About Debt

What is Debt?
Everybody understands the concept of debt. We need to buy something – so we borrow money from someone and all of a sudden we are in debt. When the money is repaid you will be debt free. It does not have to be money – it can by anything. When you borrow a lawnmower from a friend you are basically in debt to him until the lawnmower has been returned.

If you don’t give it back you will always be in debt and sooner or later will have to come to an arrangement of how to recompense your friend for that lawnmower if it has been destroyed.

Being in debt is not good.

There are 2 reasons for this:

  1. You will have to pay money or something in value to the lender if you are in debt. If you borrow money you have to pay interest. If you borrow a truck you may have to return it with a full petrol tank. Some debts cost nothing. If you borrow your neighbour’s clippers to cut the hedge and then return them in good condition there is generally no cost to that debt. Even if there’s no cost, it has been a debt until the debt has been repaid or the item returned.

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