This took a long time before the machinist is writing about this topic. The reason is not ignorance, but I just have no personal experience in this area.
I’m speaking about consumer debt!
Like described I grew up in a tiny German village in the 70s and 80s of the last millennium. People didn’t have that much and they knew nothing about the stock market or Financial Freedom but debt in general was a thing to be avoided. Cars where never loaned or leased but mostly bought used and paid for in cash. The only acceptable debt was a mortgage and even this was paid off as fast as possible.
Now I know that debt as such is not a bad thing and can be fine or even elementary for a corporation or leveraging personal investments. The Machinist currently carries six-digit Dollar debt to increase the return on his investments. (To borrow money for about 1.2% and to invest it afterwards for more than 6% is too good to be left alone). Also a mortgage for a property can be financially rewarding after comparing that purchasing made sense in your area and in your personal situation.
In addition to health, physical fitness, and choosing the best place to live, this blog is mainly about generating passive income streams that are perpetually shoveling more and more money in your direction without you having to do anything until you are financially independent. Fantastic!
If you choose passive stock ETF as income generators, thousands of the world’s biggest and most successful companies and their employees are working day and night to give you the bulk of their profits. And this simply because you are now owning small parts of all this companies. Any normal thinking person should permanently invest the bulk of his or her net worth into such passive income-generating assets. I don’t know of any other investment vehicle that is as safe and profitable in the long-term and thus more liberating as the stock market. It survived world wars and hyper inflation’s even in the worst hit countries where everything else crumbled to dust.
Ok Machinist! I know your melody now. But what is a slave machine?
A Slave Machine
is actually nothing else than a Freedom Machine which runs in reverse. Instead of pumping more and more money into your direction and making you free, a Slave Machine takes money away from you every day. It makes you poorer and poorer and if you do not work very hard against it, this machine will become more powerful by the day. The money flows are getting bigger due to compound interest.
And why should someone voluntarily take part in such a machine?
Well, I often ask this myself. The reason is probably a human weakness. People want to have consumer goods instantly without having the money to pay for them now. So they want to pay them “sometime later”. This “sometime later” means nobody else than your future self has to pay for them. You lock your own future version of yourself as a slave into the Slave Machine. And all this to consume more now than you can afford. Congratulations, fantastic job! Cant you threat yourself a bit nicer?
Usually, the bought item is quickly depreciating consumer stuff such as the latest gadget, furniture or a ridiculously overpriced car. It is the ultimate self-deception. You are going to short change the person you should take care of the most. Yourself!
wrote more than 200 years ago: “I must create a system or be enslaved by another mans”. Consumer debt is the ultimate slavery system, where money is mercilessly transported from the debtor to the “system owner”. Money of an employee is nothing more than an exchange of his time for financial compensation. It is his life energy! If this money is now sucked away, it is nothing else than life energy taken from him. You have voluntarily agreed to enter this system caused by a lack of impulse control. Everybody has dreams. But you threw away your real dreams for the shallow fulfillment of a short-term craving.
The system has exploited your human weakness. Many people do not really think about this. A permanently carried credit card balance with let’s say 15% interest is enough to pay for the (probably already completely worthless) consumer good once every 7 years! There is nothing of value left, but the debts are still there. Removing energy from your life every day. What’s even worse is that this excessive consumption has likely created a habit in your brain that brings the risk of further excessive debt.
The Machinist loves credit cards. They are such a great tool. Things that are purchased with them are insured. Credit card companies give you several weeks of free money before you have to pay them off and with a good credit score you will get up to 2% discount for all purchases with them. I mean that’s fantastic! What’s not to love about them?
Well, for people who cannot avoid the temptation to overspend there is a lot not to love about them! Here we are again at the permanent balance running individual getting slammed with highly negative interest rates. Welcome, you are officially “enslaved by another mans” system. You are working for him and you have to fight really hard to stop this insanity.
We are here in the Freedom Machine and do not make such nonsense. If you are still carrying consumer debt from your own past, the Machinist will look deeply in your eyes now: Pay your consumer debts off as quickly as possible! Pledge to never carry a credit card balance in your life again and if you are not able to do this, give your cards back or destroy them now.
So Instead of continuing with this nonsense, clear your debts and put your new excess cash flow into passive income producing assets. This can be individual stocks, equity / fixed income funds (ETF) or rented properties.
Say no to slavery and build your own Freedom Machine!