Not Falling Prey to Indentured Servitude

As yesterday was a holiday, I rented a couple of movies to enjoy while staying inside from the heat of the day. One of the films I watched was Maxed Out. This documentary style film, in the vein of Michael Moore, exposed the problem of indebtedness in America.

After reading Your Money or Your Life several years ago during a mountain retreat where I had an an epiphany regarding time and money, I became enlightened to the possibility of early financial independence. The road to financial independence was not just to earn more but to also control expenses. Financial independence did not have to be defined by vast wealth. All that was needed was residual income greater than expenses.

At that time, I had around $5000 in credit card debt plus a car payment. I had decent pay, was a regular saver/investor, and had previously paid off $5500 in student loans early. I remember thinking that there was nothing wrong with having $5000 in credit card debt - I always paid more than my minimum payments. Everyone had credit debt. Heck my friends were even taking out home equity loans.

But lightbulb a went on - Why am I carrying debt? It was costing me more over the long run for the mental comfort of having more cash to myself. If I really could achieve financial independence before retirement age, I would have to be completely solvent. So I began writing huge checks each month to pay down the credit card debt. I learned the true cost of credit card debt by having to part with large sums of money. If people were to make purchases on a cash basis, I think they would be less likely to spend freely. Paying with plastic feels numb. Paying with cash feels painful.

For the most part, I adhered to staying debt free. I incurred debt when I bought my house and needed the instant gratification of furnishing it. However, I stuck to an aggressive repayment plan - paying down the furniture and hardwood floors debt before the special no-interest periods expired.

Prior to taking a planned six month time-off from work two years ago, I was debt-free. I had been debt-free for years, during which time I redirected my income to saving and investing. Thus, paying my monthly bills (including a mortgage) during my sabbatical was not a problem. I even managed to do a modest kitchen remodel, travel, and gift $10K to needy relatives.

So now again I am between "jobs". I have no debt, a six-figure retirement account, and money in my bank account equal to some people's annual pay. Still, I got little nervous after watching Maxed Out. While some people are unable to make ends meet, I just up and left my six-figure job.

There was a quote in the movie John Q, where the lead character played by Denzel Washington told his son:

"And if you have a chance to make money, go for it, even if it means selling out once in a while. Don't be a knucklehead like your father. Everything's so much easier with money."

I really do hope that this second escape "takes". I can't deny that this quote gives me cause for some doubt and fear. I have to remember that indentured servitude can be either to Debt, to Corporate America, or both.