The benefits of living debt free.
Did you know that 23% of Americans live debt free? That is all debt, mortgage, credit card, car loans, student debt, and personal loans. I’m impressed with this number. I often find statistics about the challenge Americans have managing their money and it’s a little depressing, but I like this statistic.
Being debt free is the single most impactful financial goal you can achieve that will offer a tangible impact on many areas of your life.
Personal fortitude
For example the process of becoming debt free requires a significant amount of personal fortitude. When you work towards the goal of debt free living you’ll have to set aside minor comforts in order to achieve your goal. That will teach you to be more mindful in your approach to purchases. You will become more mindful of the individuals around you and their values. You’ll learn to live lean, find fun with creativity and value experiences over stuff. That’s massive change for most of us and will improve your outlook as you become better at identifying the feeling of satisfaction and happiness. You’ll have less patience with superficial forms of joy, like needless purchases.
More disposable income
If you live debt free you’ll have more money to spend when you want something. Hopefully what you want will add to your life in a meaningful way, for example a memorable vacation, education, or an investment in a heartfelt charitable cause. But if you feel like splurging one day you can because you have cash in your account.
Several years back I was on vacation with my spouse. We were in Turkey and planned to take a local bus from the airport to charter bus station to catch a bus to Selçuk, the town near the ancient ruins of Ephesus. We became lost immediate after getting on the wrong bus from the airport. When thinking back on the experience it makes me laugh. We were fortunate to be able to count on the generosity of the Turkish people to help us get back on track. If I were broke at the time of the trip and had to tap into a credit card to cover the expense to get ourselves sorted out, it would have made the experience stressful. As it was, because I have no debt, I knew I had money to cover whatever would happen. Knowing I could cover the cost with no issue made it funny and fun, instead of stressful and scary.
Retire earlier
For many people who follow the F.I.R.E. movement early retirement is a main goal. I don’t want retirement, but we are all different and if you don’t want to work retirement is achievable. People in the F.I.R.E. movement save a significant portion of their income in order to have enough income from investments to live comfortably. The process may require saving and investing up to 75% of their income to achieve their goal as soon as possible. One thing is for sure, if you are in a relationship that can withstand that sort of financial commitment, you are in a good place in your love life. Having financial goals in common is critical for success in love.
Reduce stress
Bills and coming up with money to pay them is stressful. For some this can lead to anxiety and depression. Imagine living your life without the need to juggle your mortgage, insurance, car loan, credit card bill and more when your kid needs braces. All that adds stress to life and if you can simply cover the cost out of pocket because you have no debt and a flush bank account you’ll have way less to worry about.
Stuff causes stress. Stuff has to be managed. Take a quick look in your closet. How many items lurk in the back that you haven’t even looked at in months? Do you have a garage overflowing with collectable that you “may” need one day? Managing your garage can become a four times per year project, and often that project is rife with regret. Keeping your life simple by reducing the amount of items you must manage is one step towards mindfulness that will leave you more relaxed and feeling in control of your environment.
Be a role model
When you tell people you live debt free they will admire your effort and ask how you did it. When they see how you live, without piles of junk spilling out of your coat closet, and your tidy “junk” drawer, they will also want to take steps in that direction. You can teach your children money management, something they won’t learn in school but can have a massive impact on their future.
I used to work with a nice woman who told me that she had never been out of debt since she was 18 years old. She was just over fifty and had zero retirement savings or investments, although she imagined she would retire at the typical age of 65. But she had no plan and admitted she was concerned. Her office was filled to the rafters with cute statues, signs that said things like “laugh” or “teamwork”, she had multiple coffee cups, vases, and framed art work on every surface. There was hardly an empty space available to write a note. I imagine her home is the same, chalk full of stuff that will have to be managed at some point.
I like the Swedish concept of death cleaning. The Swedish just get rid of stuff that they don’t want their kids to deal with when they die. I wish my folks had that kind of foresight. It is heartbreaking to toss your mom’s favorite vase or your dad’s great cozy coat because you associate the item with your love for them. But if you are married you may have to do this four times or more if your folks are in second marriages. Do your family a favor and make your life sparse and manageable before they have to deal with your belongings. You may go before your partner, make it easy for them as well.
When I became debt free in 2011 I committed to never going back to that way of living. Often I felt stressed out about bills; I worried that I would lose my job and become destitute. I had no funds for any emergency. Debt free living is freedom in the best sense. I am the master of my destiny, and not beholden to any relationship, job or creditor, I live how I want.
Want to learn more about the benefits of debt free living, buy my book, “Never Worry About Money Again: Gain Financial Freedom By Becoming Better At Managing The Money You Have”
