Let me ask you this question. If you had no debt, would you work at the employer you have now? Would you downshift and work less? Would you seek to be creative in something you really enjoy regardless of the pay packet?
I don’t know about you, but I would rather choose what I want to do with my day, rather than someone else telling me what to do. If you think that self-employment is the way to break this bond of slavery, then you may be sadly mistaken.
Until you pay off all of your outstanding debt that you borrow to service your company, you are still chained to working until it is paid off. Debt is a contract that you enter into with a financial institution that you must honour, by law. It is a burden that must be repaid one way or another and are shackled to whomever you owe the debt to.
So, to be truly free, we must become debt free and not owe anything to anyone in the form of loans that bear interest. Therefore, no debt equals freedom, in my mind.
To that end, we have been paying down our personal debt as quickly as possible with a view to being free! At the start of our sustainable living journey, we took out a personal loan to pay for the Solar PV system over the term of 4 years. We paid it off in one and a half years! This saved us about $1500 in interest. How did we do it? Well we used the saving achieved on our electricity bills over the term of the loan to pay down extra off the principle. The beauty is that renewable energy is the only investment I know that pays for itself! So now that this debt is paid out, we basically have free electricity. Same goes for the solar hot water which is free for eight months of the year, as does all the cheap, organic food we grow.
With the surplus funds that we gained after paying off this personal loan, we are then paying down our remaining mortgage quickly. We now have about two and a half years to go and the house is ours. We are putting every spare cent we can into this debt reduction. We do have a credit card, but it is paid off monthly, within the free interest period.
With no other outstanding debt, that will make me a free man! What about other expenses, I hear you say? As I have a military pension that will cover off basic expenses, I will only need a part time job, with the choice being mine alone on what I do and how many hours I work. I am very excited by this notion. We plan to ramp up our Little Green Workshops business and spread the work near and far around Greater Melbourne! Yay.
Knowing that our frugal lifestyle and low expenses have gone a very long way to achieving this goal, I am so glad I had my green epiphany when I did.
Little did I realise that by reducing consumption I was actually lowering my environmental footprint, and in the process, lowering my craving for debt. With all things being equal, I will be 52’ish when I semi-retire. Not bad for a born again middle aged hippy!
“The entire world economy rests on the consumer; if he ever stops spending money he doesn’t have on things he doesn’t need — we’re done for.” – Bill Bonner
Our entire society has a foundation of money = debt, and we rely on growth at all costs to continue funding this lifestyle. I have mentioned before, this is not sustainable in the foreseeable future, and we need Degrowth now. Growth at all costs means having unlimited resources, which is something our planet is not able to provide us with. We live in a finite world that has boundaries and thresholds, many of which we have already crossed to the detriment of other species who co-exist with us on Earth.
“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” – Kenneth Boulding, economist
For a better understanding of how money is created, check out Chris Martenson’s Crash Course which is free and will give you a better understanding of how our economy works and why it relies on growth at all costs. The course will take you a bit of time, but it is well worth it. I refer back to it regularly.
It is partly because of the way our current economic system works, that our world leaders failed to act on climate change at a global level.
This may be because they do not have the courage to change the very system that got us into this mess, as they realise that by curbing growth, the system as it stands, would collapse. Growth at all costs would have to be curtailed and the wealthier citizens of the world would have to stop shopping until they dropped to reduce excessive carbon emissions.
As the current economic reality is that money equals debt and the abundance of cheap oil has kept our economy growing, which is coming to an end, then greenhouse gas reduction is looking like a slim prospect indeed without collapse because we will not be able to afford the actions required. Either that or a collapse just stops us from polluting anyway.
“We’re in a giant car heading towards a brick wall and everyone’s arguing over where they’re going to sit.” ~ David Suzuki, Elder.
Whilst I will be personally very happy not to have any debt, I still worry that our society is still geared as if we are partying like it is 1999!
I believe that the economic issues of the year 2008 was only a small glimpse of what may confront us in the near future as resources deplete (e.g. oil, food, minerals) and growth stops and hits reverse gear.
Farmer Liz says
Hi Gavin, isn’t it sad that our economy is set up around growth and consumerism. We are trying to pay off our debt too, and get in a similar situation to you, where work is optional and we produce most of our own food on our property. My tips are: think before you buy whether you need the item, or just want it, think about whether you could do without, or borrow, make or buy secondhand instead. Set yourself up to produce as much of what you need as you can, even on a balcony, people do grow food, so if you have more space, then grow more! collect water, generate power, learn new skills like making soap, bread, yoghurt, so that you could make them if you have to in the future. Stay curious about what you can make/produce for yourself and keep learning all the time. Congrats on your plan Gavin, I hope you get there even sooner and its great that you will be doing workshops to help others.
When we got married 34 years ago we were advised by our minister to make sure that we could live on one wage, that was our starting point.
When we bough a house we paid extra off our mortgage every single week, even if it was $5 we still did it. I remember going without buying newspapers and bacon as that was a luxury. We did bake our own bread, home brew, preserve fruit and I made most of our clothes. I remember clearly that every single week I could pay extra was a wonderful victory. We had bought a modest home so that we did not have a large mortgage and all our furniture was hand crafted or second hand. Despite having 4 children in 7 years, being on one wage, we paid that mortgage off in 7 years.
We have borrowed money again when we moved and to buy a business, but have paid it off quickly with the same philosophy.
When I was working towards being debt free we gave up luxuries like television and instant gratification. It becomes addictive learning to make do. Now I only buy what I have money for so if it’s something bigger, I have to save for it first. I do consider credit cards to be a dangerous temptation and don’t use them.
Penny Pincher says
Back in the 80’s I was in a very precarious position. I took out a mortgage at a time when interest rates were just beginning their climb to historically high levels. My mortgage rate started at 10% and climbed to 14% over a very short time period. I worked in an entry level job that paid the minimum wage and was on limited tenure with 3-6 month contracts. I had borrowed from the bank plus borrowed from family to meet the deposit I was also paying interest on moneys borrowed from family at a slightly lower rate. I was a financial disaster waiting to happen but I defied the odds. The mortgage (I think the combined borrowings were around $60000) was paid in full in close to 4 years. I worked a second job on weekends and lived off my weekend earnings whilst my weekday job went onto the mortgage. I eventually found full time work that paid more and offered better security but still kept up the weekend work. Every cent spent was accounted for, bills were carefully budgeted out and only basic essentials were purchased. It was absolute minimalist living until that mortgage was paid off. When that huge debt was cleared it was pure euphoria. Of course, as luck would have it, interest rates eased not long after the mortgage was paid.
Hi Gavin, We wrote a couple of pieces on Budgeting http://homehillfarm.blogspot.com.au/2010/11/first-spring-vegetables-bees-budgets.html and Spending Management http://homehillfarm.blogspot.com.au/2013/09/cattle-happiness-spending-management.html
But as you and Farmer Liz say growing your own food and recycling and repairing etc. really save bucket loads of money.
Pavel Bentham says
I’ve had a number of friends and associates ask me about my plans to move to the country and when I bring up this topic, they behave as though it is not happening. They don’t see the trajectory of their life as being devoid of freewill. They think that the path they are following is entirely their own doing but then, oddly, back it up with a hesitant “but there is no other way really, is there?” Sure there is, I’m setting out to prove that in a rather extreme fashion. You Gavin, have proved there another way with little structural disruption to the ‘normal’ suburban life. You have proven that by consuming less the more money you have to pay down debts and ultimately become debt free so you can live more deliberately.
I have debt. I have a few small dues, including a couple of grand in consumer debts from my ‘past life’ that I need to pay off. I could pay it off immediately but have chosen to keep my cash flow positive incase I find that perfect block of land. In the meantime, I continue to pay interest but that’s an expense I am willing to bear for the freedom of being able to secure that block of land when it presents itself. Once I have bought it, though, or saved enough to do both, the debt will be gone and my life will be simpler. Unfortunately, with land will come a small debt. I intend to buy through vendor finance which, at least, allows me to pay into the pocket of an individual rather than a bank. I hope to have it paid off within a couple of years (it will only be a small amount). My rationale is this. I could stay at my current job and earn the ‘big bucks’ for another 6 -12 months (passed by designated exit date) and save more money to buy the land outright. I don’t want to do that. Instead, I will pay the land off over a few years (no more than 5) and to meet my repayments will only need to work 4-5 hours a week, on my own business which I can run from home. I’d much prefer to be in debt and work a few hours from home on my own project than work as a wage slave in the office for longer.
To read more about my “Desirable World” check out my blog: www. desirableworld.wordpress.com
Linda Woodrow says
I’m a middle aged hippy too, but I’m an unreconstructed one! My path is an unusual one, but I totally don’t regret it. We’ve never had a mortgage. We bought land as a community and built from scratch with the money we had. No roads or running water or electricity or services in the beginning, living in a caravan with a baby, then a shed then a tiny tiny house with literally 2 rooms (with 2 babies) then building the 60 square metre house we still live in. Water in a bucket from the creek heated in a copper initially, then cold running water, then joy of joys solar heated hot water. A pressure lamp initially, then one solar panel and electric lights, then 4 and a washing machine, and now a solar charged car.
The old 80-20 rule comes into it. It is very easy to be 80% self sufficient, diabolically difficult to get that last 20%, at least with kids who need to grow up “normal” and not tarred with radically hippy parents! In my perfect world, the economy would be a market for trade of goods and services and talents for money, that circulated round and made up that last 20%. Sadly we don’t live in my perfect world, and jobs are designed to be full time, commuting to an urban centre and not an easy fit.
Speaking as an unreconstructed hippy, the only big change I would make in retrospect is to think about self employment, my own small creative business alongside luxurious home production and frugal debt avoidance, much earlier.
Pavel Bentham says
Linda, I admire your ‘unreconstructed hippyism’. What I admire the most is your ability to live so simply – seriously simple. I would buy a bush block and build a shanty out of scraps if it wasn’t for planning and building codes. If the house burnt down in a bushfire, so what – it wouldn’t have cost me much and I could build again. But unfortunately, it’s the codes that hold a lot of us back from going all hippy and living genuinely low-impact.
I think personal responsibility has a lot to do with it. If we could all be more personally responsible for our actions – if we hurt ourselves doing something stupid, we take it on the chin – rather than litigate at the drop of a hat, we could enjoy more of these freedoms. By no means am I am redneck libertarian, I’m way left, I just think let us be with some things. If I don’t want to have washing machine (and trough, which the BCA insists on) and want to wash my clothes in a bucket, then let me. If my house falls in on me because I didn’t use sound building methods, then that’s my problem. Most of us are a bit brighter than that and will undertake measures that minimise risk – we don’t want to hurt or kill ourselves. As for the rest that want to do stupid things that are going to effect only themselves, let them.
Life has become needlessly complicated. All because people and companies and governments are wanting to cover their backs.
Hi Gavin, I love your post. Yes, I have always believed debt equals slavery. I have lived debt free most of my life and love the freedom that affords.
I prefer to do without rather than get into debt. My first ‘home’ was a caravan, then when we could afford it, a bigger caravan. Next we built a yacht . . .after sailing around the south pacific for a few years we sold the yacht and bought a house, and so it went… debt free.
I think I have been semi-retired my whole life, with my lifestyle values and choices. I have found that a simple life has real meaning, some hard work at times, but is so naturally rewarding and fulfilling I can’t imagine living any other way. It is so empowering and rewarding to be able to produce and create a healthy and natural way of living for yourself and your family.
I have written about my ideas on retiring or semi retiring (at any age) here
Love your post Christie, especially this quote;
“The essential aim is not to fight against consumer-capitalist society, but to build an alternative to it”.
Michael Stavretis says
Thanks for running the blog Gavin. You’re spot on about debt and slavery: they are interchangeable terms as is being evidenced on an international level globally.
Illness left us with a disability pension, but below the poverty line is no place for any human to be.
My wife and I have both worked in community based structures most our lives; even businesses we have run always had what social aspects that we could engineer into them.
Now we want to beat the debt trap and the jail of a poverty line income.
We just want to make soap. Pretty much like you’re doing. Bit difficult as my wife is my carer, and my medical condition means I need pretty constant observation. So we need to be together.
Didn’t know about NICNAS so your published response to Sue was great.
A real key expense is public liability insurance, so your info that YOUI costs about $500 gives us some idea of where to start.
We’d really appreciate any other input on insurers anyone may be able to help with. And any traps for not so “young players” to beware of, pleeease!!
Good Luck Gavin and all your readers.