Debt is different from expenses. Expenses are something you have to have, like food and clothing. Debt is something you want but don′t have the cash to pay for. You can control expenses and you can also control your debt load.

Let′s say you need a car. You go to the showroom and finance a nice, shiny new car that you have to pay back on for the next five years. You now have debt. Consider the alternative: you buy an older car for cash and drive it for three or four years while you save up for that nice new car. You don′t have debt because you are not paying anyone interest on money you borrowed.

Change the word “car” in the paragraph above to widescreen TV, vacation in the Caribbean, sofa set, or whatever you want and don′t have the cash to pay for, and it works the same — you may have to save longer for the more expensive items, but the payoff is bigger in the amount of interest payments you save.

Debt is Bad

In 2008 we learned what happens when we let debt get out of control. Banks gambled with our money, and we all lost. Families with the most debt lost the most. Those banks and finance companies which had been so willing to lend us money ran out of money. They had gambled and lost in exotic financial schemes, and suddenly their small customers, people who had borrowed to finance a new home or a new car, were out of luck. The economy imploded and easy debt became extremely painful debt. Lost jobs became foreclosed mortgages and lost homes.

We as individuals cannot control what the stock market will do and we cannot control interest rates. We cannot control the price of bread or milk, just as we cannot control the weather. We can control how we spend.

It is normal to want nice things. Advertising encourages us to believe we can have those nice things right now. Advertising tells us it is normal and acceptable to go into debt to have those nice things now. Advertising lies.

Being Responsible

No one makes you spend money. No one makes you go into debt. These are choices you make. As a society, and as individuals, we need to learn to be more responsible with our personal finances. We need to learn to stop the debt cycle by learning to stop living beyond our means.

Spending what we don′t have by borrowing is not good for us or for our children. Learning to save for the things we want is good. We may have to work longer and harder to get the things we want, but the payoff is a lot less stress on us and our families.

So make a resolution for the new year: work to pay off your credit card debt because credit card debt is the most expensive debt you can have. Then stop using your credit card; save it for emergency use only. Make yourself into a cash spender. If you must use your credit card (midnight at the gas pump, for example), pay off the bill within the same week.

Reduce your debt and one or two years from now you will be less stressed and a lot happier. Really!