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Financial Tales from the Factory Floor #2

illustration with hands of debtor with tied hands

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This tale is about debt. Debt can be a very useful too when used correctly. Unfortunately, many do not use debt as tool but as a way to fund their lifestyle. Through out the years, I have seen many factory workers, including myself, misuse debt. In this post, I will discuss some of the ways I have seen debt misused by factory workers.

My Story

First, I will start with my story. I used to use credit cards for my emergency fund. This worked well until it didn’t. Usually, when an emergency would happen I would finance it typically by putting it on a credit card and pay it off over the course of a few months. Sometimes it would get pretty tight but I would find a way to work through it.

When I needed a new roof on the house I financed it. Before I could pay it off, I needed a new well so I financed that too. This maxed out all of my credit line. Things were tight, but I was making the payments. Then I had a major car repair. I had no more available credit. I had no savings. This time I had dug a hole for myself that I could not get out of and wound up filing for bankruptcy.

Debt for Lifestyle

Instead of using debt as a tool, many use it to fund their lifestyle. I have seen people finance boats, RVs and other recreational vehicles. People will take out loans to either lift of lower their vehicles or other wise “trick” out their vehicles that honestly aren’t in good running condition. I know a guy who has financed an engine and other parts for his race car so he go racing on the weekend but does not have any money saved for retirement. Others will take out loans for car repairs such as brakes or new tires. Some people will buy a vehicle with a loan in which their monthly payment is 25% of their gross pay.

A Bad Example

One really bad example of poor debt management I have seen is a 60+ year old refinancing his vehicle. He purchased a $50,000+ truck with a 6 year loan. He was within 10 payments of paying it off, but refinanced for an additional 4 years so he could have enough money to get another loan on a second vehicle. This individual has little saved for retirement and now will not be able to increase his retirement savings any time soon. He now has to work past the age of 65 in order to be able to afford his car payments.

Conclusion

Too often I see people use debt not as a tool to buy appreciating assets but instead as means to purchase a depreciating asset that they could otherwise not afford. I learned my lesson about poor debt management the hard way. Now I am in a much better place. My view on debt has changed. I no longer use debt as my emergency fund. Unfortunately, many others have not learned their lesson and will likely pay a big price to learn how to manage debt properly.

On a side note, I have added a Recommended Resources in the menu which is currently is a work in progress. This page will contain blogs and YouTube channels that I enjoy as well as some sites that I use. I hope you take the time to check it out.

*Disclaimer – I am not a financial professional. The information shared here should not be considered financial advice. I am just a factory worker sharing my experience as I strive to achieve financial freedom. Before investing or making any financial decision do your own research and due diligence or consider seeking the advice of a financial and/or tax professional

Below is a list of a few businesses I use. Check out some these offers.

Free Bitcoin!
https://www.lolli.com/share/XP7gxDgqC4

Lolli has a variety of stores that it is affiliated with and offers rewards for shopping at these stores. I use Lolli when I shop on Chewy and I get bitcoin as a reward. Who doesn’t want free bitcoin! If you are interested in Lolli and want to help support the blog here is my referral link: https://www.lolli.com/share/XP7gxDgqC4

Investing Made Easy
https://m1.finance/ktIiFeOI5zDr

I use M1 Finance for my taxable growth account. M1 Finance offers promotions for signing up. At the time of writing this post, the promotion is for $10. These promotions vary from time to time but is usually a $10 bonus. If you are interested in M1 Finance and want to support the blog here is my referral link: https://m1.finance/ktIiFeOI5zDr

Up to 5% Savings Rate!
https://bank.varomoney.com/signup?r=William360

I use Varo Bank for part of my emergency fund. From time to time the bank will run promotions. Currently, you can earn up to 5% on your savings with Varo, if you meet certain requirements. If you are interested in checking it out, here is my referral link: https://bank.varomoney.com/signup?r=William360

If you use the referral links listed above I could receive compensation. Please take the time to read the terms and conditions before signing up.

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