Debt isn’t always a bad thing.
When I was a child, stores still asked whether customers would pay with cash or with card.
“No credit cards for me,” my dad would reply proudly. “I am debt free.”
Of course, this wasn’t true. While he didn’t have credit cards, he did have debt. The electricity and heat were regularly turned off in our home due to nonpayment, and once the car was repossessed right out of our driveway.
We were poor. My parents struggled to pay the bills. But my siblings and I were always taught that debt free was the way to be. “Cash only!” my father would boom.
As I grew older and started my own life, I realized that in order to break the cycle of poverty, I needed to embrace responsible debt. With no one to help me pay for books or foot the bill for college, those expenses were my responsibility.
I worked full time during the summer and as much as I could during the school year, but I still didn’t have the cash on hand to finance the tools I needed to climb the financial ladder — things like a college education and professional clothing.
Luckily for me, I graduated from high school in 2007, before banks tightened their lending practices. I was able to get a credit card at 18 with no proof of income and a frightfully low bank balance. Although this definitely wasn’t the best lending practice for the bank, that card allowed me to purchase the things I needed for my dorm room the next fall.
Paying for college required even more debt. I received many scholarships and grants, but living at a four-year school in a big city was still going to cost me five figures each year.
Armed with a co-signer and little understanding of the long-term implications of a college loan, I signed the dotted line. I remember looking at the loan disclosures after the fact (like the responsible college student I was) and thinking that it simply didn’t make sense that my $18,000 loan would cost me $60,000 in the long run. My mind couldn’t compute that trick of interest, so I tried to ignore it.
But somehow, it stuck with me, and instead of deferring my payments until after graduation, I opted to make monthly interest payments from the time I took the loan. It was a stretch on my small nannying income to pay that bill each month, but I never missed it. After four years of payments, it was infuriating to that I still owed the initial loan amount, but I was proud that I hadn’t let more interest pile up while I was in school.
When I graduated from college, I was lucky to get a job quickly, but money was still tight, especially when those student loan payments were factored in. I married an immigrant who was initially unable to work in the U.S. because of his visa regulations, so for a time, credit cards helped us make ends meet. Finally, last year we took on what I see as the ultimate responsible debt: buying our first home.
Now our mortgage payments are half of what we were paying in rent each month. Instead of putting that money in a landlord’s pocket, we’re able to direct the funds to credit card debt and student loan payments. For the first time in our relationship, my husband and I are both working stable jobs, and our cost of living is well below our income. The stability I feel from living in a home I own —something my parents never did —is worth every penny of debt I had to take on to get here, as are the student loans I borrowed to get an education.
Debt gets a bad name. But I’ve come to think of it as a necessary evil. I am further ahead financially today than I would be if I had not taken on debt with credit cards, student loans, and eventually the mortgage.
I certainly wasn’t perfect in managing my debt —there were times I slid over my credit card to pay for nights out in college or a date with my husband. But for the most part, I was cognizant of the power of the debt I was taking on and didn’t use it mindlessly.
In that way, my dad’s lessons on financial freedom stuck with me.