“All debt is bad.” This is perhaps the silliest of all financial advice. Our whole financial system is debt based. All of it. Every dollar that physically exists is issued as a treasury bond. That’s debt. Every digital dollar that exists is created as an IOU in the banking system. That’s debt too. The very currency we use is debt – so unless you plan on bartering or using gold and silver coins, debt is unavoidable.

That’s all well and good, but we don’t have any say over our currency system. True enough. My point in explaining the nature of currency is to show how deeply entrenched debt is in our financial system. It is designed to run on debt. In many ways it will cost you for not using that system. For example, not having credit cards (that you use responsibly) will lower your credit rating. So unless you are sure you’ll never need a credit check for anything you don’t want to get rid of them. For most of us we need a mortgage to buy a home and loans to buy our cars. The only alternative is that we rent – where we pay someone else’s mortgage – and buy less reliable, less safe cars we can afford with cash. How appealing.

For those with enough cash to realistically pay up front for a car and even a house (the top 5% or so), consider this: your retirement portfolio is full of treasuries and other bonds. All debt. Even if you own a share of a company, that stock is debt!

The real issue is how to responsibly use debt. That will be for next time.