The debt conundrum

The car is starting to squeak a lot more than it used to, the suspension may be shot soon, and it's overdue for a transmission flush - but I have to make the monthly payments first. I should be saving up to buy the car that will replace this one - and the computer that will replace this one - and the lawn tractor that will replace the one I bought five years ago - but instead I am spending hundreds of dollars a month to pay the balances on the car loan and the credit cards that I haven't used in more than a year.

And that's the problem with debt. A debt is a trade - you exchange your future income for the money to buy what you want NOW.

The cost of having it now is a little thing called interest. So the $10,000 used car costs you $12,500. Is it worth it to have it NOW? That depends on whether you could have used the other $2,500.

Essentially you are gambling that nothing goes wrong for the life of the obligation.