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Everybody’s wrong about debt

This past week, I hit a milestone that I am really, really proud of: I translated my 1,000th loan for Kiva.org.

Kiva is a microlending site that basically allows you (most likely, if you’re reading this, you’re in a position of relative comfort compared to basically everybody else in the world, even if it feels like you’re stretched to the limit or you can’t keep up with the Joneses) to give a bit of your money, as a loan, to people who really superduper need it.

We talk about debt as The Worst Thing, but we’re wrong. It’s terrible to feel crushed by debt, and sure, an unemployed 22-year-old buying a Ferrari on a credit card (is that a thing? That seems like a thing that everybody could agree is a poor choice) is not recommended. But dismissing all debt as evil is missing a huge chunk of the story.

I recently had a teeny tiny enormous miscalculation with my taxes, and it sucked. It is still sucking and will suck for months and months until we right this ship. But I have access to a seemingly endless flow of credit cards, many of them that could help me to go to Disney World for free or offer me 0% interest while I get my act together. “Hey, you owe $7000 more than you thought” is “oh crap, gotta apply for the right card” and not “oh no, I need to look into selling a kidney.”

There is a lot of talk about how Americans don’t have any emergency savings, but just by nature of being in America, we have access to something that many people the world over do not: the opportunity to borrow money when it’s needed. This is a huge global advantage. If I need cancer treatment, I can get on a payment plan. If my pipes burst, I can put it on a credit card. If I need to get a car so that I can drive to a job that pays a lot more than the one I can walk to, well, financing is always available.

I know, it’s not always available to every single human being in America, but even for those who have poor credit, there are usually some options. And that isn’t the case everywhere around the world.

Which brings me back to Kiva. In places where there is no credit available, and you’ve put all of your money into the three cows that you have grazing in your yard, you can’t get another cow. That hypothetical cow would hypothetically eat the grass in your yard and grow and maybe give birth to another hypothetical cow, which would pay you back in spades for the hypothetical money you spent on your first cow, but you can’t get that hypothetical money. You can’t invest in your business because there is no way to get capital.

Except there is. Microlending allows me, and you, and your friends, to chip in $25 to loan somebody in a developing country, say, $350 to buy a cow. And they pay that money back, you get your $25 back, and they get a cow, and next year they have been able to capitalize on this investment, and perhaps, now that that real actual cow had a real actual calf and they sold it and paid back the loan, they have four cows grazing and are markedly better off.

Some studies have shown that this is instrumental in lifting people out of poverty, and I believe it. Other studies are less clear about the impact. I don’t actually care, though, if it makes sweeping differences in global poverty. I believe that it does, but even if it doesn’t? I think about the way I felt with that $7000 surprise deficit. How the only thing that’s getting me through is knowing I can finance this, fix it, right the ship. How many people in the world hit an unexpected snag and it destroys them?

So anyway, I translate for Kiva, a few loans a week, and it makes me feel really happy because I think it gives people opportunities that they wouldn’t otherwise have. Maybe to better their financial situation, maybe to just not feel so completely, horribly stuck.

Debt isn’t evil. It feels that way, when it can trap people into corners, and I’m hoping to get to debt free at some point myself. But it’s also a tool, and it’s one that can be instrumental in changing people’s lives.

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