Why not accumulate more debt?

Do you subscribe to the “live in the moment” school of thought, or do you prefer to plan for the future? Personally, I am a planner but I do embrace my more spontaneous side every once in a while, providing balance to an otherwise stringent (and somewhat boring) natural tendency.

In some ways, I envy those who can throw caution to the wind and are able to recognize fun and adventure without worrying about the future too much. They seem free and unencumbered by the stresses of everyday life. However, I certainly do not envy some uninhibited individuals’ tendency to discount the trouble with accumulating too much debt.

Interest rates in Canada are at a historical low, causing people to ask themselves: “why not borrow money?” More people are seeking out secured lines of credit to finance a lifestyle they could not otherwise afford. They justify their financial choice with its perceived affordability. Unfortunately, their focus is on the low interest of the loan instead of the high principle value of the debt.

These borrowing pursuits are reinforced by convictions such as “you only live once” or “I could die tomorrow.” It is easier to ignore future consequences in exchange for immediate gratification; unfortunately, those who disregard the risks, will eventually be forced to face their debt.

Irresponsibly accumulating debt can be compared to smoking, for example. Smokers know that their habit is bad for them in the long-run, but the impending health problems do not seem threatening enough in the moment. They convince themselves that they will abandon the vice in time to save themselves. More often, the damage is already done. The same can be said of poor money management. Everybody believes they will get their finances in order in the near future, but the truth is that the way you spend now is most likely the way you will spend later – unless you implement change now.

Sit down and identify what needs to change in order for you to gain control of your finances. The changes do not have to be drastic. You can easily get back on track with these 10 financial rules to live by. Today is the day to make the changes needed to become financially healthy.


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