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Nobody Taught Us  ·  Article #5
Debt  ·  9 min read  ·  Step 5 of 8

Nobody taught us that debt should
buy assets, not lifestyle.

The right loan can build your future. The wrong loan quietly borrows from it.

9 min read Debt Step 5 of 8
✓
Salary
✓
Money Habits
✓
Emergency Fund
✓
Insurance
5
Debt
You are here
6
Investing
7
Retirement
8
Financial Freedom
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The Story

Arjun and Amit started their careers together.

Both earned similar salaries. Both took loans in their early thirties.

Arjun bought a luxury SUV.

Amit bought his first home.

Ten years later

Arjun's car had lost most of its value. The EMIs had long been forgotten, but the money was gone forever.

Amit still had EMIs. But he also owned an appreciating asset and a place his family called home.

Neither loan was "good" or "bad."

The outcome depended on why they borrowed.
Nobody had taught them that.
Nobody taught us this

Debt isn't dangerous.

Thoughtless debt is.

A loan is a tool. Pointed at an asset, it builds your future. Pointed at a lifestyle, it quietly borrows from it.

Before taking any loan, ask four questions

Why am I borrowing?
For an appreciating asset? Or to upgrade my lifestyle? The answer predicts how you'll feel about this loan in year five.
Can I still pay this EMI if I lose my job?
If the answer is no, the loan deserves a second thought. Your emergency fund and this answer are directly connected.
Will this purchase matter five years from now?
Many expensive purchases lose their excitement long before the loan ends.
Am I buying because I need it?
Or because everyone around me has one? Comparison has created more EMIs than necessity ever has.

Not all debt is equal

Usually productive debt
  • ✓Home loan, within your affordability
  • ✓Education loan
  • ✓Business loan
Usually lifestyle debt
  • ✕Credit card rollover
  • ✕Personal loans for vacations
  • ✕Consumer loans for gadgets
  • ✕Borrowing to impress others

Every EMI reduces future flexibility

Before signing any loan agreement, remember: your future salary has already been committed.

The bigger your fixed commitments, the fewer choices you have later. A job change, a career break, a family need. Every option gets smaller as your EMIs get bigger.

The real goal

Your goal isn't to avoid debt.

Your goal is to make sure debt creates more value than stress.

Ask yourself

The lesson

Nobody taught us that the cost of debt isn't just interest.

It's the freedom you give up every month.

Letter to my younger self
Dear Kuldeep,

Before asking, "Can I afford this EMI?"

Ask, "Will this decision still make sense five years from now?"

Borrow carefully.

Future freedom is worth protecting.

— With hindsight

Borrow to build your future.
Not to finance today's lifestyle.

?
Before you move to the next step...
Answer all three honestly. When every answer is yes, you're ready for Step 6: Investing.
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