Many people don’t realize this but their personal freedom is in danger.  I’m not referring to conspiracy theories, corrupt politicians or even terrorism.  The biggest risk to personal freedom that will impact your daily life is coming from banks and other financial institutions in the form of debt.  If you are like me, your personal freedom is very important to you.  Many of the financial, professional and personal decisions I make often revolve around not limiting my personal freedom or my ability to live my life the way I want to live it. That is why when it comes to taking on personal debt I am very cautious.

What does debt have to do with freedom? When you are in debt to somebody that person becomes your “master” and consequently you become their servant at best and a slave at worse.  I don’t mean the literal meanings of these words but when you are in debt to somebody that person controls your life in a very similar way.

A simple look at recent history will do a great job at illustrating this relationship between debt, slavery and freedom.  The American Civil War ended in 1865 and slavery in America was over. However the system of slavery was quickly substituted for what was in many was a much worse and harsher system, a system that was based on the relationship of debtor verse debtee. This system was sharecropping.

Sharecropping worked like this.  These newly freed slaves now needed jobs and places to live.  Their previous owners gave them the following deal.  The landowner would give the newly freedmen all the necessary tools, supplies, housing and food they needed to work the fields on credit. In return, at the end of the harvest the workers would receive a share of the profit, after all debts were paid off of course. Since the landowners were the only ones that could understand the debt agreement and were charging large amounts of interest it isn’t surprising the profits were never enough to fully pay off the workers’ debt.  So the workers would be forced to work the next year to pay off the previous year’s debt plus any new debt incurred.  This cycle continued accumulating more debt until it became accepted that the debt would never go away and the workers would forever be working to pay it off.  These newly freed people were re-enslaved by their own debts to the landowners.  Their life was no longer their own but belonged to the landowner.

While this situation is a bit extreme it isn’t necessarily unrealistic.  Many people have chosen to lose their life in their own version of sharecropping.  The banking and financial institutions have successfully convinced many good people to go into huge amounts of debt with credit products they don’t understand.  They’ve shifted the common sense from paying off debt to only worrying about affording the monthly minimum payment.  The last step in this enslavement process by the banking institutions is getting you to the point where all of your monthly income is going to those monthly min payments with no chance of being able to pay it off.

The people in this position have many things in common with the sharecroppers.  Everything they think they own actually belongs to the bank.  Just like how all the sharecroppers’ possessions were actually owned by the landowner.  These people don’t work to improve their life but for a debt that will never go away.  These people are no longer free to live their life because of their huge obligation to the bank.  Their life is no longer their own but their banks’ and employer’s.

What is important to take away from these stories is that all debt comes with some amount of control and takes away a bit of your freedom.  Understanding this is important to being able to effectively manage your life and continue to be the one in control of your life instead of someone else or some institution.  I will choose freedom over servitude every time.

-T!

The Second Opinion

Today in the mail I received an ad with an offer to buy an apartment in a new building in Shinjuku (a busy and convenient place in central Tokyo). It was 1LDK condo, 36.7m2, in neat condition. According to the ad it would be possible to get financing for 3.05%, paying just about 1,000 USD per month… for the next 35 years! Is it an offer to enslave myself voluntary? I understand that the apartment is very nice, frankly I would like to live there, but 35 years to repay the mortgage?! How much self-confidence and confidence in his financial future should a buyer have to sign such a contract?

I don’t want to be a slave for a bank for the rest of my life because my freedom is more important for me than a fancy apartment.

-O.