FINAL REFLECTION

Nicholas A. Kempin

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Nicholas A. Kempin
Professor Harrison Holland
Finance 1050
12/10/15
Final Reflection
Debt culture, it is a disease that plagues this nation, in many ways. It plagues us on
personal levels, it plagues us even on the national level, and all you have to do is look up the
national debt. Where have we gone wrong? What is causing these issues? The truth is it is
because we as a people live in a consumerism mindset. In this class we have been forced to learn
of many complex, and simple ideas. It is a class where we had to delve deep into our own lives,
to gain an understanding of what it is that we were studying. How does debt affect each of us?
Are we living in debt? Are we contributing to the debt culture? In this way the class was one of
success, and it was one that challenged many of us in a multiple of ways. It is with this in mind,
and with what I have learned over this last semester that I will now delve into the topic of
decreasing our personal debt, and defeating the debt culture.
Following in that mindset we need to dig deep into what exactly debt is. Debt is thus the
owing of money, property, or services to a person, business, government, or other legally
recognized entity. The debt we will be discussing will be that of financial debt, or money. There
are multiple ways in which we can accrue debt, the most common being Credit Cards and Loans.
So the easy answer to decreasing debt would be to not accrue it, but in the world we live in it is a
near impossibility unless you are already financially set for life. Therefore we often accrue debt

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to increase our credit score so that we can have access to more, and lower interest loans and
credit cards.
Debt can be used as a tool, and not be looked at a burden that we are forced to carry. The
use of revolving credit, or credit cards, is a staple in the world of building credit, where we often
go wrong is not paying it back in full. If instead of paying the minimum every month we instead
payed it in full every month we would find that not only are we not carrying large amounts of
credit card debt but we are also significantly strengthening our credit score. With this higher
credit score we could get better rates on necessary loans in our lives.
When I mention necessary loans, what I am referring to is Auto Loans, and Home Loans.
These loans allow us to purchase products that are important to our everyday life, as well as
becoming more and more of a necessity in various aspects of our lives. The vehicle we purchase
will make it easier for us to get to work and, if we research well enough, we can find one that has
been on the market for a few years for a cheaper price that is still a good value, including fuel
mileage. By finding a car with a few miles on it we can reduce the amount that we need to
borrow, as well as find a vehicle where parts for repair are more readily available. It also means
that most of the issues with the vehicle have been discovered and we can make a more informed
decision.
In addition by purchasing a car with better fuel mileage we can save additional funds
which we can then put towards paying off the debt accrued with the purchase of the vehicle. This
Auto loan is thus a necessary loan, but how we utilize it is what is important. We should use it as
a tool to continue to strengthen our credit for the eventual purchase of Real Estate. The vehicle is
also an asset that we can sell down the road, and since we purchased used in the scenario most of
the depreciation has already occurred; while we will not make money off of its sale we can

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decrease the loss, but is it truly a loss of funds if we have been able to utilize it for years? I
would say not; instead it is bonus funds that we can utilize for investments or towards
accumulation of wealth which will aid in the decrease of debt in our lives.
With the greater credit score we can look towards accruing necessary debt for our home,
or as I will refer to it, Real Estate. Why do I use the term Real Estate? Because we are building a
home, an asset, and an investment all in one. This Real Estate may be debt now, but with proper
care, and continually paying down the debt we will turn it into both an asset and an Investment
for our future. All the while this place will also function as our home.
While we have been building our credit, we should also be using a combination of
investments and saving money for long-term growth. The ways that I suggest are the
combination of Mutual Funds, Roth IRA, Savings Accounts, Annuities, CDs, and Life
Insurance. But Nick you ask, why Life Insurance? How is that an Investment? Well dear reader,
whoever you may be, Life Insurance, if its whole life, doubles as a savings account. This gives
you double security, ensuring should you pass away before you or your loved ones would want
you to, they will be taken care of. Though, if instead you live a full life you will be able to access
those funds and thus utilize them for long-term health and life. The use of a Roth IRA, while not
tax deferred, will grant you access to a Tax-free income source when you retire, this means you
do not owe a debt for your income from the Roth IRA to the United States government. The use
of the savings account gives you a safe and constant accumulation of wealth for yourself and
those you care for.
By utilizing your funds for long-term growth, accumulation, and investments, you will be
able to overcome the debt culture by making debt a tool to overcome it. Your Credit Cards are no
longer used for those insignificant purchases, but instead are used to increase your credit. Your

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loans are no longer something you look at in fear because of how much you owe; instead you
look at them as a way to begin developing an investment for the long-term. This all coalesces
into your retirement and thus into your estate for your descendants, should you choose to have
any. By utilizing debt as a tool instead of as a crutch you will be debt free well before retirement
age, which means that you will have a debt free estate.
Achieving a debt free estate should thusly be your goal; to achieve it will mean that the
funds you have accrued and built can be granted to your children to give them debt free lives.
This, over a few generations will eliminate debt culture, and instead create a culture of growth,
both for individuals, and for the economy. So shouldnt we all make an effort to utilize debt as a
tool? Or should we only look at it as a burden? Should we look at it with disdain? No, instead we
should utilize it, and make smart decisions with the debt we do accrue, because we will all
accrue debt. How we utilize it though, that is what matters, which is what makes the difference.