Let me pose a question: in what universe is taking on debt considered a key to financial security? Quoting Credit.com’s Shelby Bremer recent article, "Millennials Ignore Credit Cards. Should They?":
While this means fewer young people are incurring credit card debt (an average of $2,087 per person, compared to 2007’s $3,073), in the long run, this trend is not without consequences. Though juggling credit card debt with student loan debt and an entry-level salary may be challenging, establishing credit at a young age is arguably crucial to future financial security.
Ms Bremer then goes on to suggest that millennials take on credit cards, but only the "right" kind of credit cards, and establish a credit history.
I argue that credit and credit cards are not necessary for future financial security. Being well-versed in the basics of accounting will do a lot more for helping you maintain financial security than taking on debt or remaining in debt, such as the numerous "experts" who advocate against paying off a mortgage early.
I think that on some level a lot of millennials know that this tremendous borrowing that has occurred over the last 20 years has been contributing to a major economic problem in the United States. A lot of millennials were very receptive to Ron Paul’s message when he was on the campaign trail in 2008 and 2012. He woke up a lot of minds, opened a lot of eyes to the realities of our economy and, more importantly, our monetary system. It also helped that the financial meltdown from 2008 that we are still feeling today Ron Paul and many other economists predicted years before it happened.
Rampant borrowing lends itself to greater fractional reserve banking which fuels inflation in the economy and money supply. Greater inflation means things become more expensive over time. But at the same time, we have an economy that, for at least the last two decades, has been fueled and propped up by debt. That is why recent headlines have said that an increase in interest rates would end a housing "recovery".
Banks and other financial firms need people borrowing money. They need to convince people, especially the younger generations, that borrowing is good, credit is good, and credit cards are necessary for future financial security. It’s all part of the banks trying to promise the world, so long as clients are willing to sign over a part of their future value to the banks.
I’ve said it before and I’ll say it again: debt is slavery. And despite numerous assertions by numerous financial "experts", there is no such thing as good debt.
Millennials avoiding credit cards is not a bad thing. It is when measured against the financial standards established over the last 20 years or so, but it’s never been a bad thing to avoid debt. The borrower is servant to the lender, metaphorically speaking. But when you borrow money from someone, you are committing a portion of your future earnings to someone else. When you borrow money, someone else has a claim to your assets and your future.
Where is the good in that?
Avoiding debt is only bad for your financial future if you intend to be someone constantly borrowing money to prop up a lifestyle you would not be able to afford on your wages alone.