Updated on 09.03.15

Review: Debt is Slavery

Trent Hamm

Each Friday, The Simple Dollar reviews a personal finance book.

debtI’ve been anxious to read this book for a while, mostly because it’s been recommented to me by a lot of people that I trust. For example, J.D. over at Get Rich Slowly has often said, in some form or another, “Debt is Slavery is the best personal finance book out there!” while I just roll my eyes gently and clutch my well-worn and loved copy of Your Money or Your Life.

The first thing I noticed about Debt is Slavery is the brevity: weighing in at only 88 pages, it’s a very thin volume. It’s mostly because the author, Michael Mihalik, has focused intently on trimming away every possible little bit of fat from the bone. This book is lean and mean – it doesn’t mince many words at all. For some, that’s good – I like concise factual writings. For others, it’s not – Mihalik is often blunt with some very hard advice for some people to swallow.

Let’s take a deeper look.

A Peek Inside Debt is Slavery

How to Choose a Teacher
The introduction to the book contains a brief section entitled “How to Choose a Teacher” that really stuck with me. Mihalik says to ask two questions: have they done what they are teaching, and do they have your best interests at heart? Those are two profound questions to ask about anyone you’re attempting to learn from, and it’s that logic that has pushed me more and more to start following and trusting individual writers, not specific publications. I have a greater tendency nowadays to trust, for example, an individual writer of a blog than I do a large conglomerate like CNN with different people pushing different agendas and ideas.

Chapter 1 – Debt is Slavery
Mihalik opens the book with what I’ve started to call the “Dave Ramsey argument.” Debt is Slavery makes the case that all debt is bad because it restricts your freedom. Even if you’re borrowing to put yourself in a better position long term, you’re still restricted by having that debt load hanging over you – the monthly debt payments and so on. Mihalik’s solution? No debt of any kind, not even debt that you could pay off if you wanted to.

Chapter 2 – Time May Not Be Money, But Money Definitely Is Time
From there, the book moves on to the concept of the true hourly wage, where you actually sit down and figure out how much money you’re really putting into your pocket in exchange for an hour of your life. It’s usually surprisingly low, and Mihalik’s point is that your time is more valuable than that. In other words, you’re better off earning $20 an hour for 20 hours a work than $10 an hour for 45 hours of work even if the second job pays more. Why? Because if both options are available to you, that extra 25 hours at the $10 an hour job is really only paying you $50 – or $2 an hour.

Remember, what you’re really working for is time – time to enjoy the aspects of your life that bring you happiness and pleasure.

Chapter 3 – Possessions Are a Prison
The third chapter brings another stern point – that the most valuable parts of your life aren’t things, but experiences. Thus, the stuff you buy is effectively paid for by lost experiences. Let’s say, for example, that you spend $2,000 on a flat panel television. That same $2,000 could be used to go to Disney World with your six year old kid. Which one will stick with you emotionally for the rest of your life?

I’m slowly starting to come around to this perspective. My best memories of my life as a husband and a parent are about experiences, not about stuff. Shouldn’t I be devoting my financial resources to more of these experiences instead of accumulating more things?

Chapter 4 – Be Aware of the Ongoing Campaign to Separate You from Your Money
The title of the chapter is intentionally done to send up “kook” flags, but it actually makes a serious point. Marketing is everywhere, and it’s constantly trying to convince you to spend money. There’s the obvious – television ads, etc. – and the less obvious, like giving “trendy” clothing to teenagers who are influencers of their peers.

It takes practice to get used to really identifying the marketing and really figuring out what you want as opposed to what marketing is suggesting to you (or to your peers) that you want. When it really clicks, it becomes much easier to cut down on your possessions in life.

Chapter 5 – Money Buys Freedom
Of course, once you begin to break free from all of this, you begin to spend less and less money. What does that reduced spending really mean? It means that you now have the money to buy freedom. Mihalik uses a great explanation here. If you can get by with only spending 50% of your income each month, then you only have to work half the time – or if you can get by with only spending 25% of your income, you only have to work three quarters of the time. It becomes easier to do things like take a leave of absence from your job to follow up on a dream (like writing a book). Or, in my case, it becomes easier to just walk away from a job to follow something you’ve dreamed about your whole life.

Chapter 6 – Don’t Sell Your Soul For A Salary
Mihalik continues that thought, expounding on the idea that being in control of your spending and free from debt means you don’t have to sell your soul at a job that you detest simply because of the pay.

That, in a nutshell, is what financial freedom is. It’s the freedom to make choices in your life without having to worry about the day to day financial implications. If you hate your job, you can just go find something else to do – the money isn’t going to kill you. Plus, when you do find a career that you’re passionate about, you’ll truly enjoy what you’re doing and the money will follow.

Chapter 7 – Own
The remainder of the book is more along the lines of the “nuts and bolts” of managing your finances. First of all, Mihalik urges people to own the things they use, then use them until they’re truly unusable. Take a car, for example. If you just stick to a cycle of leasing cars because you like the “new car” feel and smell, you’re costing yourself a lot of money – $2,400 a year, post tax, on a $200 monthly lease? That’s a difference of $3,000-4,000 a year in salary. The same is true for housing – once you own a house, you’re not dumping out thousands a month on a mortgage or rent any more. Own the stuff and your monthly financial footprint gets smaller and smaller, giving you more and more freedom.

Chapter 8 – Spend Less Than You Earn By Controlling Your Expenses
Here, Mihalik encourages good ol’ frugality, mostly in the form of minimizing your monthly bills. His advice is pretty general, but it basically adds up to looking through all of your regular expenses for places to cut fat. Do you need extra cable channels? Do you need Netflix? Do you need web access on your cell phone? Do you need a brand new car with the requisite payments? Probably not, and those things are keeping you from acquiring freedom.

Chapter 9 – Save 50 Percent of Your Salary
He’s pretty blunt on this one, too. Save 50% of your salary, period. Make that your goal. In 2007, if you figure money spent on overpayment of debts as “saving,” we did exactly this – and it made us feel a lot more freedom in our lives. In 2008, we hope to be able to do the same.

Chapter 10 – Control Your Money or Your Money Will Control You
Mihalik introduces a very simple form of budgeting here. Basically, he shows a method where you take all of your monthly bills and match them up with each of your paychecks. Then, you essentially make other expenses – like food and entertainment – bills as well and match them up with paychecks. The goal is to set things up so there’s some left over after each paycheck, and that left over can be the amount that you automatically start saving for the future.

Chapter 11 – A Bonus
You’re never as young again as you are right now, so why not get started?

Buy or Don’t Buy?

In a lot of ways, Debt is Slavery came off as a condensed and very blunt version of Your Money or Your Life. That’s really the highest compliment that I could pay Debt is Slavery – it’s got a lot of similarity to my single favorite personal finance book of all.

Mihalik does a great job of really nailing home a handful of few key points: stop spending money needlessly, avoid debt, be frugal, move towards extreme savings, ignore the marketing. Because the book is so brief, Mihalik is really blunt and straightforward with the points – there’s not much fluff.

As useful as that bluntness is – and in terms of just pure advice, it’s very useful – the brevity of the book means that the pieces that were cut were the human pieces. The best part of Your Money or Your Life was the humanity of it – Dominguez and Robin and some of the people they talked about really came off as three dimensional humans. Mihalik’s book dispenses with most of that and goes straight to the advice.

Which one is better? It really depends on what you value. For me, I’ll stick with Your Money or Your Life, but if direct and clear advice is what you’re really looking for, you couldn’t do much better than Debt is Slavery.

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  1. Frugal Dad says:

    Sounds like a good one, Trent. I’m adding it to my stack of books to read in 2008. I like the idea to save half of your income. Many two-income couples I know can’t even accomplish this, and pay for the expensive vacations, the luxury SUVs, etc. If they would just cut the luxuries out of their lives they could easily live on 50% of their combined incomes, or drop down to one income while the other spouse pursues other interests.

  2. sunshine says:

    My goal has been to live off of 50% of my income. I’m not there by any means, but I’m working towards it. I have to agree with you on the YMOYL – I enjoy the stories and personal aspect of it. Perhaps a happy medium btwn the two – less proselytizing with a human element.

  3. Lack of debt is so freeing and powerful. I’m proud that we got out of debt shortly before we got married and haven’t carried a balance on a credit card in the last 5 years. We have an 11 year old car that needs very little repairs, upkeep, or gas since we don’t drive that often. We both have IRA’s, a 401k, and sizable savings in a high interest account, Our focus now is buying a house where we can put our money into equity instead of rent.

    We save quite a bit of our income, but I feel like we could do better. Travel is very important to us, but we’re finding new and creative ways to finance it either via press rates through my freelance work, shaving off a day here and there to save on lodging, and overall researching so we’re never paying full price on airfare and attractions.

    I think many people are afraid of actually getting out of debt — at least in some ways. I think they believe their life will be on a perpetual money ‘diet’ and can’t imagine not feeling validated without plasma TV’s and new clothes. Some would rather have a life full of ‘stuff’ than get real about what’s going on. But there’s always ways to find money or alternative means to keep your passions part of your life. I think it makes life more fun to find free and frugal ways to do what you love.


  4. By the way, did anyone see Oprah’s special on freeganism? Freegans are people who live off consumer waste. That means unused and safe food from dumpsters, and discarded furniture, clothes, TV’s, electronics, even computers. Some freegans claim to have left corporate 6 figure income jobs and only need to spend $10-20 a week to meet their needs. It’s crazy what we throw away, just to go into debt to buy it new and then repeat the process every few months. In New York, trash day is a complete spectacle – coffee tables, art, couches, dressers, books, the list goes on. You could easily furnish your entire apartment.


  5. Maybe I need some kind of therapy, but using debt to finance things like our home and some investment properties has been very beneficial to out net worth. I really really struggle with the idea that I should not borrow even when there are financial rewards for doing so. I’m even considering carrying some debt in retirement.

    The rest of it sounds good though.

  6. elizabeth says:

    I can agree with the picking a job that won’t kill you idea, but after doing that I can’t save half of my income. I gave up a $55,000/yr job that worked me 60-80 hours a week and my only vacation was 3 weeks in the summer (when they assigned it to me). I hated it. I left when I got married, because I wanted to spend time with my husband and with my family. But now that our combined income is $52,000/yr, we can’t live off of half…60-75% maybe, but not 50%. I guess though most writers figure you won’t follow all of their advice.

  7. Venkat says:

    I think you meant, you were eager to read not anxious.

  8. J.D. says:

    Debt is Slavery is a great book. I read it last summer on a train across Ireland, and have been singing its praises ever since.

    It’s not a book for everyone, though. If you have control of your finances, you don’t need this. But if you feel like you can’t get control of your finances, and especially if you’re young, Debt is Slavery does an excellent job of presenting advice in a clear, straight-forward fashion without any sort of padding. After I read this, I thought, “Huh — maybe I don’t need to write a personal finance book. This says almost everything I want to say.”

    It’s a quick and easy read, and the concepts seem basic, but if you can grasp them, you’ll go far.

  9. KC says:

    Sounds liek a great book. Can’t agree with the title more. Once I got out of debt and got a larger and larger emergency fund and eventually additional savings I realized how free I was. I was free enough to quit my job and focus on family. I also learned that I have more options now. For instance I drive a nice 7 yr old car that has a history of transmission problems. I thought about buying a new car – which I could afford to do. Or (and this is the option I chose) I can continue to drive this car I like and just know that I have the money to replace the transmission if I need to. If I were still in debt this wouldn’t be an option – I’d be in a new car that would be putting me further in debt.

    Also I like Chapter 4. I feel like everyone is out to get my money and I’m nowhere near being rich! But whether its whole life insurance, leasing a car, buying bigger and better things, or just donating to charities (that I don’t want to donate to) everyone is trying to get a piece of you if they think you are prosperous. I’ve just had to learn to say no. But there are definitely vultures out there and the more prosperous you become or appear – the more they want from you!!

  10. Courtney says:

    Debt doesn’t completely leave you free to do what you want. I have enough savings to easily take a year off work. It would be nice. But when I want to return to work, I will have missed out on that year of experience. Employers will see that gap in my resume and will pay me less, if not just discard it without an interview. Maybe I can live on that smaller salary, but as a young person that additional money is worth more time to me later as retirement savings. Unless you’re freelancing, you’re still at the mercy of the rat race.

  11. Phil A says:

    Anybody who earns less than $40,000 a year simply cannot save 5o% of their salary.
    Take a look at the following example.

    Say your take home pay is $2000 a month:
    Mortgage- $700/month
    Property Taxes- $125/month
    Utilities- $80/month
    Health Insurance- $100/mont
    Car Insurance- $75/month
    Gas- $100/month
    Food- $150/month
    Phone- $25/month

    Total: $1355/month (68% on essential living expenses)

    These are conservative numbers too. Notice I didn’t include a car payment or any entertainment expenses). Saving 50% of your salary if you are in the lower class or lower middle class is just not reasonable.

  12. Michael says:

    I couldn’t agree more with you Trent. Debt is slavery is a great book. It reminded me of the Total Money Makeover in the sense that it delivers common sense advice in a way that makes you open your eyes.

    To Phil A:

    Obviously saving 50% of your salary is very difficult but not impossible. Let’s use your example. I can see two areas off the top that you do have some control over. First being your income. Earn more money and you will be able to have a smaller PERCENTAGE of it go towards necessities like food and utilities. Second your mortgage payment, maybe you could buy a cheaper house?

    The point of the book was to not look at possessions has “have to’s” and to not go into debt for them.

  13. Phil A says:

    I would go as far to say any debt with an interest rate below 8% is not bad debt as long as you are putting money that would have gone to pay off those debts into a well diversified portfolio. You should get an 8-12% return if you have a long time horizon.

  14. MossySF says:

    Phil A — it’s unlikely the typical American could do it. But if you say “cant'” as in impossible, I know of many examples who have lived way below your expense numbers and it only takes one example to disprove an argument.

    If we want to play the game of theoretical exercises, let’s take your $40K person. First, you’ve overestimated the taxes a bit — take home at 40K is about $2550/mo. Now, suppose this person makes a 15.5K 401K contribution at work. You might say — woah, that leaves nothing left over at all. Well let’s work out the numbers:

    Total Income = 40000
    * Standard Deduction = 5500
    * Personal Exemtpion = 3500
    * 401K Contribution = 15500
    Taxable Income = 15500

    * Federal Tax = 1950
    * State Tax (~3%) = 450
    * Social Security/Medicare = 3000
    * Retirement Tax Credit = -2000
    Total Tax = 3400

    Take Home = 40000 – 3400 – 15500 = 1750

    $1750 still is above your threshold of “minimum” expenses. If we are targeting 50% of take-home, we are at 42% and another $230 of the $1750 needs to be saved to hit 50%. If we’re taking 50% of pre-tax, that’s harder. That needs another $375/mo to be saved but I wouldn’t say impossible. Just hard for somebody who has expectations.

  15. Phil A says:

    Saving 1% of salary has proven extremely difficult for many Americans and we are talking 50%.

  16. LC says:

    MossySF – excellent respnse! You showed how it is not only possible to save 5% – you can save almost 40% of your salary without even cutting expenses. It goes to show the value of paying yourself 1st rather than last and the huge benefits of the tax shelter.

    @traineeinvestor – think of the freedom you would have if your mortgage was paid off. Your monthly cash flow would be reduced by 25-30% (on average). Not to mention the security of knowing that if you lost your job, you would still have a place to live.

  17. MossySF says:

    Of course, but if you aspire to be the average American, why are you even reading this blog?

  18. Phil A says:

    The advice should be save what you can after you have paid for your necessities and then save the rest (whether it be 1% or 50% of your salary). Treat yourself to something nice every so often to maintain your sanity. Just don’t buy too many things you don’t need for you will be a debt slave.

  19. Jean says:

    This is one of my biggest pet peeves. Debt is not slavery. Debt is debt. It is inert. It’s your own perceptions of it that is “enslaving” you. If you choose to act like a victim, you will be in debt in some way or another to something.

    We have choices in our lives. (Oh — yeah — Marketing is not evil, either!) A manufacturer makes a product, an ad agency lets you know about the product and it’s up to you to buy IF YOU WANT TO. No one is holding a gun to your head.

  20. Cat-Daddy says:

    Jean, I sort of agree. I have never carried debt– worked through school, used credit cards as cash, drove a clunker for years– and it has been extremely freeing to me. But that’s because I’m okay with a smaller lifestyle. Some folk, I think, don’t understand debt. Maybe the book could be titled, “Lack of Knowledge is Slavery.” More to the point.

  21. Eric L says:

    Chapter 6 was interesting for me. I’ve been considering moving to L.A. with my wife and young child for the sake of my career, but when you consider that the most valuable things in life are your experiences (or quality of life?) it may not be such a good idea.

  22. Sean says:

    Jean- Sure, the phrase is a bit of an exaggeration, but the underlying idea is correct–debt is an obligation, and like any obligation, restricts your choices. It can be a tool, and it can help you accomplish your goals, but at the same time it constrains you.

  23. J.D. says:

    Jean writes: This is one of my biggest pet peeves. Debt is not slavery. Debt is debt. It is inert. It’s your own perceptions of it that is “enslaving” you. … (Oh — yeah — Marketing is not evil, either!) … No one is holding a gun to your head.


    Yes, you’re right. But you’re also wrong. Perception determines reality. Have you ever been deep in debt with no hope for escape? I have. Sure, I put myself there, and I freely admit that. So do most people who are in debt. But that doesn’t change the fact that it feels like slavery.

    William Isaac Thomas once wrote, “If men define situations as real, they are real in their consequences.” He’s right. It doesn’t matter whether something is “only mental” — it’s still just as real as if it were an actuality. And just because it’s not real for you doesn’t mean it’s not real for somebody else.

    Finally, marketing may not be evil, but it’s specifically designed to subvert the consumer’s will, her better judgment. Do you know why transnational corporations pump billions of dollars into advertising campaigns every year? Not to “let you know about a product”, but to persuade you to buy a product. There’s a subtle but important difference here. Advertising and marketing are not about information — they’re about persuasion. Marketers are very good at what they do. They know the tricks that work. Consumers are not, in general, equipped to defend themselves.

    Yes, it does all come down to personal responsibility. But there are plenty of people out there trying to subvert this sense of responsibility in all of us.

    These facts don’t mean that people are “acting like victims”. That’s some weak sauce right there.

  24. Brent says:

    I think that people are reacting the the term “slavery.” We have some baggage in the U.S. as far as it goes.

    Slavery: bondage: the state of being under the control of another person.

    Slavery as a word does not mean that you are being beat or in forced labor camps, etc. If you take a classical view of slavery, (Greeco-Roman, Jewish, Christian, Muslim, etc.) you are putting yourself under some one elses control when you borrow money on credit. Let me work this out for you.
    You get paid wages in exchange for your labor.
    If you do not have enough wages saved up for something you want to buy you have to borrow.
    Borrow means you are making a legally binding agreement with the lender that your future labor belongs to them until you pay your debt back.
    That means you are no longer working on your own will, but because your lender and the law now requires you to work.
    You are now under the control of another person.
    That is the technical definition of slavery.
    There you have it.

  25. J.D. says:

    I think that people are reacting the the term “slavery.” We have some baggage in the U.S. as far as it goes.

    Ah. Could be. That’s funny because I actually secretly think of it as “Debt is indentured servitude!” :)

    (I’m not kidding.)

  26. luvleftovers says:

    $700 mortgage???? where?????

    You can’t rent a closet for that around my area!

  27. laura k says:

    My debt (well, some of it) is actually making me money! When I finished grad school my intention was to pay off my student loans in 18 months. I had the money to do that with no problem, but I just found out that I get a $595 rebate at each of 12, 24, and 36 months if I make all my payments on time. With the amount I still owe, I will pay ~350/year in interest.

    Not only am I making $245/year just having the loans, but I am also investing the several hundreds of dollars I had been using to prepay the loans. As my dad (an accountant) said, Almost makes you want to go out and incur more debt!

  28. Kari says:

    It’s not the easiest thing to spend less in an era when everyone is trying to keep up with the Jones’. But spending wisely can be aided in part by how you physically spend your money, for example, with a reloadable prepaid debit card, like the UPside Visa card. Unlike a debit card from your bank (which many allow overdrafts, getting you into even more debt), you are only able to spend what you put on the card. You are able to fund the card periodically or automatically with allowance schedules, from family, friends and employers. And with multiple plans to choose from, you can find a card that fits you and/or your family’s lifestyle, as you can get the card for yourself or one for family members that are either already in need of debt-help or you would like to teach healthy financial living to, like your kids (as young as 13 years of age).

  29. savvy says:

    You didn’t specify whether that 50% was gross or net. I will assume net because I’m not sure saving 50% of your gross salary is really that feasible unless you live like a spartan. We tithe 10% and taxes are another 20%. If we saved 50% then we would only have 20% for living expenses. That said, we do save 25% and I’m sure we could do better but then again, I like my lifestyle.

  30. CreoleIvy08 says:


    Now that’s marketing at its finest!

  31. Here’s my question. Say, you’re working hard to pay off all your debt, you’re living frugally below your income to have more money, you only work the time you want to work at a job you love and then you have all this…..time.

    Now, if I want to do something other than read, do crosswords or walk the dog, where to I get the money?

    Trent makes a good point about going to Disney World with his six year old vs the flat screen (although I bet a few hours with the six year old and a Wii and the flat screen might be fun) but that’s about priorities not about time.

    Frugality is good, debt is bad (I’m personally on the Dave Ramsey diet)but at what point do you say, “I wanna have some fun!” and spend money to do it!

  32. Mr. Nickle says:

    This year, I finally achieved saving 50% of my *pre-tax* income. It took years to get to this point, but I’ll share how I did it.

    I started with saving 10% of my gross pay from every paycheck (in a retirement plan) and putting another 10% (sometimes more) towards paying down debt (mortgage and some student loans – my car was already paid off 8 years ago).

    Every year, as I got a raise, I applied the full amount of my raise to my savings. So every year, my savings rate went up at least 3%-5% (and one year as much as 10%). I applied the full amount of bonuses to paying down debt.

    By maintaining the same standard of living (and eating the impact of inflation, which I didn’t really notice in most cases), after 8 years I have reached a savings rate of 50% (and I am now almost completely free of debt).

    My 50% savings gets allocated as follows:
    15% 401k (plus what my employer kicks in)
    10% Index funds in my taxable account
    10% Employee Stock Purchase Plan
    5% Roth IRA
    5% High-yield savings account
    5% Purchase of I-Bonds via Treasury Direct

    All of this is done via direct deposit or other withholding, so I am never tempted to spend the money.

    I am 36 now and I expect to be able to retire with my current standard of living in 10-15 years.

  33. Peter says:

    @ Mr. Nickle Another way for folks to look at it is that even if you started with saving 10% and added 1% per year, after 40 years (e.g. retirement) you’d be used to living on half your earnings. I have also, to a lesser extent, used this plan to help fund my kids college and increase my retirement over the years. Once the kids are in college, that same level of savings can be switched over to my personal savings.

    @ Ken Who says you can’t spend money for fun? Part of you’re budget, once you’ve got an emergency fund, and the debt is paid off should be put towards vacations or other fun stuff. The only point is you don’t go nuts on it, you plan for it and save for it and not go back into debt for it. It sounds like you’re considering this a debt diet. But no diet really works if you get to your goal weight, then stop exercising and start pigging out in celebration. If you do it right, you can probably ease back on the intensity a bit and it should be easier to maintain your lifestyle while still meeting your goals. Hopefully through the process you learned that you control what you choose to spend your money on, so lay out a plan forward to hopefully include some mind blowing trips and excursions.

  34. Monevator says:

    I get the sentiment, but the ‘buy experiences not things’ meme that’s running about the saving community (for want of a better word) isn’t unchallengeable, in my view.

    We all know we don’t remember everything. Who over 40 remembers they’re college years in great detail? I know I saw hundreds of bands, but I can’t remember more than a dozen or so.

    At least if you buy a bit of land you know you’re going to be able to walk about it next year, rather than wondering where it went.

    Don’t buy anything with debt though, quite agree.

  35. David Hunter says:

    Personally I am on the side that debt for the sake of investment’s isn’t always a bad idea.

    However on the side of those who think of debt as slavery let us translate the word mortgage from it’s word roots:
    Mort = Death
    Gage = Grip
    Mortgage = Deathgrip…

  36. Lisa says:

    Perhaps instead of thinking about SAVING 50% of one’s income, one could work on SPENDING LESS than 50% (after putting $ into retirement plans and scheduled savings accounts). I agree that this is a subtle difference but it is worth considering. It keeps one constanting looking for a way to minimize expenses, socking away small amounts at a time. Also, it moves one away from “deprivation mode”, which in my mind says, “I saved, and therefore I do not have it to spend.(deprivation)” Instead, one should have an “abundance” mindset towards spending that says, “If I get this $14 shirt instead of this $17 shirt, I will still have a great shirt (abundance) and also save $3 (abundance again).

  37. overcoming overspending says:

    I am always amazed also at what some folks say they are paying for gasoline. Where I live it is now $3.20 per gallon. Above someone else mentioned $100 a month on gas? I am paying close to that per week! I guess it all depends on what kind of car you drive (I do not and never will drive an SUV or a truck) and how far your commute is. I drive around 60 miles per day to and from work. Why don’t you move closer to work?, you might ask….well, rents are about double in the town where I work. Life these days is expensive….no way around it. And now I hear that gas will be closer to 4.00 per gallon come summer time….YIKES.

  38. nancy says:

    I think the expenses Phil listed are on the low side. Our expenses for 2: mortgage: 486, food 160
    car ins: 116, home ins: 36
    prop taxes: 150
    health ins for 2 via gov’t employer: 350
    gas for my car for work: 301, 310 more for spouse
    electric: 108, gas for heat: 120, water & sewer:66
    cell phones: 79, house phone: 39

  39. bigbuddha says:

    hmmm … don’t buy anything with debt. OK, so if every individual followed this track, how could anyone possibly look to expand or even purchase a half decent business.

    Debt for investing purposes is a very valid strategy.

    It’s what makes the world go round economically.

  40. Macinac says:

    While I agree with the principle, I think it’s clear that not everyone can save half their income. For one thing, as you go to smaller and smaller incomes this becomes harder and harder. For another, people who have large obligations relative to their incomes will find this difficult (suppose you had nine kids and made minimum wage).

    I do understand that people survive at every level, so that in general one could reposition to a lower place and still get along. For some incomes, though, that lower level looks too unattractive. For example, some people will cut by going from steak to chicken. Others will go from chicken down to eggs. Yet others will cut out the eggs and eat only potatoes. Finally, those already having only potatoes will eat every other day.

  41. I’ll have to check it out! There truly was nothing more liberating than the feeling of paying off my last non-mortgage debt. Can’t wait to get the house paid off, but it’s going to be a while!!

  42. boardmadd says:

    IF you cannot do 50% out of the gate (I know I can’t currently) start with what you *can* do (perhaps you can do 15% to start or even 5% if that’s all you can really muster). Make a commitment every quarter to raise the amount of ssaving by 1%. This was a trick that I used to allow myself to make adjustments gradually and experiment on methods that would allow me to meet the goals instead of going into severe austerity mode. Austerity can be great for short term boosts, but it’s really hard to live that way long term. By allowing yourself the opportunity to try things out at a 1% increment each quarter, you get the opportunity to really see if your changes are one’s you can stick with. If you determine that 1% is too slow or conservative, up it to 2% or 3% per quarter :).

  43. Lise says:

    I seem to agree with all points but the last. I’m beginning to move away from the “owning is better” philosophy, largely because I think such large, fixed possessions are slavery of their own. If you don’t want to deal with maintenance, you should not have a house. And if you do have a house, there is no guarantee that that’s a winning investment over renting, especially if you take into account your hourly wage for maintaining it. Same goes for leasing vs. buying a car.

    Think what you would do if you needed to move: what would be quicker: selling your house and car, or ending your leases?

  44. Fern says:

    The real irony here is that if you follow the “no debt” mantra, your credit score will really drop. I guess if you’re sure you’ll never again need to finance a car loan, a mortgage, student loans, etc., then your credit score doesn’t matter. but it’s impossible to anticipate every future event, sidestep emergencies, etc. So then what do you do? We don’t always have the luxury of timeto defer buying a new vehicle until we’ve sasved the cash if the old one died and we need to get to work.

  45. Troy says:

    Love the site

    Debt is slavery? Not so much. Cute title intended to garner interest, and it works. Debt is debt. It is a tool, as all money is. Most people do not know how it works, or how to use it, but debt is not inherently bad, just improper use of it.

    Slavery is “The state of one bound in servitude as the property of a slaveholder or household.”

    That generally means being a slave is by force, not choice. Debt is not by force, all by choice.

    The problem most people have with debt is they do not understand it. Most people live paycheck to paycheck. They use debt not as a tool, but as a crutch to live beyond their means. Debt is not bad, spending more to live than you have or earn is. But that is not as catchy a title.

  46. Aaron says:

    Last November I decided to employ most of the strategies you just summarized here. Since then I’ve paid off $16k in consumer debt and school loans. I earn $43k a year after taxes, so that equates to over half my income that I can put in savings. This idea is obvious once you’ve really committed to being debt free and staying that way.

    To Troy:

    I couldn’t disagree with your comment more. Debt makes other people richer. That’s all there is to it. There are fundamentals in finance, and when you try to obscure them you’re just setting yourself up for long term trouble. Debt does restrict freedom, the clear intent of the author’s use of the word slavery. When you take on a mortgage, you give away a piece of it to some faceless bank. Which is better, to wait and pay for property entirely in cash or get it now and tie yourself down while helping to enrich banksters? Likewise, why get a car loan instead of using cash to purchase the car you can afford.

    Maybe debt is a good tool for creating illusions, but then I don’t believe that illusions have value.

  47. tomas real says:

    Liberty is the freedom from debt. Being in debt is to be owned by your obligation to pay. We had debtor’s prisons in the United States until 1833. How can anyone believe that being owned in this way by another is to have liberty? Doesn’t the word liberty come from being liberated? Liberated from what? Liberty is to be liberated from debt. Even the lords prayer says forgive us our debts as we forgive our debtors.

    Obviously when the government puts you in eternal debt as they do with property tax they have prevented your ability to acquire liberty.

    Being forced into debt with property tax means we can never be free. Because of property tax you can never own your home and you can never be free from debt. If you cant own your home what can you own? Althought this book has hit the nail on the head the fact is our government has made liberty impossible by stealing the ownership of our homes.

    Perhaps the greatest lie ever told is the American Dream of home ownership as property tax clearly prohibits ownership making it impossible to ever become free from debt. Property tax is the evolution of serfdom where kings and lords have been replaced by rulers of the State. This medieval extortion, collected on unrealized capital gains, makes the peoples homes into investments of the State. Property tax forces the people into government servitude in order to keep their homes. Clearly as in the past, modern day serfdom is intended to prevent the people from ever acquiring liberty. With property tax the people must pay with government currency. Gone are the good old days when you could pay with chickens, some other farm product or manual labor.

  48. snapicus says:

    My wife and I went through Dave Ramsey’s Financial Peace University shortly after getting married. We’ve been paying down our debt at an incredible rate after we decided we were going to put our shoulders into it, cut down to nothing and go nuts. I’m very interested to read this book and see if he has anything to say that Ramsey hasn’t.

    We’ve paid off $56,000 of $63k on a household income of $55k annually in 24 months and will be debt free very shortly. It IS possible to save 50 % of your income, you just have to decide that you’re going to, then find the way to do it.

    Let the “sophisticated” broke people have their theories about good debt and playing the money game. I’ll settle for being a rich, debt-free simpleton.

  49. Jeramiah says:

    @ Troy (#46)
    Your comment that slavery is not a choice while debt is a choice is wrong. Many people in history has chosen to be a slave. Even the Bible talks about if a freeman chooses to be a lifetime slave he can. Slavery can often be a choice.

    Not all slave masters have the same rights and bondage has it’s benefits. Slavery is anytime where one has obligations therefore slavery is a necessary part of life. As the Apostle Paul said, he was a slave to God.

    I am eager to read the book since I have had it suggested to me more than once.

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