In the US people seem to have a debt mentality. They make purchases based on the payment instead of the cost. This of course leads to buying many unnecessary items. If you think something is only $50 (per month), it is much easier to purchase something than if you think of it as costing $6,000 over the next 5 years.
I think this is partially due to poor math skills and partially due to a consumption mentality. People like to buy things to make themselves feel good. The problem is, this type of mindset contributes to debt and it also contributes to a great deal of conflict and unrest people have in their lives.
On the flip side of things, someone who approaches everything with a debt free mentality tends to think of purchases in terms of total cost compared to the value received. Someone who thinks debt free is going to see a cell phone as a $600 per year expense and carefully weigh that $600 against the benefits of saving the money.
People who consistently think debt free tend to have much lower stress levels because the don’t have to worry as much about money. Since they do their best to put money aside in savings, they are prepared for little emergencies like an unexpected car repair. Also since they spend more time figuring out what they really want they have more money to spend on the areas that are important to them. For example, someone who has a debt free mindset may easily decide that cable television isn’t worth the $700 per year that it costs. Instead they may put that money into signing up for a DVD rental club and investing in a sound system to better enjoy their movies. Their money goes further because it is focused on their personal preferences instead of spending it on other things (like cable TV), just because it is “normal”.
The debt free mindset is about knowing yourself and setting your priorities in a way that is customized specifically to you. The debt mindset is about following the crowd and spending money because that is what other people are doing.
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