Debt Is Slavery

I was a typical naive college freshman, relishing my first day on campus. Lining the hallways of the crowded student center, financial companies competed obnoxiously for our attention.

“Apply for your first credit card and you could win a brand new TV!”

“Step right up! We’ll make it easy for you to buy things now… then pay for them forever!”

The Giant Marketing Machine deftly defines what is fashionable and brainwashes us to spend. As young adults, my friends and I were perfect targets.

Too bad Michael Mihalik’s book, Debt is Slavery: and 9 Other Things I Wish My Dad Had Taught Me About Money wasn’t prerequisite reading prior to admittance into those hallways, littered with credit card applications.

Michael’s short book offers preventative medicine for students and young adults — plus concise treatment for anyone struggling with debt. This author didn’t create words simply to increase page count. He created a short read that gets right to the point. In his just-the-right-size book, he offers practical advice and illustrates financial concepts with relevant examples.

Golden nuggets of wisdom are sprinkled throughout each chapter. Here are some of my favorites:

Chapter 1: Debt is Slavery

Do you ever wake up in the morning and groan, “I don’t want to go to work today?” As you lie in bed toying with the idea of staying home, your thoughts turn to all the bills you have to pay. So you drag your tired self out of your warm bed, drink a pot of coffee, and drive to work (in your cool car–only 43 more payments and that baby is all yours!). You drag yourself out of bed and go to work, because you have to. Isn’t that a form of slavery?

Reading this passage brings back haunting memories of the relentless “BEEP! BEEP! BEEP!” of my old alarm clock. Aack! I hated that obnoxious beast! When I say that I haven’t set an alarm clock in years, I truly mean it. Financial freedom has set me free from that blasted beeping slave master.

Chapter 2: Time May Not Be Money, But Money Definitely Is Time

…if I earn $12 per hour and want to buy something for $12, I am spending an hour of my life. I quantify all potential purchases with two questions:

  • How many hours do I have to work to pay for it?

  • Is it worth that much of my life?

Bingo. We trade our time for money and our money for stuff. Problem is this: while we can make more money, we only have a finite amount of time. See my relevant post, How to Revolutionize Your Spending Habits by putting a price tag on your time.

Chapter 3: Possessions Are a Prison

Don’t love something that can’t love you back.

I have friends who define their self-worth on what kind of car they drive. They just love their car. But is that love returned? When you love a thing, the love will never be returned. A car will never comfort you when you’re sick. It will never help you when you’re in trouble. If you’re going to love something, make sure it can love you back.

Powerful concept. Have you ever participated in “retail therapy”?

Chapter 4: Be Aware of the Ongoing Campaign to Separate You from Your Money

We have become so desensitized to advertising that we are unaware of its insidious effect on our lives. We have become sheep who buy what we are told.

Isn’t that a little extreme? Are we really sheep?

So what kind of clothes are “in”? What kind of car should you drive if you want to look successful? How do you know what’s “cool” and what’s not?

Advertisers and marketers tell you.

What I appreciate most about our Tivo boob-tube box is that we can skip past the commercials, thereby reducing our exposure to advertisements. We avoid magazines for this reason, too.

Chapter 5: Money Buys Freedom

Money may not buy happiness, but it does buy freedom, options, and opportunity–and freedom, options, and opportunity may lead to happiness.

This is certainly true for me and my family.

Chapter 6: Don’t Sell Your Soul for a Salary

Sunday nights fill many people with dread because they know they have to go back to work Monday morning. So why do we end up at jobs we don’t like? Because we sold our souls for a salary.

Yep, the salary that’s required to pay for the vacation you charged to your credit card — two years ago.

Chapter 7: Own

Most wealthy people, especially if they’re self-made, are aware of the difference between income-producing assets and income-consuming assets.

I’m tickled pink that Michael recognizes and demonstrates the difference between the two — especially when it comes to real estate!

Personal real estate may appreciate over time, but it does not produce income. It consumes income. It consumes income because you have to spend money on maintenance, utilities, repairs, taxes and insurance. The only way you can extract money from real estate is by taking out a home-equity loan (debt!) or by selling the property.

As I’ve said several times here before, home-ownership is not normally the most effective way to create wealth and financial freedom.

Chapter 8: Spend Less Than You Earn By Controlling Your Expenses

…you have to value your peace of mind and financial security more than the things you buy.

Chapter 9: Save 50 Percent of Your Salary

If you save 50 percent of your salary, for every month you work, you will save enough to take a month off– without changing your lifestyle.

(The author doesn’t take compounding interest into consideration here — which would grow your future savings balance exponentially.) He illustrates his point by sharing a personal story of financial hardship: he was able to withstand two job layoffs, lasting a year or longer, because he had sufficient savings to see him through tough times.

Chapter 10: Control Your Money or Your Money Will Control You

Change your attitude toward debt. Every time you use credit for a purchase think, “Debt is slavery; I am making myself a slave.”

In this chapter, the author provides step-by-step instructions for creating a written financial plan aimed to minimize expenses, eliminate debt, and start saving.

While Debt is Slavery: and 9 Other Things I Wish My Dad Had Taught Me About Money might not be particularly suited for advanced finance readers, I enthusiastically recommended it for young adults and those struggling to break free from the handcuffs of debt.

Published by

Millionaire Mommy Next Door

A self-made millionaire shares her recipe for success, happiness and financial freedom.

22 thoughts on “Debt Is Slavery”

  1. Great points! The only thing I would change is most people go off of their GROSS hourly wage. Myself? I figure out how many hours at my net pay I would have to work to pay for something. Can’t tell you how many times I have walked away from item for that reason. Really wanted a Wii fitness until I realized it would take almost 1 1/2 days of work to pay cash for it. No thanks. Suddenly working 1 1/2 days in my garden seemed like a better use of my time!

  2. This is a great post! Number #1 hit heart. We always grumble when it comes to Sunday evenings. I also hush my husband when he grumbles because I tell him, “maybe it won’t come if we don’t talk about it”. But that never seems to work.

  3. That sounds like a really good book! Thank goodness I’m finally done with college. The credit card companies are relentless in trying to get you to sign up for new credit cards. The companies set up reps all over campus the first week of classes, when you purchase anything from the bookstore they throw three applications in the sack, a couple times a week the campus mail would throw more applications in your mailbox, and every Saturday morning reps would call every single room down the hall. I try to avoid Walmart as much as possible because they have too much stuff to entice me to spend money. I’m also always keeping an eye out for relevant work on Elance.

  4. He’s preaching to the choir, but I still want to read the book! And I love not dreading the night before a job since I don’t work for anyone else these days. (Although I did make myself take weekends completely off from any sort of income-producing work to focus on family & personal interests)

  5. OK, I’ll bite and say that I disagree with one of the points made (see below) and the whole tenor of the book’s “debt is slavery” message.

    For us debt has been a means of bringing forward the date of our propsed retirement (by an estimated 3-5 years). Using debt enabled us to buy more real estate at relatively depressed prices following the Asian crisis than we could have afforded if we had been forced to pay cash. Our net worth today is materially higher than it would otherwise be.

    We do not worry about repaying the mortgages (our tenants do that for us) and do not feel that we are going to work in order to service the loans. School fees and the other components of our retirement plan are what keeps us working – and we do not think of having children as a form of slavery.

    Debt may be a form of slavery to those who misuse it, but if I had to generalise I would say that many (but by no means all) people who find themselves with a debt problem have been slaves to their own poor judgement and financial ill-discipline.

    I also take issue with the book’s take on home ownership. Sometimes renting will be better than owning. Sometimes owning will be better than renting. I have been both an various times. The quotation from the book above does not address all of the pros and cons in the ownership debate – if it is representative of the book’s message on point then that is, quite frankly, very poor advice on the part of the book’s author. It is not difficult to identify many situations where home ownership has been hugely beneficial – periods of high inflation typically favour home ownership (and the use of debt). (The reverse is often true in periods of deflation.)

    I do agree that people need to be better educated on the use of debt and advocate mandatory education for school leavers.

    I also agree with all of the other points being made – but they are independent of the use of debt.


  6. Great book review. Concise and to the point. I have to agree with Debbie about point #2:

    “…if I earn $12 per hour and want to buy something for $12”

    It’s actually much worse than that – we have to look at the discretionary income.

    Out of the $12/hr we have to subtract state and local income taxes, subtract commuting and work related costs. Finally we have to subtract costs for basic living – food, housing, and health insurance deductibles. What ‘s left over is what we have to spend on items we might want to by.

    We might be lucky to have $3/hr left over, making that $12 purchase worth 4 hours of our work time.

    Oh and I forgot, that $12 item is going to be taxed and if you unlucky enough to live in Chicago that not insignificant sales tax rate is 10.25%!!!

  7. Excellent article. I thoroughly enjoyed reading it even though I consider myself more than a complete beginner in the field of personal finance. I guess its always good to keep thinking about the basics.

  8. I definitely agree that debt enslaves people, but it’s not necessarily the reason that people have to set an alarm and go to work. My husband and I have no debt aside from our mortgage, live very frugally, and he still has to go to work every day. ;) Some people are just not going to be able to be financially independent, and I think that’s ok.

  9. Kristen@TheFrugalGirl: And many people, even though they ARE financially independent, still choose to go to work every day. For me, being free of the alarm clock is freedom in itself!

    Debbie and I wrote a post about the points you brought up, on how to put a more accurate price tag on your time: How To Revolutionize Your Spending Habits at

    traineeinvestor: Yes, the rent versus buy debate depends upon your numbers, location, rate of inflation, etc. I think the point is, though, that income-producing real estate is different than the home you live in.

    Credit CAN be used wisely, and for personal benefit. Many will be surprised to hear that I charge everything I possibly can onto our MasterCard. This will be the topic of a post coming soon.

  10. Oh yes, I put everything I can onto my rewards credit card too. ;) And I’ll keep doing that as long as they offer rewards, grace periods, and no annual fees.

  11. These are excellent points, but I’m curious about your (and other commenters) opinion on something. What do you suggest for students? For me, I have very little help from my parents. My bills are minimal (comparatively – rent, daycare, car insurance & maintenance, gas, food) and because I have a child, I would prefer to use a credit card when I have to rather than work all the time for practically nothing. When I graduate, I estimate I’ll be about $10,000 in debt, if nothing changes. So what do people think? Students with dependents should live with the student loans, or sacrifice time with their children to keep it minimal? Is there an option I’m missing?

  12. @charlie, wow you really analized it. LOL

    I think the author was just trying to say think before you buy something. Consuming all the time will not get you ahead, you will always be behind financially

  13. This really resonates, because I was one of those who got suckered into getting a card the first week of college and it took me YEARS and much agony to pay it off. No one talks about the emotional cost of debt (and I’m talking about credit card debt, not mortgages or student loans) but it was hell on wheels for me. Getting free of the self-loathing was one of the most wrenching, empowering, revolutionary acts of my life.

    I wrote about it in a post called “In which I slay the credit card beast”–

    Millionaire Mommy, I love your site because you address both the practical and the emotional/spiritual aspects of this– I had tried to attack one or the other many times, but it wasn’t until I took on both in a doubleheader that I worked my way free. It seems ridiculous now, but I truly believed that I could NEVER work down my debt AND that it proved I was a failure. Talk about a double bind. If anyone else out there feels like this, take heart– I did it! You can too!!!!

    You are you, not your debt. There was a point where I really needed to hear that. Then I finally believed it, and then I got to work conquering the actual debt in tiny increments, and then I was free.

  14. @Sylvia: You’ll never be able to buy back the missed time with your child :-) The parent-child relationship is more important than money.

  15. Well we in Malaysia can easily get more money by job hopping to a higher salary as the economy is booming thanks to China ! We in Malaysia are enjoying high growth and high inflation, I do not understand all this complaining. We have to thank China for our strong growth as our economy was going down until March 2009 and China rescued us by buying our commodities. Currently there is strong job market, 2 jobs for every worker, we have to import in foreign labour to do jobs that locals do not want to do ! We have high inflation, an example is a local dessert called “cendol” selling for $1.20 in local currency a month ago, is now selling for $ 1.80 in local currency. Thats a hefty increase, so don’t complain, enjoy the boom !

  16. Inflation makes the monetary gains illusory. It’s insane for a price to go up 50% in one month. It’s like needing $1000 for living expenses in one month, and then needing $1500 the next month for the exact same expenses.

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  19. hi, i am writing from costa rica.. happiest country in the world : ) …. i totally support your ideas and i am trying to promote them in my community… i also promoting THE ZEITGEIST MOVEMENT, THE VENUS PROJECT, PRESERVE THE PLANET and many others….. peace.

    el mundo no esta mal por la gente mala… si no por la gente buena que deja que los malos tomen el control…

    the world is not in this bad shape because of the bad people… but because of the good people that are letting the bad guys have control of things….

  20. This looks like an interesting read! I will head down to my neighborhood library and check it out!

  21. This was a breath of fresh air. I am working 7 days a week trying to dig my way out of debt. I am so wore out mentally and physically, not sure how much longer I can last at this pace.

  22. Another 66 hour work week and I am exhausted, if anyone knows a way to get out of the rat race I am listening.

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