Originally posted at :ShaunSomers.com
The year was probably 1992 or 1993, I'm not sure but it was when I was in either grade nine or ten. I was sitting in class at Centennial Secondary. I can clearly picture the classroom and it's setup of computers lined around the outside walls with another inner ring of old school IBM PCs in the middle (they were pretty modern at the time of course).
Our teacher was Mr. Gyetko. I don't remember why we were on the subject of personal finance, or if we had been talking about it for a bit or it was just a one-off comment. It was computer programming class, not any kind of business or math class really.
There is a lot of advice that Mr. Gyetko could have been giving if he had perfect foresight. Maybe something like "invest in Microsoft" (it was at about $2.30 a share at the time). Or even just "pay way more attention, Somers, this stuff will be pretty useful someday and people who understand computers might get really rich".
Hmm, he actually may have said something along the lines of that last one. I don't remember, I spent the bulk of those classes playing Tetris and copying programs off of the kids who sat near me. I grew up liking computers and all, but once we got past the basics I got lost quick on programming.
The advice I am certain he did give that day was a lot more basic and predictably true than either of those. What he said was "Don't ever go into debt for anything but a house".
"What about a car?" was one question that was asked by a classmate, an obvious teenage response to such a restrictive tip. "No", Mr. Gyetko replied, "only borrow to buy something that will go UP in value".
Fantastic advice. While I'm no fan of debt of any kind, mortgage debt is at least acceptable for that very reason – there's a strong likelihood that a properly maintained house will at least hold it's value over the long term. If you never go into debt and don't tie yourself to monthly payments, you will always have your full income working for you. Even if you are somehow able to follow this advice and be completely irresponsible with your money otherwise – spending every dime of every paycheque – you still aren't in terrible shape. If you don't get into debt, you always have the option of quickly changing course financially.
If you do something more along the lines of what I did, that is to say completely ignore this bit of computer class wisdom and get a credit card immediately upon arriving in college and spend the next years running it up on pizza and baseball games; then when you decide you want to start working towards financial peace you first have to get yourself out of debt. And if only it were that one credit card! Car payments, a line of credit, uh…more credit cards, all together equaled a slavery to payments that would have best avoided by never even dabbling with them in the first place.
Thankfully several years ago now I found Dave Ramsey, whose book and radio show basically give the exact same advice I received in 1992. This time I followed it, and after some hard work our family now has no debt except for a mortgage, and I help people reach their money goals as a financial coach.
You know what would cool? If I could write a computer program that would tell me where I'd be financially today if I never got into non-mortgage debt. Hmm, maybe the guys who sat beside me could give me a hand…..
Do you agree with my teacher's recommendation about debt? Who gave you your best money advice and did you follow it?