Myth: Debt is a tool and should be used to help create prosperity.
Truth: Debt isn't used by wealthy people nearly as much as we are led to believe.

Debt is dumb. Most normal people are just plain broke because they are in debt up to their eyeballs with no hope of help. If you're in debt, then you're a slave, in the sense that you do not have the freedom to use your money to help change your family tree.

According to a recent USA Today article about debt, 78 percent of Baby Boomers have mortgage debt, 59 percent have credit card debt, and 56 percent have car payments. It takes a lot of will, discipline, courage and help to slay the debt monster. But it can be done. Imagine how much you could put toward retirement if you just didn't have a stinking car payment? This is how the wealthy really build their wealth. Debt is dumb. Welcome to the real world!

Dave Ramsey's Background
When training for my first career in real estate, I remember being told that debt was a tool. "Debt is like a fulcrumand lever," allowing us to lift what we otherwise could not. We can buy a home, a car, start a business, or go out to eat and not be bothered with having to wait. I remember a finance professor telling us that debt was a two-edged sword which would cut for you like a tool but could also cut into you and bring harm.

The myth has been sold that we should use OPM (other people's money) to prosper. The academic garbage is spread really thick on this issue. We are told with sufficient snobbery and noses in the air that sophisticated and disciplined financiers use debt to their advantage. Careful there, you'll get a sunburn on your upper lip.

My contention is that debt brings on enough risk to offset any advantage that could be gained through leverage of debt. Given time - a lifetime - risk will destroy the percieved returns purported by the myth-sayers. I once was a myth-sayer myself and could repeat the myths very convincingly. I was especially good with the "debt is a tool" myth. I have even sold rental property that was losing money to investors by showing them, with very sophisticated internal rates of return, how they would actually make money.

Boy, what a reach. I could spout the myth with enthusiasm, but life and God had some lessons to teach me. Only after losing everything I owned and finding myself bankrupt did I think that risk should be factored in, even mathematically. It took my waking up in "intensive care" to realize how dumb and dangerous this myth is. Life hit me hard enough to get my attention and teach me.

According to Proverbs 22:7, "The rich rule over the poor and the borrower is slave to the lender" (NKJV). I was confronted with this scripture and had to make a conscious decision of who was right - my broke finance professor who taught that debt is a tool, or God, who showed the obvious disdain for debt. Beverly Sills had it right when she said, "There is no shortcut to any place worth going."

The Debt Myth
You have probably heard a lot of the sub-myths, which fall in line behind the big one that says "debt is a tool." Are you beginning to understand that debt is NOT a tool? This myth and all its little sub-myths have been spread far and wide. Always keep in mind the idea that if you tell a lie often enough, loud enough, and long enough, the myth becomes accepted as a fact. Repetition, volume and longevity will twist and turn a myth, a lie, into a commonly accepted way of doing things.

No more. Debt is not a tool; it is a method to make banks wealthy, not you. The borrower is truly servant to the lender. Your largest wealth-building asset is your income. When you tie up your income, you lose. When you invest your income, you become wealthy and can do anything you want.

How much could you give, save and spend every month if you had no payments? Your income is your greatest wealth-building tool, not debt. Your Total Money Makeover begins with a permanently changed view of the debt myths.