Archive for February, 2009

Debt and Wine

February 8th, 2009 2 comments

Debt is like wine.  A glass or two during a night out can take the edge off and make the evening a little more enjoyable.  Drink two bottles though and you’re asking for a hell of a hangover.

I’m in a relatively good financial position right now, but I can easily look back and see a different path I could have taken.  For example, the wife and I could have bought a more expensive house by using an exotic mortgage instead of our modest townhouse financed with a 30 year fixed loan.  

My truck will be paid off in about a year from now, but I could have easily traded it in for a new loan on a nicer car.  I was especially tempted to do this when gas prices hit around $4 and I was paying about $80 to fill up the tank.

If I had done these things, essentially drinking the whole bottle of wine, I would have been asking for a hangover.  My company just announced it will not be giving any cost of living increases this year, and many people are being laid off all over the country.  Right now, if either the wife or me got laid off, we could probably get by long enough to find another job.  

Unfortunately, many people aren’t in this position.  Either they bought too much house, thinking prices would continue rising, or they bought whatever they wanted, assuming a stable job would allow them to pay off the debt later.  

Hopefully, I’ll remember this in the future and practice self constraint when others around me are living it up and getting drunk.

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