How I Think About Debt · Collab Fund
How I Think About Debt · Collab Fund
I love the quote from author Kent Nerburn that, “Debt defines your future, and when your future is defined, hope begins to die.”
Not only does hope begin to die, but the number of outcomes you can endure does, too.
Let’s say this represents volatility over your life. Not just market volatility, but life world and life volatility: recessions, wars, divorces, illness, moves, floods, changes of heart, etc.
With no debt, the number of volatile events you can withstand throughout life might fall within a range that looks like this:
A few extreme events might do you in, but you’re pretty durable. With more debt, the range of what you can endure shrinks:
And with tons of debt, it tightens even more:
I think this is the most practical way to think about debt:
As debt increases, you narrow the range of outcomes you can endure in life.
