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Is debt good or bad? There seems to be some debate about this topic. Some, like Dave Ramsey, believe that all debt is bad. Others take a more moderate approach. But the fact is that too much debt or debt with high interest rates can wreck your financial future. Chess has its own form of debt–it’s called a pin. Let’s take a look at pinning in chess, and then we’ll return to the question of debt.

A pin in chess occurs when a defending piece cannot move without exposing a more valuable defending piece on its other side to capture by an attacking piece. This is where a picture is worth a thousand words:

In this position, black cannot move the Knight at c6 because it is pinned by White’s bishop. That is, if the black knight moved, white would capture black’s king and win the game. Thus, black’s knight is said to be pinned.

Now, just like not all debt is bad (in my opinion), not all pins are bad either. In the above diagram, Black could move its white-squared bishop to d7 on the next move, breaking the pin. The position would look like this:

Too much debt or high-interest rate debt, however, at best reduces you options in the future, and at worst, can create a financial crisis. To avoid being pinned by debt, I try to follow these basic rules:

  1. No Consumer Debt: This is a tough one for many, and at times we’ve had consumer debt from cars, furniture and the like. Now we eschew any consumer debt. We paid cash for our last car, and if we can’t afford something, we don’t buy it. This is a sacrifice to be sure, but the financial freedom it brings is well worth it.
  2. Pay More Than The Minimum: For existing debt, we try to pay more than the minimum required payment each month. Even if it’s just a few dollars a month, over time, it will make a big difference.
  3. Keep Mortgage Debt Below 25%: We keep our monthly mortgage payment below 25% of our gross income. Currently we stand at about 20%, and as my income goes up (hopefully), the percent goes down. I find that a mortgage of 15% or lower really starts to lighten the load. In some very expensive areas, it’s tough to find a home at that price, but over time with a fixed rate mortgage, you can reach these goals.

Our chess puzzle today will show you just how bad a pin (or debt) can be. In the diagram below, it is white to move and gain a winning advantage. Can you find the right moves?

Good luck, and here are some good resources for managing your debt: