The Blessings of Living in a 'Mental Recession'

Some debt is necessary. Only a privileged few in this country can buy a home with cash. Still, if you live like you are in the midst of a recession, you see debt as a drag on your finances and mental health. And if you view all debt this way, then you will be very cautious about how much you take on, even to buy a home. You'd adopt the mantra "No debt is good debt."

If you live in a mental recession, you won't view your home as an ATM. You won't extract equity to finance a car or pay college expenses.

You would have more common sense than to listen to advice from financial professionals who urge people -- young and old, rich, middle-class and poor -- to leverage debt to become wealthy.

If you live as if a recession were looming, you wouldn't see credit as an extension of your income. You wouldn't charge anything you couldn't pay off the next month. People who have lived through tough economic times know that the less strain you have on your income from debt payments, the better you can weather a financial storm.

Let me be clear: Don't live in fear. There is a difference between a mental recession and a state of panic. The cure for the latter is to follow two basic principles -- live on less than you make, and don't be a devotee to debt.

It's true. I am living in a mental recession. If you do, too, then you'll also embrace the basic personal-finance principles that will help see you through when a recession hits.

I'm not angry about what Gramm said anymore. He came up with the right phrase for the wrong reason.

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and athttp://www.npr.org.

· By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

· By e-mail:singletarym@washpost.com.

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