Debt = Serfdom

Serf tapestry cc

In this great post by Charles Hugh Smith at, he explains that life can be lived without debt. I totally agree. But for most of us who are not privy to piles of wealth it does take some work though.

Reducing debt is key to living a high quality life. When I was a stock broker in a small college town in Virginia, the clients who had it most together generally were the ones who had the least debt. They never had the fanciest cars and rarely had the largest houses, but they often had far more wealth than my doctor and lawyer clients who all drove Mercedes’ and lived in McMansions.

But there were exceptions to the general lawyer/doctor rule. One older doctor I came to know who I thought was particularly prudent with his money told me a great story that he told residents at the university.

A young med student is walking the halls with an old and respected doctor doing the rounds. The med student knows that this doctor is well respected and appeared to be very happy in his work despite his age and in contrast to many of the other older doctors at the hospital. So the med student asked,

“Doctor, you’ve been successful and you really seem to enjoy your work. What is the key? I’d like to be as satisfied in my work as you appear to be.”

The old doctor stops and smiles at the young man and says,

“Don’t buy the big house.”

We are so often told that we should buy a house, a college education, a car, even vacations (!) by going into debt. But as many in the middle class know, especially in light of the current economic slowdown, debt is a ball and chain. To the degree possible it should be minimized.

(From Of Two Minds)

There are three key dynamics to debt-serfdom:

 A. The serf is never free of debt, i.e. he/she is programmed to being indebted for life.
B. Most of the serf’s income is devoted to servicing debt.
C. Most of the debt is unproductive: marginal-utility college education, needless auto loan, leveraged McMansion that loses value in the inevitable speculative bust, and so on.