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The Constantly Moving Target of Debt Freedom

Erasing Debt

In my line of work as a professional cheapskate, a week rarely passes when I don't receive a money-related press release or see a news item that leaves me shaking my head about people's attitudes and behavior when it comes to money.  Adlai E. Stevenson said it 50+ years ago, but it's apparently all the more true today.  Stevenson said:  "There was a time when a fool and his money were soon parted, but now it seems to happen to everybody."

The latest such news item to catch my eye was this recent poll commissioned by the website concerning the age at which most Americans finally expect to be entirely debt free.  The results were pretty disheartening, but in some ways not surprising and not totally hopeless.

The bottom line of that survey is that, on average, the Americans polled expect to be entirely debt free - including a fully paid off home mortgage - by age 53.  On the surface of it, that doesn't seem too discouraging, particularly in light of the fact that the average American is now expected to live until almost age 80.

But as is often the case with opinion surveys, the real story is in the details.  This survey only deals with people's opinions, namely when they believe they'll be debt free. In fact, their opinions on the subject turn out to be extremely optimistic compared to the reality of the situation, given that a majority of Americans will enter retirement with outstanding debts and nearly half of us will die still owing money, even though in many cases our estates may have sufficient assets to finally retire those debts.  That's the ultimate case of better late than never, I suppose, although it's sad to think of not living to experience the joy of being debt free and sense of financial independence that comes with it.

One of the interesting aspects of the survey is that people's expectations of when they think they'll finally be debt free keeps advancing as they age.  So, 18-24 year olds are the most optimistic, believing they'll be debt free by the still youthful age of 33; 25-34 year olds predict age 38; 35-49 year olds say age 56; 50-64 year olds predict age 62; and at age 65 expect to be debt free at age 77, if ever.   With Americans taking on debt at an ever younger age - and with the average American now expect to pay more than $600,000 in interest during their lifetime - it's little wonder that debt freedom is a target that always keeps moving out of range.

Keeping debt out of your life, and paying it off as quickly as possible when you do incur debt, are topics that my debt-fighting colleague Lynnette Khalfani-Cox (AKA "The Money Coach") and I have written a lot about her on the AARP website.  The first step is to teach your children (and yourself!) the simple old-school rule:  "If you can't afford to pay for it now, you simply can't afford to buy it now."  What I call "spending procrastination" - putting off buying something today until you have the cash to actually pay for it tomorrow - is a great virtue, not a vice.  Avoid impulse purchase like the plague, since those are purchases you'll likely regret later and are often tempted to pay for with plastic.  And finally, as is so apparent from the findings in the survey, refuse to allow your lifestyle and spending to constantly escalate throughout your adult life to consume all of your increased earnings, and then some.

Wouldn't it be great if in a future edition of this survey, the average American would be looking backwards when polled , and revealing the age at which they actually became debt free, rather than always looking forward toward the time when they hope to be?


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