Far too many people aren’t set up for retirement. There are a number of reasons that contribute to this, but one of the leading obstacles to achieving financial freedom is, unsurprisingly, debt.

If we look back to the period from 2000 to 2007, the economy really heated up. Then the great recession hit, and the wheels started to come off. An important part of this story involves taking into consideration what happened with student debt. Since the start of the great recession, student debt has skyrocketed. According to the board of governors of the Federal Reserve system, during this time student debt has more than tripled.

Here is where things went wrong for a lot of people. People were losing their jobs, and some of the popular remedies being thrown out into the discussion were “Go back to school, learn a new trade, switch career fields, or get an MBA!” The problem was that people didn’t have jobs, so they didn’t have the money to pay for tuition. They had to borrow, which put them further in debt without any income coming in while they were back in school.

There’s No “Good” Kind of Debt – Debt is Debt

It is compelling to compare student debt with credit card debt during the great recession. Credit card debt dropped during much of the time, while student debt did the opposite. What makes matters so much worse (and is a dirty secret of debt in our country) is that you can’t get rid of student debt the way you can get rid of other kinds of debt.

Unlike in the case of student debt, you could max out your credit cards by going to Las Vegas. You could gamble up a storm, have a blowout party weekend, spend all kinds of money, and put it all on your credit card. Then, if your credit card debt is below $50,000, you can bankrupt that credit card. However, if you have a $50,000 student debt, you can’t bankrupt that debt. Sure, some politicians talk about forgiving student debt, but so far it is just talk. There are some programs out there that can forgive certain amounts of student debt for teaching or public service, but you cannot bankrupt it away. That’s with you forever.

How Debt Impacts Life Decisions

Something many don’t stop to consider, when seemingly making decisions that are supposed to improve their lifestyle (e.g., acquiring more education), is how that student loan debt impacts homeownership rates. When student debt goes up, homeownership gets pushed down, leading to young people not being able to afford to buy a home. The result is they have to rent.

Let’s flip this around. This means you have a lot of people looking for houses to rent, which creates a need in the marketplace. This means you should be a landlord. You might think that’s crazy—a real leap of logic. But homeownership among young people is at its lowest point in three generations. The young are renting. Period. What does that tell you? It tells me that debt has caused a severe situation. Student debt has a direct correlation to homeownership rates going down. If that’s not financial imprisonment, then I don’t know what is. They just forced you to become somebody who leases property from somebody else. I don’t know what else to call that. Sorry, if you are renting because you have to, you’re a captive.

And so it goes with debt in all its forms. When you are beholden to another, that is imprisonment. When the presence of that debt precludes you from making strategic financial decisions, that is imprisonment. Learn more about how to dig out from under the debt you have in your life – even what was considered “good debt” – in order to experience the financial freedom you deserve.

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