The Devil's Dictionary in 1911 defined debt this way - "An ingenious
substitute for the chain and whip of the slavedriver."
I ignored sayings like this when I started out in the practice of law. And, whereas it does not take you long to figure out what this saying means and feels like in real life, once you discover it you are generally years away from correcting it. This is because debt is everlasting.
It is bad enough that most of us have student loans and other debts coming out of law school, but it does not help to increase the pain with more debt.
Stated in short, every dime in debt service you pay each month is a dime less than you have to spend the money (debt free) on what you want and need.
And, the stress of debt .... Do not even get me started. Let me just say that it gets worse with age. When we first graduate from law school we are fearless, and this causes us to make some bad decisions. It is this stress that represents the chain and whip of the slave driver at our backs. It is what makes us pain.
Somehow, when we get out of law school and start in the practice of law we look at debt as an investment of sorts, meaning that we see it as increasing our cash flow to unrealistic levels so as to earn ourselves out of the problem we are creating. But, it is important to note that almost never happens. No matter how much you earn, it seems that debt begets debt.
The further chain and whip of the slave driver results from the lack of liquidity. Debt does this too you. You spend all of your time spending -- in growth mode. You stay current, but as a result you have no cash. Your future is dependent always on grace and luck. The problem is that long term nobody is entitled to that much grace and nobody is that lucky. It is like running all out in the wrong shoes with your shoe laces untied. You are an accident waiting to happen. After a while, when you come out of the fog of success, you realize this and life becomes a little too uncomfortable. By this time you have been entrapped by the slave master of debt.
I once had someone explain it to me this way. They used $10,000 placed in a imagined share of Brookshire Hathaway stock over a given period of time. But, it could have been any high yield investment as any kind of stock probably has too much risk over all for this analogy. The result was that the investment yielded hundreds of thousands of dollars in profit over a long period of time. He then took $10,000 in credit card debt, fired up the old HP calculator, and showed what happened over the same length of time with only minimum payments. It had nearly the opposite effect. Where one was putting wealth in your pocket, the other was sucking the hope of wealth and comfort right out of you. You say, but I do not have $10,000 to put in an investment. So be it. Neither do I. But, the example is not lost because even no money investment might yield no gain, it also does not produce a giant loss.
I tend to think that the biggest problem most of us have is that we see debt as just that. We see it in the way of credit cards, and unsecured loans, and car loans and, sometimes, as home loans. But, it is really more than that. We might as well just call them liabilities whether they are actual debts or not. Anything, really, that continues to consume your earnings and to which you are obligated is a debt.
In this way, your office lease is a liability. Your staff for which you feel obligated is a liability. Your leased vehicle is a liability. Your law library is a liability. The light payment is a liability. That famed parking space of yours downtown is a liability. The truth of the matter is that these liabilities are debts. The truth of the matter is that these liabilities rob you of your livelihood.
When we start out as lawyers, trying to make something for ourselves, we concentrate exceedingly on cash flow -- on making money. Liabilities -- debt -- takes a backseat, and that is terribly unfortunate. First, we tend to over buy what we need. Too much office space, too big of a computer, or staff that we could do without really need does nothing but invite in the slave driver. Oh, some say that we might be a little lazy and we do not want to do the work ourselves. It is more that we are a little insecure and feel we need the support. So we buy it, or lease, or hire, or commit future monies in some way. Second, it is just easy to get nickel and dimed to death. A little money here and a little money there really add up over time.
My experiment starting 10 years ago was to quit psyching myself into what I think I just have to have or need, and to figure out what I actually need. What you find out, if you dare to try it, is that you need very little to start and run a law practice even in this modern world. Sure your earnings might be a little off as a result, but your liabilities are a lot less. Most often it not only equals a net gain, but it equates into a big net gain.
More importantly, what it does is remove the chain and whip from the slave diver. It provides you a degree of peace. It gives you a little more comfort. It makes it a little easier to satisfy your needs. It helps you sleep a tad deeper and better. It all adds up to a sense of relief, joy and accomplishment.
I'm with you all the way on this one! Good points for new and not-so-new lawyers alike.
Al
www.alnyethelawyerguy.com
Posted by: Account Deleted | June 09, 2009 at 12:40 PM