Business Ownership and Wealth Management

Dana Barfield

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Get Out of Debt

It’s not all that often that hard financial news comes out in the local newspaper on Saturday.  This morning was an exception when it was announced that a local company suddenly closed it doors after 54 years of existence, productivity, and service.

The story says investors worked “diligently to save” the company.  Obviously to no avail.  But the next line is the one that should garner all the attention in this situation: “unforeseen expenses made satisfying debt obligations insurmountable”.  You’re going to hear more companies cite some sort of similar situation in the coming months and years.  When companies go out of business, workers loose their jobs - which mean more and more individuals are going to be saying something similar – especially those individuals who are also in debt.

From an investment standpoint we have always sought to avoid companies with debt whenever possible.  This is reflected in the positive account balances our clients have despite the recession and financial meltdown. But from a business operation and personal standpoint I urge you to eliminate your debt.  Expenses are much easier to make if you don’t have debts to also pay.

Looking at the debt data over the last five years, it is difficult to determine whether Americans have been intentionally reducing their debts or if write-off, bankruptcy, and foreclosure has accomplished debt reduction.  If it is only the latter, then many Americans have continued to add debt to fund their lifestyle.  It is important to remember that taking on debt presupposes a more prosperous future to be able to make the debt payments.

On a macro basis, there are few drivers to improving the overall economy.  On a micro basis, growth can and will still occur.  But, the overall economy is competing with the government for resources.  At the rate government debt is being added, the macro economy is likely to get the short end of the stick, especially if this government debt gorging continues.

On that basis, the best thing you and your business can do…is get out of debt.  Get your house paid off, get student loan debt paid off, make sure credit cards are paid off monthly, and get your business out of debt.  There will come a day when you are very glad you did.

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Dana is the president of The Barfield Group, which has provided industry leading Financial Advice, Investment Services, and helped people Plan for Retirement for more than 20 years. He is a frequent speaker and writer for a variety of industry, regional, and national publications on business ownership and wealth building related topics.