Anabasis
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107Course · Foundation

Debt

When debt is a tool and when it is a trap.

The Course

Debt is a tool when it finances a productive asset and a trap when it finances consumption at a rate above the asset's return. This course teaches you to tell the difference on the day of the decision.

You will model the true cost of a debt over its full life, choose between amortization schedules with intention, and design a defensible repayment order for the debts you already hold.

Outcomes
  • 01

    Distinguish productive from consumptive debt.

  • 02

    Model the true cost of a debt over its life.

  • 03

    Choose an order of repayment that is defensible.

Prerequisites
  • — Course 106 — Credit.
Pacing

1–2 weeks · ~4 hours plus the Assignment.

  • IModule · ~1.5 hours.

    The two kinds of debt

    The classification that changes every decision.

    Productive debt finances something whose return exceeds the interest rate; consumptive debt does not. The classification is simple, the discipline is not.

    What You Will Be Able To Do
    • — Classify a proposed debt as productive or consumptive on principle.
    • — Read an amortization schedule and locate the interest-heavy years.
    • — Compute the true cost of a purchase after financing.
    Why here

    The classification is the single most useful debt heuristic in household finance. It belongs first.

    1. 01Productive vs. consumptive debtArticle12m
    2. 02Amortization, in detailInteractive20m
    3. 03The true cost of a purchaseVisuals8m
  • IIModule · ~1 hour.

    Mortgages

    The largest debt most households will hold.

    A mortgage is the largest debt most households will hold. Getting the structure right matters more than shopping for one-eighth of a point on the rate.

    What You Will Be Able To Do
    • — Choose defensibly between fixed and adjustable mortgages.
    • — Read a closing disclosure and identify the line items that move the true rate.
    • — Decide when refinancing is worth its own fees.
    Why here

    Structural choices in a mortgage compound for thirty years. This module makes those choices under duress avoidable.

    1. 01Fixed, adjustable, and the choice between themArticle12m
    2. 02Points, PMI, and closing costsArticle12m
  • IIIModule · ~1 hour.

    Student loans

    The debt that shapes the first decade.

    Student debt shapes the first decade of adult financial life for millions. The federal-versus-private distinction matters more than the interest rate.

    What You Will Be Able To Do
    • — Distinguish federal from private loans on the terms that matter.
    • — Evaluate income-driven repayment against the alternatives.
    • — State the case for and against aggressive early repayment for your situation.
    Why here

    The first ten post-graduation years are compounding years; treating them as debt-service years is often wrong.

    1. 01Federal vs. private student loansArticle12m
    2. 02Income-driven plans and forgivenessArticle12m
  • IVModule · ~30 minutes plus the Assignment.

    Getting out

    The order of repayment.

    The order of repayment is a choice — mathematically correct, or psychologically effective, but rarely both. Choose deliberately.

    What You Will Be Able To Do
    • — Compare avalanche and snowball on your own debt list.
    • — Write a debt plan with dates, amounts, and a rule you will hold.
    • — Rehearse the response to a windfall or an income shock.
    Why here

    A plan chosen in calm outlasts a plan improvised under stress. Write it now.

    1. 01Avalanche vs. snowballArticle12m
    2. 02Assignment: Your debt planAssignment60m
A Note from the Faculty

Debt policy is more important than debt tactics. Households that write a debt policy hold it; households that improvise repeat the same mistakes.