The LA Kings Holiday Pack is back! The perfect gift for the hockey fan in your life. A three-game pack starts at just $159 and includes a holiday blanket. Buy today and you'll receive an additional game for free. Don't miss out. Visit lakings.com/holiday today. Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now, while building a plan for financial freedom in 10 years or less.

Today we continue our 7 Rings of Freedom series. These are 7 specific actions you can take that will enhance your personal liberty as you work your way toward financial independence. Today is Ring #4, where we're going to talk about spending liberty, the value of being debt-free, and having some savings.

By way of review, Ring #1 was Spiritual Liberty. I talked about how if you as an individual possess spiritual liberty, then no matter how difficult or constraining your external circumstances can be, you as an individual can live a life of peace and joy and contentment in the middle of those circumstances.

Whereas if you don't, as an individual, possess spiritual liberty, no matter how externally great your circumstances are, you can be bound as a slave in the middle of those circumstances. That was show #1, where I talked about spiritual liberty. Show #2, I talked about Spousal Liberty. I talked about how much benefit I've received in my family and how much freedom I've enjoyed from having a stay-at-home wife and having a stay-at-home mom, and how that's brought tremendous freedom and liberty to our family unit and how we value that.

So I talked about the value of Spousal Liberty. Show #3, I talked about Family Liberty. I talked about the value of home education, having your children involved in your family enterprises rather than institutionalized, and how that gives you tremendous freedom and flexibility in your lifestyle, and how much I've come to appreciate the freedom that comes with that decision.

Now today we're going to talk about Spending Liberty, and here's where we need to introduce some of the more financial topics, because these topics are extremely important. I didn't exactly know what order to put them in. I don't think that these have to be done in order. I think you can pick and choose, and each person might choose different ones of these to do.

But from my experience, if I were going back 10 years and I were approaching my life, and let's say that I were caught in a lifestyle of no liberty and I wanted to achieve liberty, this is the order that I would do things. So that's all I can say.

Your mileage may vary, but this is the order that I would pursue these things. The great thing is, of course, that most of these are fairly simple. Spiritual liberty, that's a very quick process. Spousal liberty might take a little bit longer, but still I think it's primarily just a decision and a quick process.

Family liberty, fairly quick. Knowing what I know now, if I woke up in a situation where I didn't have that, I would immediately move into that. Now this is the pivot point, though, where this process can take a little bit of time. And I want to talk about debt-free and having some savings.

Now you'll notice that these – I'm going to define these words, but I want to talk about the value of being debt-free. There are some very compelling reasons for you to be debt-free. You say, "Well, Joshua, obviously I would know that. It's fairly clear." But I think the reasons go a little bit deeper than most people experience.

It's been my observation that although many people would say they'd like to be out of debt, they just simply don't do what it takes to get out of debt. And they never experience the freedom of being debt-free. And so I want to talk to you and share with you, hopefully, some ideas that will help you to give a vision of it so you'd be willing to put in the hard work of becoming debt-free.

The number one reason why I value being debt-free so highly is that if you don't owe anybody any money, you have total freedom in your future choices. If you're out of debt, you have almost total freedom in your future choices. You can make any decision that you want to make, even the most radical life-changing decisions, if you are out of debt.

Immediately prior to recording the show, as an example, I was reading an article on how few Americans are choosing to marry and how many Americans are waiting until they've paid off their student loans in order to marry. Now, certainly you can consider whether you want to be debt-free when you marry.

It's fine. I wouldn't. I would make the decision based on whether I wanted to marry or not, and I would make the money fit to that. But I understand what people are going for when they're saying, "I want to pay off these student loans." And I think it's a good example of how many people's lives are put on hold because of debt.

You're told, "Go and take student loans out so you can get a good job," and people go and get a good job. But then what they do is they find that their life decisions are constrained by the fact that they owe student loans. Recently, I was talking to a student, graduated from university, got a master's degree, has $30,000 in debt, and isn't really sure what she wants to do with her career, isn't really sure what she wants to do with her life, but she's got this $30,000 of student loan debt hanging over her head.

And it limits the fun of any decision she could make. She's totally free. She could go and live on an organic farm or work in a communal, a commune somewhere, or she could go to the big city and get a big job. And any of these life choices are available to her.

She could go and build a big career, she could go and live in a van in the woods and write novels for a living. Anything is there except for the debt. And until she pays off the student loan debt, she won't have that total freedom of choice because she knows that she's got to go and service her debt.

She's the kind of person who would do really well in some of those not so normal lifestyles, but she's stuck. She's got to go and get a job that's a high paying job so she can pay back her student loans. Now in her situation, she's not even, there's no marriage prospects in the future and not particularly interesting to her, but you could see how she's stuck because of her past decisions.

If you don't owe anybody any money, then almost any decision that you want to make can be made. If you don't owe anybody money, you can change careers fairly easily. If I have somebody who is debt free and I'm coaching them and they say, "I don't really like my job, don't really like my work, I'd like to change to something else." I don't even have to ask about the financial impact.

I just encourage them, "Go for it." But it's not so simple if someone is in debt because if you're in debt, you've obligated yourself to fulfill your word and pay back your debt, which means that you may or may not be able to afford it. Similar things about starting a business.

If you're not in debt, you can start almost any business. Some businesses lend themselves more to a lean startup approach, some businesses you need a lot of money. But if you're not in debt, you can open yourself up to almost any business. If you don't owe anybody any money, you can work almost any job and have enough money to pay your bills while starting a business.

So, it completely, radically frees up your future. If you don't owe any debt, you can make the most radical of life decisions and you can do almost anything you want. Decide that you're tired of living in Atlanta, Georgia, and the south of France is calling your name. If you don't owe any debt, if you don't owe any money, you can go to the south of France and you can find a way to provide an income for yourself.

There's plenty of ways to work for room and board and to get a job and you can go live in the south of France. But when you have debt, it requires a whole different level of planning. I can't promise somebody with $100,000 of student loans that they're going to be able to service their student loan debt in the south of France.

I can promise that person that, "Hey, you can go there and let's figure out a way for you to get room and board so you can survive and let's figure out a way for you to make a little bit of spending money. You can go do it. Let's make it happen fast, quickly." I can do that if they don't have any debt.

You can't do that if you have obligations. So being debt-free gives you almost total freedom in your future. Now, this should be obvious. This should be sensible because after all, what is debt? Well, debt is a promise to pay a certain series of payments and money back in the future.

Somebody gives you money and you say, "Thank you for this money. I'm going to use this money to do something that I want to do. It could be buy a new computer, could be buy a new car, could be buy a college degree. I'm going to use this money and I promise to make you a series of payments in the future." So it should be obvious that you have less freedom because you've made promises in the future.

But it's only once people get into debt that they start to realize, "Hey, my future is pretty constrained." So I would encourage you as a financial planner, I have coached, I think I could say safely thousands of people at this point, but let's just keep it modest, hundreds and hundreds and hundreds of people.

And you can't bring me a goal that I can't tell you how to achieve in a reasonable time if you're out of debt. But when you're in debt, some goals become much more difficult to achieve. Being debt-free gives you total freedom in your future. The next big benefit of being debt-free is that it removes almost all fear from the present.

Being debt-free removes almost all fear from the present. Here's why. In order to have this total freedom, you often need to pair it with some frugal living skills. But a man who has the ability to live well on little, possesses a sense of confidence and a sense of ability and a sense of possibility about the future that somebody who has to pay a lot of money all the time just simply can't imagine.

Those skills are important, but you can't employ those skills if you've already committed to a massive outflow. If you've already committed to an outflow, a monthly outflow of $1,500 per month that you have to pay, you can't apply frugal living skills to make that number go down. In theory, maybe some negotiation skills, you can renegotiate that to some degree, but you can't apply frugal living skills to it.

You can make all the coffee you want at home. You can buy all the cheap on-sale food that you want at home. And at the end of the day, you still got to make that $1,500 payment out. But if you don't have any debt, if you don't have any guaranteed payments that go out from you, it removes almost all fear from the present.

Because you can stop almost any financial outflow from your life except a debt payment. If you don't have any debt, but you lose your job, you can tighten your financial belt to nothing very quickly, or very close to nothing. If you don't have any debt on your car, and you lose your job, and you have no source of income, and you don't have a little bit of savings, you can simply park your car, you can drop the insurance from it, and you can let your car sit there.

And now your car is no longer consuming money from you. You can turn your car expenses from normally, say, $300 per month to zero. But you cannot do that if you have debt. If you have debt, let's say you have a car payment, you have to make that monthly payment.

If you don't make the monthly payment, they come and take your car. And you may have to sell the car. So you could say, "Well, I have debt, and I could always sell the car." Yes, but if you sell the car, now you can't just turn it on quickly again.

If you need another car, you have to go and buy a car. Whereas if you're debt-free, and you have a $20,000 car sitting in your driveway, and for some reason your cash flow drives up, you can park the car, drop the insurance, not put any gas in it, and ride a bicycle.

Immediately, you can remove massive levels of spending from your life. What about something like having debt on a cell phone? You go and you buy a cell phone, and it's a $1,000 new cell phone. And you set it up on an Apple Pay loan. Well, no matter what, you've got to pay that monthly payment.

If you don't, it'll be reflected on your credit payment. If you just simply pay cash for your phone, and if you use a prepaid phone plan, then if you run out of cash flow, and that $40 a month or $30 a month or $20 a month is a problem for you, you just simply stop paying your bill.

And as soon as you haven't broken your word on anything, you just don't renew your prepaid contract, and boom, at the end of the month, you lose your cell service. But you don't lose the functionality of your phone. You can still go and use it at the local free Wi-Fi.

So now, if your cash flow dried up, you ride your bicycle to the local library, and you use the free Wi-Fi to do your email and send WhatsApp messages, etc. Which, by the way, is one of the reasons why I find it very convenient to move communications away from phone numbers over to messaging platforms, be it Wire, Signal, WhatsApp, Facebook Messenger, whatever your...

even iMessaging, whatever your messaging platform of choice is, it's very convenient. Because then you can just simply stop paying. But you can only do that if you haven't borrowed money. Now, when we move to bigger bills, I'm using some little ones, but if you move to bigger bills, like housing, things do become a little bit more complex.

But it's a lot easier if you don't have a mortgage. Let's talk about if you own a house. If you own a house, and you have a mortgage on that house, if you stop paying the mortgage, fairly quickly, your mortgage company can foreclose on you and forcibly eject you from the house.

Now, if you don't have a mortgage, you have additional layers of safety. It's not possible to remove all housing expenses, at the very least, unfortunately, in the United States. Although you can move to a country where you don't have property taxes, unfortunately, in the United States, you always have to deal with property taxes.

It's impossible in the United States to ever own your house. But it's at least possible if you don't own a mortgage... sorry, if you don't have a mortgage, if you don't owe a mortgage, it's at least possible to not be kicked out of your house. Let's say that you own a $300,000 house and you live there, and your property taxes are $3,000 per year.

Well, if you don't make that $3,000 per year property tax payment, they are not going to evict you from the house. It's just simply a lien accumulates against the house. But at least you can live in that house and stay there for the rest of your life. So you're dramatically safer if you don't have a mortgage.

It'd be nice if we didn't have property taxes. I'm not going to die on that hill, but at least they're not going to evict you. Now, you do want to be careful. This is one of the reasons why I don't like homeowners associations, because one of the most dangerous institutions is a homeowners association.

If you live in a community, at least in Florida law, I'm not sure about every state law, but if you live in a community that has a homeowners association and you don't pay your homeowners dues, then they can foreclose and evict you from your house, even if you have no mortgage on the property.

So I consider homeowners associations to be extremely dangerous from a financial perspective. It's like a mortgage. So be cautious about them. The point is though, that if you don't have a mortgage, you can at least stay in the house. And then if you need to do something dramatic to pay your property tax bill, you could do something fairly simple, like take on one part-time boarder, rent out one room of your house, and that could provide enough income for you to cover your property taxes.

Or you're going to simply let the lien accrue on the property until your cash flow comes back in, and then go ahead and pay off the tax lien. So if you don't have a mortgage, you have tremendous safety and you can drop your expenses to almost zero. Now, what about if you're renting?

Well, if you don't have a mortgage, if you're renting an apartment, one of the nice things is the time horizon of your decisions is much smaller. If you're renting an apartment and you need to go now, you can go now. If you need to move to a tent in the woods or to a camper parked on some government land, or if you need to move to the spare bedroom at your mom and dad's house or the garage or move into the mother-in-law quarters out back of grandma's house or something like that, you can do that.

You can just simply leave the apartment. You'll probably forfeit a certain security deposit. You may break a contract and impose a fee, but it's a lot simpler to do if you don't have any debt. But if you have to do that when you have debt, it's a lot tougher.

So I think that's enough examples. The point is that because you can stop almost any outflow except debt, you can remove almost all fear from the present. What about outflows that you can't stop? Things such as food. You can cut those things pretty deep if you've got frugal skills.

If I had to, I could feed my family of six on one to two hundred dollars a month, if I had to. Now, I don't think we'd have the most varied diet. I don't think we would necessarily have the most nutritious diet long term, but we would do it.

If I were in a situation, and let's say that I lived in the United States, I had no debt. Pretend that I live in a house that has no mortgage on it, no homeowners association, the only thing I have is property taxes, and I have no debt. And I go into dire financial circumstances.

For some reason, my business fails, I'm disabled, etc. What would I do in that situation? First thing I would do, I would park the car or the cars. Assuming that I can't make money with them in some way, I'm going to immediately stop that liability. So I'm going to park the car, remove the insurance from the car, stop putting gas in the car, put it up on blocks, do whatever needs to be done, but I'm going to park the car.

That removes a huge expense from many people's budget. Certainly limits their lifestyle and their mobility, but a bicycle can get me there eventually, or figure something else out. But maintaining that hundred dollar a month insurance payments is oftentimes expensive for people who are in dire financial circumstances. I don't have a house payment, so I'm going to be pretty good there.

If I don't have the money to pay my property taxes, I'll let them accrue and they can put a lien against the property, but I'll just stay on the property. What about utilities? Well, I can change my usage. I can unscrew everything electric in the house, and if everything in the house that's electric is unscrewed, then my electric bill goes to practically zero.

Now, obviously, I would want to maintain that ability, but because in many modern houses you can't live in them safely. You live in Florida and you turn off the AC, all of a sudden you start to have mold problems based on the way the houses are designed, but depending on the house, you could look at it.

You know, turn off your air conditioning, you turn off your heater, and you put on a coat, you go jump in the pool at the midday, and you get a fan, or you open the windows, you do something. You don't use the lights at night or use very small lights, right?

If we're getting, and I'm just being hardcore just for the fun of the thought experiment, but maybe I have to harvest some electricity from somewhere. Maybe if I'm riding back and forth in somebody's car, I charge my phone or charge a flashlight or a lantern or some batteries. I mean, you can harvest electricity from other places.

Many ways to do that. I could give example after example of how you could live without electricity. You can do it if you have the right equipment. It makes it fairly doable. But you can build a solar oven to cook with, right? Build a solar oven to make your daily food.

Now, I'm going to skip because it just gets too weird to do all the weird ways of living without things, but you could do it. You could drop your utility expenses from $100 a month to $10 a month by dropping your usage. Those things aren't debt. They're declines in usage, and so you could affect your usage.

What about food? Well, I would buy some flour. I'd buy some oil, and I'd buy some sugar and some salt, and I'd be eating pancakes. I'd try to get some butter and things like that. I'd go to the food pantry if I could and try to do that to get some fresh vegetables or some kind of canned vegetables to supplement that a little bit.

I'd get some rice, and we'd be eating rice and white flour. I mean, that stuff is so cheap, but at least our bellies would be full. Supplement some peanut butter and jelly and add some beans and a little bit of meat if I could get some from time to time.

I'd be dumpster diving for food, depending on what context I was in. If you're in a rural context, then you can go and glean from the fields or go and wildcraft in the woods. There might be a lake that you could fish in if you're capable of fishing. If you're in a rural context, there's food available on the land.

If you're in an urban context, there's food that's constantly thrown away. And so in either case, you could supplement your food and have food available to you. So in those dire circumstances, even the most dire circumstance can be overcome with debt, without debt, if you don't have debt. That gives confidence.

To me, that gives me confidence because if I need, I can get a job and cover some money. Obviously, nobody wants to live without turning on their electricity. You don't want to unscrew all the light bulbs. And you can run a light bulb in your house at night for probably 50 cents a month.

It's just simply not... Most of us are not at that scraping by level, but there are some of us who are. And so I think at least just having the skills or going through the extreme thinking to say, "How would I live on nothing?" is worth considering. And then on the business side, though, when you can cut your expenses so low, then it leads to more opportunities.

I've read a bunch of books written by homeless people. I try to read their stories. I talk to them sometimes and you can talk to them. But I'm interested in the ways that people live on nothing and the ways that people generate income on nothing. It fits my radical personality just to go to the hardcore extreme.

And one of the things I've observed is that there are so many, there's so much abundance where most of us live that if you're a person of skills and if you can maintain a sound mind and a sound body, even in one of those radical situations, you could do it if you didn't have debt.

I could start a business at the library. The library system in many places have things like media studios. I could use a camera that the library has. I could use fancy computers that the library has. I could create media. I could build a business using the internet and the computers in the library every day.

And the books are right there. Everything is there to start a business online. The books are there. The instruction is there. The computers are there. The equipment's there. Everything is there where most of us live. We live in a world of possibilities. I could go and do day labor and be hired out there.

And so when you don't have debt and you say, "I've got to live on $1,000 a month," you can do that and pursue a dream. Whether that dream is a business, whether that dream is something else, the fact that you don't have debt means you have total control of your expenses.

That removes fear from the present. To me, that's always been powerful. That's why debtlessness is worth pursuing, because it gives you freedom of choice. You can change quickly. You don't have to make a three-year plan unless you decide you want to. There's no reason to run away from a job if you don't want to.

But you don't have to make a three-year plan. If you have a business idea and you say, "This is a business idea I want to do," or, "This is a place I want to go," or, "This is a thing I want to do," you can pivot quickly. I have found that sense of freedom, that lack of fear, to be so valuable in my personal psychology.

I've found it to give me tremendous optimism over the future, to give me a sense of resilience, to give me a sense of unlimited possibilities. I look at the world and I say, "There's almost nothing that I can't do." And being out of debt is a key, key part of it.

Now, what else? Being out of debt gives you total control over your income. When you don't have debt, then whatever your income is, you can just simply allocate it as you like. And what happens is that most of our desires are fairly modest. But when all of your income is pre-committed, even your modest desires sometimes become difficult to indulge.

If you've got a median income of $4,000 or $5,000 per month, but you have no debt, you can fulfill on a regular basis almost any impulse purchase that you'd like to make. Want to buy a new barbecue grill? Buy a fancy $600 smoker? No big deal. It's a tiny fraction of your income.

Want to take a trip? Spend $1,500 on a nice vacation? You can do it. Want to spend $5,000 on a nice vacation? You can do it. You need a few months probably, but you can do it. Need a new car? Well, you can buy a new car or another car, right?

You can buy a couple thousand dollar car any month that you want to. Need to buy a new set of tires? Well, it's a thousand bucks. And a thousand bucks for a new set of tires for a lot of people is a lot of money, but not when you're debt-free, even if you have a median income of $4,000.

$5,000. And so when you don't have any payments and you have the ability on a monthly basis to have full control over your income, it makes a lot of things really doable for you. What about kids' college education? Let's say you're a median household earner, but you can make a plan to where you're debt-free, completely debt-free, including your mortgage, and you earn $5,000 per month, but you've got three or four or five children and you want to help support them in a college education.

You can do that. If you don't have any debt, you can easily commit a thousand, $2,000 per month to college educations, which is more than enough, if they're frugal in their college choices, more than enough to simply pay for college educations, thus perhaps helping your children avoid debt. As long as everything else in your life is in line, you can adjust everything else down as long as you avoid debt.

That ability to have total control is really, really fantastic, because when you have total control over your income, it gives you the ability to make the decisions in the present that you believe are right, and you don't have to spend a lot of time thinking about them. You don't have to spend a lot of time worrying about them.

You frankly just have less buyer's remorse. The times in my life where I've had the most buyer's remorse is when I have borrowed money to do something. Let's say that you want to go on a trip, and you say, "I'm going to go to Egypt and see the pyramids of Egypt, and I'm going to spend $5,000 on it." You put the $5,000 on a credit card, go to Egypt and come back.

You're probably happy with the trip, but if a year later you're still paying off the balance of that credit card, the trip starts to feel a little bit more sour. Whereas if you just simply pay the $5,000 out of your cash flow, even if you come back and you say, "You know, that was a little bit more money than I would have liked to have spent," that regret is fairly short-lived.

Then you say, "It was a nice time," and you start saving for your next goal. When you have total control over your income, even if your income is modest, you generally have choices. Now, certainly, we're all going to have some bills, and so it's hard to get always to the point where you have total control.

In addition to no debt, you also want to just simply balance the commitments that you make. It's nice to have modest rent payments if possible where you live. It's nice to have just a modestly priced lifestyle. But no debt gives you total control over your income. In any given month, any given week, any given day, you have the ability to make the choices that are best for you right now.

I, in addition, greatly value the sense of personal independence that comes with being debt-free. Many people complain about their job, their work. Some people feel like they're being abused at their work. If you don't have any debt, and if you have those frugal living skills that I described, the ability to live on very little, and if you have a little bit of savings, of course, it makes it easier.

But if you don't have any debt and you're being abused, you stand up, you walk into your boss's office, you say, "I quit," and you leave. I'd like to see you give some notice. I'd like to see you keep your options open. One of my goals that I encourage people is try to make sure that anytime you leave a job, they'd hire you back.

But if you're truly in an abusive job situation you're being taken advantage of, you walk out. Or what about if something is happening at your workplace that is morally wrong or ethically questionable? You don't have to think too much about it. You simply stand up, you say, "This is wrong," and you leave.

And you might walk right into a newspaper reporter's office or publish it immediately online. You don't have so many obligations. But those are the kinds of decisions that are a little bit harder to make if there's going to be a cascade of bad consequences in your life. If you've got a mortgage payment of $2,000 a month, and you've got a student loan payment of $1,500 a month, and you've got a car payment of $500 a month, and you've got $30,000 on a credit card, you know that if you get up and you walk out of this job, there's a good chance that all those things will collapse.

You know that there's a good chance if you stand up and you say, "No, what you're doing in this company is wrong," and you walk out of that office, that you might find yourself on the street without a car, with the creditors calling, behind on everything. It's a lot harder to do the right thing that you should do when you know in your personal life everything can collapse.

But if you're out of debt, you know you can go and get another job. You know you can live on nothing. And there are so many people who I think would be more willing to speak up for what is right, even though there's a risk for them if they were out of debt.

There are so many people who sit when they know they should leave because they're in debt, and that's not a way to live. One of the most important things for you to maintain is your self-respect, your personal integrity, your ability to look yourself in the mirror in the morning and be proud of the man you see in front of you.

You can't be proud of yourself if you're not doing the right thing. You can't do that if you're sacrificing your integrity on a daily basis. And it's a lot easier to stand up and say what you believe to be right, what you know to be true, if you know that your life is not going to collapse around you.

Important. In addition, being completely debt-free helps you to avoid the moral hazard of debt. One thing that many people wrestle with is, "Is it wrong for me to borrow money? Is it immoral for me to borrow money?" Now, as I've wrestled with that question, my answer is no. Usually, a lot of Christians who wrestle with that question, they do it based upon a comment that's written in the Book of Romans where Paul says, "Owe no man anything except love." And there are some people who take a very hard-line stance and say that that means don't owe anybody any money, and so thus, no debt.

I sympathize with that position. I don't personally believe that that one statement, when looked at in the totality of commentary on debt and borrowing money, etc., in the Scripture, is enough to say that it's morally wrong to have a series of time payments. Where I've come to in wrestling that through is that it's not morally wrong to make an agreement to borrow money from somebody and then to pay them back as agreed.

What is morally wrong is to not pay them back as agreed because that is theft. So if I come to you and I say, "Will you please lend me $1,000?" It's your $1,000 and you have the ability to give it to me if you want to. It's your money.

You can do what you want with it. And so as long as I'm not threatening you, as long as I'm not coercing you, I'm not pointing a gun at you and saying, "Give me $1,000," if I come to you and I simply ask you and say, "Will you give me or lend me $1,000?" and you have your $1,000, you have the ability to give that to me entirely free, thus it's entirely right, no moral, there's no moral problem here.

And so if you give it to me and you say, "I'll give you $1,000, but starting one month from today, you're going to pay me, Joshua's going to pay you back $100 per month for 10 months." Well, if I agree to do that and then I show up every single month and I give you the $100, everything is fine.

This was our agreement, or let's say that you charged me some interest and so you say, "I'll lend you $1,000 and you pay me $100 for 11 months." And so I show up in the first month and I give you $100, second month, $100, third month, $100, fourth month, $100, thus everything is fine.

Now, the problem comes in the sixth month when my child is sick and instead of being able to bring the $100 to you, I use the $100 to pay for medicine and a physician to check out my child. Well, now we have a problem because I have promised to return your $100 to you, but now I'm unable to fulfill my word.

And so what I've done here is I've committed a sin of stealing from you because I said I would bring the $100, it's your $100, you owe it, and now I'm not able to pay it as agreed and it's a form of theft. Now, certainly it's a different form of theft, a less morally repugnant form of theft than if I stuck a gun in your ribs and just took the $100,000 and et cetera, but it is a form of theft.

And so when I've considered the morality of the situation, that's my conviction, is that it's not immoral, it's not sin for me to make an arrangement with you where you give me $1,000 and I agree to pay you $100, but it puts me in a situation where I may commit sin in the future if I'm unable to pay.

And since I don't know what the future holds, that's a significant risk. And that's why it's very important to be very cautious before you ever strike your hand in a pledge. Maybe one thing for me to have $1,000 and to say, "I'd like to borrow $1,000 from you, but I know in the back of my head that I can pay the $1,000 back." That's less of a problem.

And so there's a lot less danger, let's say that I go and I'm looking and I'm shopping for a car and I've decided I need to buy a new car, I've got $100,000 in the bank, but the new car dealership will give me a better deal if I go ahead and borrow $20,000 at 0% interest, they'll give me a better deal on the car than if I just simply pay them cash.

And I know that I've got the money in the bank, I know that thus I'm never going to wind up stealing from them, stealing the monthly payment, because I've got the money. That's less risky than if I have no money and I go and buy the $20,000 car and I just simply sign my name knowing that I have no money and I'm presuming on the future to have the income.

So I don't see this as a black and white area, I think it's shades here that you've got to be cautious and prudent and conservative, but the farther you are away from that line, the farther you are away from ever borrowing money, the farther you are from ever breaking your word, from ever stealing from another person.

Now, obviously you can renegotiate debts, sometimes you can renegotiate payments and it's always your right to forgive a debt. In addition, you have to deal with a contract. So for example, I'm much more comfortable whenever I, if I ever have to borrow money, although from a financial perspective, it's less safe.

When I've lent money, let's go to the different perspective. When I've lent money to people, for example, one time I sold a vehicle to somebody and I agreed for them to make a series of payments. What I've tried to do is structure the contract in a way that we can avoid the moral hazard and it has simply made it clear that I would simply repossess the vehicle if they didn't make a payment.

And that's the way that a lot of times that auto loans can be satisfied, is that they're just simply going to repossess the vehicle if no payments are made. So if I'm in a situation and I make a pledge, I make a commitment, I'm going to borrow $20,000 from you, I'm going to use it to buy a car, but I'm going to pledge this car as collateral for the loan, then I can feel morally clear where if I'm unable to pay it, they repossess the vehicle and thus maybe I come out the worst because I had equity in the vehicle, but I'm in a position where I've had a sense of, I've not stolen from somebody.

The agreement that we made was for you to repossess the car, or the agreement was that you would foreclose on the house and thus when you foreclose on the house, if I'm unable to pay, at least I can walk away free and not wind up owing you money. So those, whenever, if I'm ever in that situation, if I'm lending money, I try to structure it in some way that I don't, that we can have an out that satisfies the necessary terms and that satisfies the moral difficulty.

Then of course we need to come in and you talk about things like bankruptcy. And in the United States where you have bankruptcy laws, everybody knows those bankruptcy laws, and so things like bankruptcy laws, I don't view them as immoral because they're known whenever you lend money, whenever you borrow money.

I think they're difficult and I think that that's where, as an individual, you have to question the intent of your heart. It's one thing if you, as an individual, are caught in a situation where you borrowed money, you took out money on a credit card, and then some series of circumstances happened and you wind up declaring bankruptcy because of these circumstances that were relatively unforeseen.

That's different than my making a plan to intentionally defraud somebody. And I go and I build a big line of credit cards, and then I borrow hundreds of thousands of dollars in credit cards, and then I declare bankruptcy, but I've concealed or otherwise protected the hundred thousand dollars and taking advantage of the laws.

Well now we've got a situation where it's immoral, not because it's illegal, well that situation probably would be, but not necessarily because it's illegal, it's just immoral. The intent to defraud is something that should weigh on your conscience. So I think there are ways to work through it in those situations, but the farther you are away from that line, the easier it is to maintain your integrity and to fulfill your word.

And the most valuable thing that you possess is your word. And so word of caution to you, if you're ever in a situation where you wind up borrowing money, make sure that you create an out for yourself, or that you discuss what would happen so that you can satisfy your word.

This is especially important with individuals. If I'm going to go and borrow money from somebody, I'm going to say, "I'm going to borrow the money, here's what I'm going to do, but if I can't pay this back as agreed, I want to talk about what's going to happen and how we're going to satisfy this to make sure that we can maintain our integrity in this situation." So consider those things.

All right, by way of review, being debt-free gives you total freedom in your future. Being debt-free removes almost all fear or all fear from the present. Being debt-free gives you total control over your income. Being debt-free allows you to maintain your personal independence and makes it easier for you to keep your integrity and your good moral standing intact.

These are compelling reasons, but what about some of the other sides? First, is it possible to avoid all debt? My answer is no. It is possible to avoid all commitments of payment, but if we think about the full meaning of debt, it's impossible to avoid all debt. So I'm not saying that you can't buy a car without a car loan.

Of course you can. I'm not saying you can't buy a house without a house loan. Of course you can. But at the end of the day, there's always some form of debt, even if it's temporary. For example, technically speaking, if we're going to think about this technically speaking, you agree to pay your electric bill after every month of usage.

So you're using electricity today. Well, you now owe an electric company money for the bill. You can't avoid that. You can do prepaid to some degree. You can give them a deposit. There are things that you could do, but at the end of the day, there's always going to be some forms of debt.

And that's not even getting into personal debt, government debt, some of the other obligations and things that are imposed upon you. So it's technically not possible to avoid all forms of debt, but I see debtlessness as a scale. The closer you are to zero, the better the results and the returns.

The less, the better. But you don't have to get to zero to start enjoying the benefits. In a moment, we'll talk about good debt, bad debt, et cetera. But the closer you are to zero, the better. Because every step towards zero gives you increased levels of freedom. So let's use an example here.

Let's assume that you are a deeply indebted family. You have a house mortgage, you have a car loan, you have student loans, and you have a credit card debt. You don't have a lot of freedom because you're deeply indebted, but you decide, "I'm going to make progress on this debt." And so the first thing that you tackle is your car loan, because you don't need a $50,000 car that you owe $30,000 on.

So you decide, "I'm going to go ahead and sell the $50,000 car and buy a $5,000 car." Well, that gets rid of one payment. Then you take that excess payment and you use it to reduce your credit card debt. And so now you're left with simply your student loans and your mortgage payments.

Then you get a new job offer. And the new job offer is going to pay you less money than you're currently making, but it has much higher long-term potential for you. And it's in a career direction that you're more interested in. Previously, you couldn't have taken a pay cut because you were pretty well maxed out.

You had to make that car payment, you had to make those credit card payments. But because you sold the car, thus reducing your cash outflow needs by the amount of your car payment, and because you paid off or paid down your credit card debt, now you can take a reduction in cash.

So you bought yourself freedom by lowering the amount of debt that you owed. So fast forward, you move into the new job and you're in a situation where you keep on paying and now you get rid of the student loans. So the only thing that you owe now is a mortgage on your property.

But you decide, "This new job is not for me and what I actually want to do is I actually want to move to the south of France." Well, are you totally debt-free? No, you still owe a mortgage. But you can sell the house, pay off the mortgage, and then go.

Or you can rent the house, pay the mortgage on a monthly basis, and go. And so even if you don't get to completely debt-free, every step towards lower and lower debt buys you freedom. Every single step of the way helps you. And so don't think that it has to be all or nothing.

Think that there's a scale here. And the closer I get to complete debt freedom, the more and more personal freedom I'm going to enjoy. But there is a scale. The less the debt, the better. But you don't have to get to zero to start enjoying the benefits. Let's talk about some questions.

Will you get lower long-term returns without debt? Or will you have less money without debt? For example, if you're going to buy a house, should you just simply rent for $1,500 a month until you can save enough money to pay cash for a house? Or should you buy a house and take out a $1,500 a month mortgage so that you can be building equity in the property over time?

Well, I think the answer to that is pretty clearly that, yes, you will get lower long-term returns and/or have less money by avoiding all debt. If you put two exact circumstances together, circumstance one, person lived in a rental house for $1,500 a month until they could save, let's say they had $2,000 a month of excess cash flow.

And option one is to live in a rental house for $1,500 a month and save $500 a month towards the purchase of a house. And option two is for them to get a mortgage of $1,500 a month and then put an extra $500 a month towards the pay down to the mortgage.

The numbers every single time are going to come out in favor of the person taking out the mortgage. It's just simply going to result in their having more money in the long term through buying the house. The question is, are they going to have more freedom? I'm unconvinced the answer is yes on that.

What you see, where you saw it most dramatically was in a time like 2008, where so many people were underwater on their mortgage that they just didn't have the ability to go where there was work. They didn't have the ability to go quickly. And so the job market had high-paying jobs on one side of the country, but people who were in a low-paying job often couldn't leave because their house was underwater and they couldn't sell it for what they owed and they couldn't get out of it.

And so although I think you can make the argument that often debt will enhance your returns, debt will result in your having more money, I don't think you can make the argument that debt is going to lead to more personal freedom, which is why I said there's a scale here.

The scale would be if you only had the mortgage, well, you can often rent the house out. So is it wise to always avoid all debt? I'm not sure that it's, I don't know, I don't think it's always wise to always avoid all debt. I do think that always avoiding all debt will lead you to higher freedom.

Another way to think about it though is to look and say, are there things that I could do? So in that scenario, I said, which was very simple, you got $2,000 a month of cash flow, you could pay $1,500 a month of rent, save $500 for the house. Yes, you're going to come out every time better to buy the house if that's the only circumstance.

But are there other things that you could do that would keep your freedom and move you in a different direction? Could you rent for $500 a month while saving the $1,500 a month? Could you buy a house for $70,000 as a starter house so that you could avoid the debt while you're saving for the bigger house?

And would somebody doing that come out in a better situation? I think a lot of times if you change those variables, somebody who's committed completely to avoiding all debt can often come out ahead, both financially and in terms of freedom. I can't make that argument if it's a direct comparison, but if you say, I want the freedom and I want the freedom to avoid the debt, but I also want the financial returns and I'm willing to change my lifestyle, to change the variables, I think you can create really compelling financial plans that work.

And that's why I think people often miss the long-term planning opportunities. They often look and say, they undervalue the ability to move for a job quickly, to pivot. Example, let's go back to our $2,000 a month example. You're in option A, you're earning $50,000, but all of a sudden, if you can move right away, you can get a job making $100,000 a year.

Well, I bet if we put all that into a financial plan and I could boost your income by keeping you mobile enough to move fast, you could do it. So just think about that and recognize that life is not only one variable. Your only variable is not either renting or buying a house.

There are many variables and in the midst of those, you can find a plan that satisfies the circumstances of your particular situation. What about things like debt for investments? Again, if we create two scenarios, scenario A is you're going to be an investor and you're going to invest using other people's money or scenario B is you're going to be an investor, but only using money that you've saved.

Well, if everything goes well in both investments, the debt will usually increase your returns markedly. I can't go to somebody who wants to buy houses and say, "You're going to get better returns by not borrowing money." I just don't see any way to make that mathematically work. The returns are going to be better with borrowed money.

But what I can say is if you desire the freedom of debtlessness, then you can adjust your decisions in a different direction. So for example, if I were speaking to somebody in the United States and they're thinking about investing in real estate in the United States, I have to advise them to use some amount of other people's money, just simply because the money is given away at basically free interest rates.

And it is a robust lending market. There's tons of money available to do that. But the returns are also pretty limited because of that. So yes, the returns are possible, but the returns are often not nearly as exciting as some other place. Whereas if somebody says, "I don't want to borrow money because I want to keep freedom," I advise them to invest outside the United States.

All of a sudden, if you move from the United States to a developing country, $20,000 in the United States is hard to get started in real estate investment. $20,000 in a developing country can often make a big difference as a real estate investor. And often in a developing country, there just simply isn't the money available.

And so you can make higher returns and you can start to boost your profits more quickly. So you can adjust your investment portfolio and your investment plans in a way that satisfies your desire for freedom. Don't ever think of it as just one variable. So my answer to the question, will you get lower long-term returns without debt?

Probably. But will you maintain your freedom? Will you sleep better at night? In a lot of cases, yes. Best plan is probably some middle-of-the-road plan, but you don't have to view your desire for freedom as something that's automatically going to impoverish you. You can have both. What about good debt and bad debt?

Is there good debt and bad debt? Usually when people talk about it, they would say that bad debt is for something like a consumption debt. A consumption debt would be you go and you put a new TV on a credit card. That's a consumption debt. And so they would say that's bad debt.

You bought an asset that plummets in value the moment you take it out of the box and you put it on a credit card. That's bad debt. Whereas people say good debt is debt that helps you make more money. So it might be debt for student loans or debt for a new piece of equipment that you can leverage in your business or a house.

That might go up in value. I think that that is a sound method of analyzing debt. I certainly think that one should never borrow money for a depreciating asset. That's simply foolish. It's consumption. It's foolish. And if something is a consumption expense, there's no way to make that a good decision.

And that there is good debt. You can take debt and you can leverage it for increased gains, especially if you follow some of those rules. So you can use other people's money or use the bank's money to buy a house that you then rent out and make money on.

That's powerful. And the results grow quickly. I frequently advise people to do that. It is certainly true that if you borrow money on student loans, that might work out because it qualifies you for a career that can be a very high earning career. If you look at this as some of the extreme examples, somebody who incurs large student loans for a medical degree, a law degree, or a fancy certification or credential of some kind that does later qualify them for a very high earning income, it works out financially in a lot of situations.

But even in those situations, it does limit freedom. It does limit choices. I have counseled many high earning professionals who have been frustrated with how they're stuck because of their student loans. It's difficult. Let's say you've got two doctors who marry each other and they each have $300,000 of student loans and they're trying to figure out how do we do this.

I've talked to a lot of people that want to make a different change. And so you will have to consider for yourself. What I would say is that there's probably some balance that would be wise to consider. Being somebody who prioritizes freedom, I can't imagine I would ever commit myself to a six-figure student loan.

I just can't imagine it. I would do a military contract. I would go to medical school in Mexico. I would do a self-study legal license or something like that. Some way of avoiding the significant amount because what I've observed is oftentimes I don't like to follow through on stuff.

And so if I did really have a lot of experience, maybe I went and worked as a paralegal and I said, "Yeah, I really like this legal stuff. I've been studying on my own. I'm really sure." Fine. There's a place for it. But anything you can do to maintain your freedom is going to...

to minimize your debt is going to maximize your freedom. And I've known a lot of some people, I've talked to people again and again and again who say, "You know, I started this path and now I'm stuck in it." And what I despise as somebody who enjoys freedom is I despise that feeling of stuckness.

Because when I'm stuck, my creativity dries up, my joy dries up. I just start to feel frustrated and it's a matter of getting out as quick as possible. I don't like that feeling. And so for me, I'm going to minimize the debt. So is there good debt and is there bad debt?

Yeah, I think so. So what are some rules that you can do to put in place? Number one is that if you're going to borrow money, try to have an out. Try to have an asset that you can sell and try to make sure that you're conservative. So if you borrow money for a rental house, you borrow $200,000 but you buy a house and the house is worth $205,000 or $220,000 so we can pay real estate commissions.

If you decide you don't want to be a landlord at some time, you're not generally stuck. As long as you've got a house that's not some weird monolithic dome that you can't sell, as long as you've got a cookie cutter house that you can sell and you can sell it for $220,000, then you can get out.

And so you can get out fairly quickly. So if you're going to borrow money, try to make sure that you're borrowing money for an asset that's going to back it up. That's going to be one of your best ways out. If you're going to borrow money for a business, make sure that you're only borrowing in a way that you'll be able to sell it.

It's one thing to borrow money for an excavator to start an excavating business, but you can always sell the excavator. That's different than borrowing $30,000 on credit cards to start a business that has no tangible value that you can't sell. And so in those situations, be careful. If you are going to borrow money, try to borrow money in a way that keeps more freedom.

So for example, if you're going to borrow money for a business, I'd rather borrow money from my customers by pre-selling something than borrow on a credit card by committing myself to something else. I'd rather set up an arrangement where I pay somebody based on commission and profits rather than committing to pay salaries that I'm taking out from an SBA loan.

And so if you think about the things that you strike your hand to, you can structure things in a way that keeps maximum levels of freedom for you. And when you're setting up loans and such, make sure that you clearly understand the creditor protection laws and bankruptcy laws that apply to you and use those laws to your favor.

Make sure that you always structure something in a way that, "Hey, if I couldn't pay this, at least I would be able to discharge it in bankruptcy. If I can't pay this, at least I can sell the asset and not be owing a difference. At least there's a non-recourse loan if possible." Understand the laws and always set things up in a way where you're protected so you can maintain your freedom.

That's why I teach so much technical financial planning, because if you can empower somebody with the knowledge of the laws, then you're in much better situations. It may not always be possible for you to avoid debt. You could be the most committed person in the history of the world to avoiding debt, and then you wind up with a medical emergency, with bills that aren't covered by insurance, and you wind up owing debt, owing medical debt.

You could be in that situation. And again, probably every single listener to this show, you owe debt. Your governments have borrowed huge amounts of money from your children and grandchildren. They've done it in your name, and they're going to try to collect their tax dollars every single day to owe your debt.

So you can't avoid all debt, but you can eschew debt. You can minimize debt. And the closer you get to zero, the more personal freedom you will enjoy. Very, very important. If... Maybe I'll do this at some point, but I want to do a show at some point called basically The World's Simplest Financial Plan.

And I'll just simply tell you this. If I could give one advice to anybody, if you just simply avoid debt, you avoid the vast majority of problems that people... that worry people, that stress people, that wind up ruining people's lives. So avoid debt. The closer you can get to owing zero dollars, the more you will enjoy personal freedom.

There is another component of this. You need to have some money and some savings, and that's also part of my fourth ring. So what I'm going to do is I'm going to end today's show here, and I'm going to talk about savings as a separate show, part two of this fourth ring.

Because simply being out of debt, there are cases where, yes, you're debt-free, but having no money, that does actually get you less freedom. If you have $100 a month that you owe, you have a $10,000 credit card debt, and you have $10,000 in the bank, and your credit card wants $100 a month from you.

You have more freedom, more choices, more freedom of choices to have the $10,000 in the bank and simply to owe $100 a month in the credit card than you do if you have zero dollars of credit card debt and zero dollars of savings. There are things that you could do in the $10,000 in the bank situation that you can't do if you have no savings.

Simple example, you want to move for a job. Well, if you have $10,000 of credit card debt, but you have $10,000 of savings, you need to make a security deposit and a first month's rent payment on a new house to live. And you can do that if you got $10,000, but you can't do that if you have zero dollars in credit card debt without going back into credit card debt.

So next, we'll talk about savings in part two of this show. Now, as I close today's show, when I did this show, I wanted to launch a... I want to do a course on getting out of debt. In some ways, it's obvious that there's nothing, there's no magic to it.

You just pay extra on the debt. That's it. There's no magic to it. But there's a whole lot of techniques that in the years that I've gone in and out of debt, I've found and I've studied that can get much faster results. I'm not ready to launch that today because I'm doing the preparedness course.

So I decided I'd go ahead and finish the series off and we'll launch that. But hopefully, in the next few weeks, I'll be able to launch that out. For today, remember that I'm teaching a preparedness course starting on Monday, February 3. So go to radicalpreparedness.com. And in the meantime, what I'll tell you is this.

I've done a lot of consulting over the last few months. And many times, I have been able to do something. I'm able to do something now that I wasn't able to do when I was a professional financial advisor. And that is to give people a plan that leads to good financial results and good lifestyle results.

And to have somebody leave a consulting call happy. It used to bother me when I was a financial advisor and all I had was a financial planning software. And people would come into my office and they'd say, "I want to accomplish these certain goals." And I'd put the numbers in and they never had enough money.

They were never saving enough money. They never had enough money. And I'd put this chart in front of them about how much money they needed to save for retirement. It was just filled with red everywhere indicating a shortfall. And in hindsight, they would always leave my office less excited than they were when they came in.

Part of that was my youth naivete, my lack of skill. But part of it is just the system, the mainstream financial system that says that the only solution is to save more money for retirement. I don't buy it. I'm done. I don't buy it. You should have a life now that you don't want to retire from.

And you can have that quickly. And certainly, I used to tell people, "Get out of debt." Of course I did. There's lots of ways to do it. But what I have found is that now in doing financial planning for people, I can usually find a plan that results in pretty quick results.

And most people leave a consulting call with Joshua feeling encouraged about the future. Even if there's some work involved, even if they know they got 10 months or a year of work, they leave encouraged. And I want that for you. So if you're in debt, keep your ear out.

First, recognize that you're going to have to pay it off. You pledged your hand. You said you would pay it. So pay it. And there's not any secret other than making money, not spending it, and paying it in debt. That's what you're going to have to do. But there are some things that you can do.

So keep an eye out for my course. I'm going to try to do it as a low-priced course. I don't like doing low-priced courses, but I want to do it on this subject just to help people who get out of debt. Because I would love to have thousands and thousands of people around the world get out of debt and experience the freedom that comes from being debt-free.

So I want that for you. But in the meantime, reach out to me for a consulting call. Email me at joshua@radicalpersonalfinance.com. And I'll help you. I'll help you. I'll charge you for it. I'm not going to work for you for free. But email me at joshua@radicalpersonalfinance.com. If you need help and you can't afford my consulting fees, your best deal is join as a patron of the show.

Go to patreon.com/radicalpersonalfinance and sign up there and join me on a Friday call. And on a Friday call, we'll talk through it and we'll work through your situation. So that's going to be your cheapest option as well. But do one of those things and make a goal that this is the year that you get out of debt.

Once you experience the control of your income, once you experience the sense of freedom in your future, once the fear flows out of your present, you're going to have a major increase in the amount of your personal freedom. Set it as a goal. Make this the year that you get out of debt.

If it takes you two years, it's still worth it. Make this the next two years that you get out of debt. And generally, you shouldn't need more than two years to get out of debt. There are potential situations in which you do, but the vast majority of people just need a plan that results in you're getting out of debt in less than two years and you can do it.

So make this the year. Make it a goal. You won't regret it. The LA Kings holiday pack is back. The perfect gift for the hockey fan in your life. A three game pack starts at just $159 and includes a holiday blanket. Buy today and you'll receive an additional game for free.

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