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This is a mini-rant, a short essay refuting a common misconception among users of an Internet forum. If you think this essay is FUD, feel free to explain why on the essay's talk page.

The first step to becoming debt-free is to pay off one's credit cards in full each month. But how far to go after that and how quickly is debated. Some extremists follow Polonius from Hamlet, Prince of Denmark and say "neither a borrower nor a lender be." Others follow Dave Ramsey, who teaches pretty much the same thing. But that's not always practical.

Student loans

Myth: Nobody needs a student loan.

Going to college without taking a student loan generally means going to a state school; I'll grant that. But it also means not paying room and board, which is not practical because not everybody has parents who live near college.

In addition, a student loan is often the way one establishes a credit history for the first time. Without a credit history, insurers will charge you higher rates. Without a credit history, it's difficult to qualify for a credit card, and without a credit card, it becomes harder to reserve a hotel room or a rental car.

Home loans

Myth: Nobody needs to borrow money to buy a home. Rent until you can pay cash; it'll keep you mobile so that you aren't limited to jobs near you.

I'm told that there are some housing markets, like the State of New York, where rent is actually more expensive than property tax, a mortgage payment, and home maintenance combined. In other places, the mortgage payment is just slightly greater than rent, and the benefit of actually having some equity offsets the difference.


Myth: Nobody needs to borrow money to buy a car. Everyone can take the bus or ride a bicycle to work and to the grocery store until they can afford a $3,000 beater car.

That's not practical in several cities that have little or no public transportation. For example, a city's buses might not run on Sundays (as is the case for in Fort Wayne, Indiana), and cab fare for Sundays is greater than bus fare for the whole rest of the week. And in a lot of cases, one would have to connect several times and make the commute at least an hour or even two hours longer each way, including time spent either waiting for one's shift to start after arrival or waiting to depart after the end of one's shift. Changing one's hours to match the bus schedule isn't practical for employees who interact with customers. See also Car vs. bus.

Nor is a bike practical in harsh weather or for round trips exceeding 20 miles (32 km). There are housing markets where all the real estate within reasonable cycling distance of the workplace is substantially more expensive.

And once you do buy a car, a beater may cost you more for repairs than a car still under its ten-year warranty.

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