The debilitating power of debt seems to have its grasp on almost everything we are and do today. I had the opportunity to spend some time with a Gen Y 30 year old who thinks that a new Infiniti is in his near future…a $47,000 Infiniti. When questioned about the price, he flippantly said, “If I can qualify for the loan, I should be able to afford the payments.” I reminded him that the price (and payment) was only one aspect of owning a $47,000 car. You have to consider the insurance, the fuel costs, the maintenance costs, and the cost to replace the tires he plans on squealing at red lights. “I’m not worried about all that stuff, I’ll just pay for it as it comes up,” came the reply.

All this happened on a short overnight business trip (driving) where another co-worker (Baby Boomer) and I (Gen X) were listening ^[2] to an audio version of Freakonomics [Revised and Expanded]: A Rogue Economist Explores the Hidden Side of Everything. ^[3]The Gen Y’er listened with one ear to Freakonomics while using the other ear to listen ^[2] to his iPhone. Judging from his comments on the book, I don’t think he heard much of either.

As we were on our way back home, the current economic situation came up. The Baby Boomer told us that he was furiously paying off all his debt, including the mortgage ^[4], and that he was trying to get himself into a position to be able to retire in about 10 years. I commented that he was making some smart moves and that I was attempting to do the same thing. The Gen Y guy said, “You are two old guys making plans to retire? I don’t know why you’re so worried about it. I’m certainly not.”

Then he popped back up and said, “Paying off debt is stupid. If you have $200,000 invested in the stock market and can get a mortgage ^[4] at 6 percent while managing to get 8 percent in the stock market, you’re silly to pay off the mortgage ^[4], just borrow the money and invest ^[5] the difference.” He thought he made a great point and sat back.