Debt is the worst poverty

If you are poor you are poor and you have to cut your coat according to your cloth, how ever poor that cloth might be. If you are in debt you have entered negative territory and someone else owns your coat. Any effort you put in to struggle free is absorbed by your debts. You cannot save a little to see you through. You cannot invest a little surplus to improve your lot.

Avoiding unnecessary debt is one of the first things a wise person should learn. The trouble is that governments have created a system of money based on paper that can be manipulated. It is possible for people to run up debt and then have it considerably reduced by inflation.

The common sense saver who prudently avoided borrowing feels cheated, as their savings lose value. In this unnatural situation the wise loose out to the witless. Is it a form of cheating or redistribution of wealth? How many times can you con people into working hard and saving if their spendthrift neighbor is the one who ends up with a big grin?

Loans and debts make worry and frets

This is a fairly obvious statement; if you owe money there is always the fear that something will happen to reduce your income. If you fail to pay up on time there will be penalties and eventually you might lose your assets. When you awake in the "wee small hours" and what if scenarios start running unbidden in your mind the proverb: neither a borrower nor a lender be seems like solid advice.

The person who gives a loan has the corresponding worry: "What if I don't get the money back?" As they say: If you owe a hundred and you can't pay you are in trouble. If you owe a million and can't pay the lender is in trouble.

In the modern economy, credit is essential for most people as they need to buy things now not in twenty-years time when they have saved up the money. To borrow to invest in a business or buy an essential can make good sense if you have carefully worked out the risk. To borrow to finance a luxury you do not really need is not wise. Previous generations would probably have called it sinful.

If something can go wrong it will go wrong so it is prudent to assume some setbacks and give yourself a safety margin.