Seven Benefits of Being Debt Free
I have written a few posts about my family’s journey to pay off our debt. We are currently debt free, besides the mortgage. I did not realize until I started this blog that so many people like us were out there. There are many benefits of being debt free.
I have been incredibly surprised by the supportive comments and how many other people have also said they were debt free. It truly gives me hope for our society.
I read many articles about how most Americans could not pay for a $400 emergency and that most do not have enough saved for retirement. I hope that our generation will be the one to change that.
So, if you are not currently paying off debt, here are a few reasons you should consider and start your debt-free journey.
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1. Peace of Mind
This is the most important of the benefits of being debt free. It truly gives you financial peace. You have security when you don’t have to worry about your car or kids’ play house being repossessed (yes, that happens).
It is an entirely different feeling knowing you own all of your possessions and no one can come and take them away from you for missing a payment.
2. You Get to Keep Your Money
I don’t know about you, but I like to be able to do whatever I want with my money. I don’t have to pay for anything that I don’t want to (besides the mortgage). While we still have monthly bills, those are wants and not needs.
Obviously, you will still have monthly bills like power, water, and trash. But it sure is nice not having a car payment, a four-wheeler payment, a trailer payment, a 401k loan payment, or any credit card payments.
I actually have spending money now that I don’t have an outrageous car payment. I get to go on trips, concerts, or anything else I want to do for fun.
3. More Money To Save For Retirement
Once you are debt free, you will have more money to save for retirement. Dave Ramsey recommends saving 15% for retirement. If I had to guess, most people, if they save at all, save maybe 5% or 6%.
I know that many people only save up to the company match if there is one, and most of the time, that is up to 5%. I know that my husband and I were only saving 6% before starting this journey, and that was more than a lot of people we know.
Our plan is to start saving 15% once we finish our emergency fund in a couple of months. If we hadn’t paid off our debt, we could not have saved 15% for retirement.
4. Your Kid’s Future
If you have more discretionary income, you are more likely to save for your kid’s college, wedding, or whatever else you want to help with. This should not come before your own retirement.
You may decide you are not going to do this for your kids, which is okay too. But if you want to help your kid through school, it will be much easier if you don’t have any debt.
Plus, most people don’t realize this, but if your child applies for FASFA, the government decides how much you will contribute to your kid’s college. So, even if you do not plan on contributing, you may not have much say in it unless your kid can pay for it all themselves.
5. Giving Back
Dave Ramsey’s biggest reason for wanting people to be debt free is so that they have more money to give. Imagine how much money you could give back to your community if you were debt free.
Is there a need in your community that you want to help with but can’t afford to right now? Would you like to do random acts of kindness but don’t have the extra money right now?
Imagine all the good that could happen in our country if people had extra money.
6. Less Risk of Financial Disaster
I know that there is always that person that wants to argue that debt is good and it’s better to invest at this interest rate than pay off a lesser rate. Well, there is always a thing called risk if you have debt.
When you lose your job, the payments will still be there. I would much rather own all my things and my house eventually than worry about losing it if something happens.
It certainly seems that this type of mentality causes every type of financial bubble we have had. Sure, buy a house you can’t afford because the prices are going up.
You can always sell it later for a profit. That didn’t work out so well for thousands of families in 2008.
7. Ownership
Purchasing items on credit does not mean you own them until the debt is paid in full. For example, your financial lender holds your car title until the note is paid in full. The feeling of owning something free and clear is an awesome feeling.
Student Loan – Good Debt?
Look at the student loan crisis that I’m sure is getting ready to explode. We have an entire generation of kids with insane amounts of student loan debt that they can’t afford to pay back.
Why would a bank loan an 18-year-old kid thousands of dollars for a degree that won’t have the same return on investment?
I know several people with student loan payments over $1000 a month; they only make around $2500 a month! This is not sustainable for our society, even though people want to argue it’s “good debt.” No debt is “good debt.” It still has to be paid back.
Being in any debt means that you owe someone money, which restricts what you can do with your own money.
Live Debt Free
So, whether you want peace of mind, want to build wealth, be able to give, or all of the above now is the time to start your journey to debt-free. Do something today that your future self will thank you for, and think about these benefits of living debt free I have mentioned and start to implement them.
There are plenty of other benefits of being debt free that I could mention, but these are important benefits that you can implement in your life.
If you are ready or at least thinking about paying off debt, I highly recommend reading The Total Money Makeover by Dave Ramsey. This book has literally changed my life. I love it so much, I am constantly giving it as gifts to people.
For ideas on how to pay your debt off quicker, check out Tips To Pay Off Debt Faster. For budget and financial tips, you can also listen to my podcast, The Money Mindset!
These are great tips. I am working on my debt too. I want it paid off by the end of the year as well.
Marie
http://www.ladiesmakemoney.com
Latest Post: https://www.ladiesmakemoney.com/why-you-need-a-side-hustle/
I have recently acquired a little bit of debt and I absolutely hate having any sort of debt!
These are definitely all very valid reasons – I think the biggest one for me is the peace of mind.
I so agree with you – I am doing my best to pay for college and my bills right now, but as soon as college is over I intend to start paying down debt immediately. My boyfriend is really bad about this and has no savings to his name – it drives me crazy!
We use Dave Ramsey’s plan, and it has served us well! It feels great to be paying off debt, and we know it will be even BETTER when we are debt-free and feel that financial freedom that comes from that!
This is so important. I use to think that buying things made me happy. Now I realize that buying things and staying in debt is a prison. Not knowing anyone anything is absolutely liberating.
Great post! Paying off debt is so important; I do want to give more, but debt is seriously cramping my style.
These are great tips! I’ve just started making payments on my student loans and I can’t wait to be done with them forever.
Great post! I’ve recently started making payments on my student loans and sometimes I feel like I’ll never get out of them, but you’re totally right – I can’t wait to have that financial freedom!
What a great post! I absolutely agree it is so important to be debt free.
Maria | http://finastyleblog.com
This is what my partner and I are currently focusing on. It’s a lot of work and careful planning but the results will be so satisfying!
This is so true! My main debt is my student loans, and I’m so happy because I just refinanced them this week to lower my interest rate and my monthly payment, and this saved me so much money long term! I’m doing everything i can to pay these down. This is a great post!
This is so true. My husband has quite a bit of student loan debt and it drives me crazy! Student loans are such a huge issue for our generation!
Great tips! Thanks for sharing
Excellent advice! I think way too many people live with a high level of debt and the idea that it’s “ok, everything’s fine.” But really, they’re totally underwater! We are working to pay off my husband’s student loans. It’s a major undertaking!
Hi Ashley, thanks for the wonderful post. I love your thoughts on paying down debt as a way to secure your future. Your tip so save 15% towards retirement was an eye opener for me, but makes a lot of sense.
I have to admit, as I get older, paying down my debt has been on my mind more and more. Thank you for some eye opening advice!
All true! It is very hard to budget at first but it is truly rewarding when you are debt free and you know that you have enough savings.
Ugh…I have so much debt and it scares me. I dodge calls from collectors and I know it’s dumb but it’s so hard to face money issues!
Paying off my debt was the best thing I have ever done. I wish there was more focus on personal finance management in schools. I don’t think a lot of people realize that it is possible to live without debt.
I love the “more money to give” reason. Never even thought about that as a reason to pay off debt, but it’s a beautiful one.
We have student loans we are paying off and I’m so thankful we have the ability to, but I’ll be so happy when we are debt free. We made bad decisions in our 20s partly because we didn’t know. Our parents talked about money, credit, etc. but didn’t actually teach us. We are doing it differently for our children.
Solid tips. Once the debt is under control, best to start saving for the future as early as possible!
There are so many good reasons to pay off your debts and I like how you have them all listen out here. We are working our way toward being debt-free as well!
Now is a good time to talk about paying off debt. As many households start getting tax return money, there’s no better place to put that “extra” cash than towards debt. I love having the ability to pay down credit card debt particularly, because in the end I’m saving by not accruing interest that has to be payed down the road.
I had an arranged overdraft during uni and it was my first priority to get rid of it. Being in debt even arranged be so stressful x
There are more people living hand to mouth than have adequate liquid savings. Its a shame, but its a consequence of the immediate gratification lifestyle we see every single day on TV, the Internet.
Interesting and practical tips. A debt free life is a peaceful one. Thanks for sharing.
I’m on the road to debt freedom and it is tough but so worth it.
Great tips. I am a person who does not like having debt so I try to pay off as soon as possible. Thanks for sharing.
I am a huge Dave Ramsey fan and also a personal finance blogger. Being debt free is so freeing, I am debt free except for my home at the moment and will work to get that paid off.
I love Dave Ramsey’s teachings too, and am currently working my way through his “Baby Steps” program, in the process of rebuilding my life after a disaster of a relationship. The strange thing is that I’m pretty well debt free at this point after he ruined my credit and I ended up with nothing. Still, you gotta start somewhere, and with Dave Ramsey’s strategies, I’ve made remarkable progress already.
We thought about buying a house this year but we would have to borrow heavily just for the down payment. So, instead we are waiting a year and paying off debt and saving for the down payment. I think in the long run we will be so much better off.
This is such a brilliant tips! Paying debt is really important. Glad you shared it
I have been putting away more for retirement than I use to. As for the kids, I decided not to put into their college fund and instead, it goes to paying off debt. I homeschool my 3 kids and if they dual enroll, college is paid for (except books).
My husband and I are going through Dave Ramsey’s Financial Peace University right now. I’m excited to see how it helps our family.
What a timely post this is! I really need to get a handle on my finances and you presented some really good suggestions. Thanks so much and keep up the good work.
I completely agree. these days too many people buy things and then work out how to pay for them later – its all on credit. If you can get rid of your debt you’ll have so much less stress!
I’ve been following the advice of Dave Ramsey for years and have implemented his ideas to eliminate all of my debt. The hardest part was the baby steps but once you start thinking about the long term benefits, the “sacrafices” become easier to live with.
so true, I can definitely see the benefits of paying off your debts – something I’m working on at the moment although its going to take a while. I can’t wait for financial freedom.
Great post. I need to pay off my debt.
I am working on paying off my debts this year. I completely agree with your reasoning as they are what drives me to pay them off! Thanks 🙂
This is a good reminder for me and my hubby. Especially we’re planning to move back to the Philippines for good. No debts at this point, but we need to avoid it.
This is a really good read. We are not debt free yet, my family is still pating for the house and car. But I am proud to say we don’t have any aside from that. Saving for retirement is really important too.
Debt is such a headache and I never want to have any. I try my best to pay off existing ones and not make anymore as I go along life. It would be so much better if you can just save the money you have instead of using it to pay off debt.
Great tips! I like to have my life well organized,so yes, this helps a lot! Great post. xoxo
We are currently paying off credit card debt and I know we’re gonna be debt-free soon. Peace of Mind is reason enough for me to be debt-free.
For several years my debt kept increasing a little each year but now I have stopped adding to the debt and have been working on paying it off. It will take discipline but I am looking forward to getting back to being debt free again.
These are wonderful tips! Debt is really a headache and sometimes can cause too much stress. I’m now saving for my retirement fund!