The personal finance world is abundant with stories about becoming debt free. Yet becoming debt free is just the first step to freedom. The money–health connection is well-established (the techniques are typically the same) and being debt free corresponds to being “fat free” or perhaps a better word would be “not overweight” in the sense that one no longer carries around an excess load.

However, staying with the analogy being free of something bad does not necessarily mean that things are now good. It just means that they are not-bad. In particular, not being fat does not imply being in shape to do anything physically laborious. Doing so requires building muscle mass, strengthening the neuromuscular conditions, and increasing the capacity of the cardiovasular system.

Economically speaking, ab initio, there is “land” or “resources” and there is “work”, but there is no “capital”. Creating capital requires resources and work. This capital can either be products that are consumed or products that produce further products. Being asset-less means that one owns no production factors and thus all consumption has to originate in work and (typically) someone else’s land (since most land is private). Having assets means that less work is requires and since leisure is a “good”, this is a good thing. Being financially independent means that one owns enough assets to obviate all need for work.

In that regard, becoming debt free simply means that one has fought one’s way back to the starting line. This is commendable (if not for the fact of previously having moved in the wrong direction) but it is just the beginning.

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Originally posted 2010-01-21 16:26:04.