friend at work that was brought up in a poor home. Instead of being thankful for what he has today, he seems to be on a mission to separate himself from his past by buying up all the nice things he can today. Just a few months ago, he rolled up in a nearly-new Audi and was so proud of himself that he always parked it outside of the window near his desk, just so he could look at it every day.

Well now the Audi isn’t enough. He has moved onto bigger and better things. Yup, he is looking at purchasing an executive home that will likely keep him broke forever. This is how he described it:

“Take a look at this house, Derek. It’s a 5 bedroom, 4 bath executive ranch house in the wealthy side of town. Sure, money will be tight for the first couple of years, but both my wife and I expect to get promoted soon, so it will get easier and easier to pay the mortgage as the years pass by.”

My jaw almost dropped to the ground. First of all, he and his wife have only one child and could easily live in a 2 bedroom, 1 bath house that is less than a quarter of the cost of this “executive” home. Secondly, if they were to buy this house, they would have to watch their spending for the next 30 years! Their cash flow would be next to nothing, and unless the house increased in value they would not be able to sell it and would be forced to live there, continuing to make that monstrous mortgage payment. And, with a cash flow of less than $100 a month (or less after they pay all of their bills), they would not have any opportunity to invest in their future and will still be broke when they turn 60!

My Simple Lifestyle

Many people decide to live their life from paycheck to paycheck, just barely getting by. They assume that it’s the normal thing to do, so they just keep making those big purchases on credit and living in the moment. It might seem like they are having fun on the outside, but I’m sure there are many money arguments and escalating stress levels going on behind closed doors.

For me, I would much rather live in a simple house and have a large amount of excess cash each month. I can either chose to spend it or maybe I’ll invest it in the future. It’s my choice. But I won’t be bound to a hefty mortgage payment and car payments. These loans will only bring you down and keep you down.

My friend will be living in a large house and will be driving nice cars, but he will be working until he is 70 years old. I will be completely debt free by the end of this year in my 3 bedroom, 2 bath house and will likely have the option to retire by the age of 35.

How about you all? Which option would you choose?

***Photo courtesy of http://pixabay.com/p-31085/?no_redirect