God, do I hate to pay interest! To anyone. For anything.
I abhor paying interest, and I avoid it like the plague! You should too.
I think that most people who currently enjoy a life of financial freedom have this distaste of interest payments hard-wired into their brains. I am absolutely convinced that this trait must be present in any household CEO who insists on running her household like a well-run business. If the trait isn’t inherently present in the household CEO, then it must be learned. Otherwise, the odds of achieving a life of financial freedom will be long indeed.
And remember, just as it is true that you do not have to be rich to be financially free, it is also a fact that wealth does not guarantee financial freedom. The sad case of Ed McMahon is a prime example of a supposedly wealthy person who is actually far from being financially free. Most people like McMahon, who find themselves in the ironic position of being indentured servants despite their high incomes, can trace their predicament on a general apathy towards debt and the insidious interest that comes with it.
And before many of you start banging on your keyboards to say I am being too militant regarding debt, I will say that I do not avoid debt entirely, as I could not have bought my home without a loan. But that’s the only interest I pay. And I am making extra payments on that loan in order to ensure that the home loan is paid off before my first child graduates from high school.
To me, it is perfectly acceptable to pay interest on a home loan, assuming one does not buy more house than they can truly afford (to me, that means your debt-to-income ratio for housing expenses does not exceed 28%).
I understand that there will be different circumstances for different people, as some of you will need to take out loans for education, a budget-appropriate automobile, medical emergencies, and other items that are considered needs for your household. But the savvy household CEO understands that the power of compound interest cuts both ways and, therefore, always thinks long and hard before agreeing to take on any additional debt.
In the end, those of you who are successful in minimizing the amount of interest you pay to your creditors will also be successful in managing your household finances and attaining a life of financial freedom!