Cash is King!

"Debt is Dumb, Cash is King” - Dave Ramsey


What is debt?

Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase (www.wikipedia.com,retrieved December 12, 2020).


Reasons Why we incur Debt

1. We cannot afford the purchase at that particular time

2. We think we will have the funds later

3. We Binge or peer pressure shop with friends

4. Need Transportation

5. Emotional spending

6. Education

7. Lack of savings and/or budget account

8. An emergency occurs that requires a financial expenditure

9. Loss of income

10. We just don’t care

The more distant we are from cash the easier it becomes to invisibly spend it by using credit cards. We cannot feel the cash or see the cash leave our hands to make a purchase. We are not mentally ready at the point of purchase to devise a payment plan to clear the purchase in full.


Large expenditures are somewhat different, such as car loans and student loans. We clearly do not have the funds to make payment in full, however good credit affords the grace of long term installment payments. Unexpected loss of income from the bread winner in a household may result in incurring survival debt.


Who is responsible for the debt?

  • The Individual who legally incurred the debt*

  • A surviving spouse may be responsible according the laws of their state*

  • The estate of a deceased family member through probate*


Protection from Debt

  • Pay with cash whenever possible

  • Avoid overspending or unnecessary spending

  • Save, Save, Save – have a cash account

  • Plan, Plan, Plan – when purchasing major items such as an automobile

  • Secure scholarships, purchase college tuition plans

  • Consider a low investment Entrepreneurial venture over college

  • Consider a survivorship/beneficiary/trust plan to cover debts for loss of life or accelerated death

*consult with an attorney for more information

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