This morning, I read an article by a friend and fellow personal finance blogger, Carrie from Careful Cents, titled, Life After Debt: The Biggest Downside to Being Debt Free. Carrie sheds light on some of the struggles that we face financially even after we are debt free. This article inspired me to think of the opposite side of this, so I wanted to post today about why I love being debt free.
For those of you new to this blog, I’ve been working on all this personal finance stuff for several years now. As a reporter that I spoke with last week from a large newspaper in New Jersey said to me, I wasn’t in much debt. At my lowest point financially, I owed $20,000 on my car, $2,500 on my credit cards and $5,500 on my student loans, totaling $28,000. That was just over 4 years ago. Sure, it wasn’t as much debt as many people have today, but to me it was a lot. I bought a car I couldn’t afford and financed 100% of it. I even put its down payment on my credit card. As you can see, I wasn’t afraid to go into debt.
Well, that all changed soon after. When reality set in and I figured out how many years of working hard it would take to pay that car off along with my other debt, I freaked out. I was so freaked out that I immediately started throwing all my extra income to my car. I was writing $1,000 checks each month to GMAC (my car’s lien holder) and it was leaving me with no cash in the bank. I did however manage to knock out $7,500 of my car loan in the first 6-7 months of owning it. That helped a lot.
During that time (fall 2008), the economy tanked and I had to stop being crazy with my car loan and start piling up some cash. I stopped paying on my car for the whole year of 2009 (I didn’t have to pay that whole year because I was so ahead). At the beginning of 2010 when I had to start paying again, I knew what it was like to have cash in the bank for once. I had piled up $10,000 on a modest income from the prior year. In the spring of 2010, when I needed a double root canal done without insurance just days before an expensive vacation I had planned, I ate through a large chunk my savings. I had managed to go 6 months in 2010 without making a bit of financial progress. On Memorial Day that year, I said “That’s enough. I’m cutting big.”
Seven months after saying “I’m not living like this anymore”, I was out of debt. It’s crazy what you can do when you put your mind to it. I knocked that debt out like nothing. You can knock yours out too if you put your mind to it. Trust me.
Anyway, for almost two years now, I’ve been debt free. To be honest with you, I NEVER want to be in debt again. It’s been a great two years. My financial stress has almost completely went away. Not only have I been able to stay out of debt since, but I’ve saved up more money during the last two years that I would have ever thought possible. I have over 2 years of living expenses in the bank. It’s very comforting.
Now, let’s get to the point of this post. It’s the point of how great being debt free is. Here are the main things I love about being debt free:
I don’t have to use my credit cards anymore
With a healthy savings account, I don’t have to use credit cards for anything, if I don’t want to. Sure, I’m missing out on my points and rewards, but honestly, it feels so great to log into Mint.com and see zeros next to my two credit card balances. It’s almost a form of medicine for my peace of mind. I love swiping my debit card through the machine at Target, the gas station or even the at the mall without having to worry about how or when it’s going to get paid. I know that it will get paid right now with the money I have right now in my checking account. Yes! I love paying for things right now with money I have in the bank right now! You can’t tell me that getting points or rewards on your credit cards feels as good as this feels. I won’t believe you.
I don’t have to see any debt payment bills anymore
Back when I was in debt, I received a GMAC bill every month for $351. That wasn’t a fun bill to get. My student loan bill was paid automatically, but I still saw it as a line item in Mint.com every month. Those credit card bills were horrible to receive, especially when I spent to much and they were in the several hundreds each month. Ouch. Today, I have all of my monthly bills set up automatically and none of them are debt payment bills. It’s so great!
I get to use my income to build wealth for myself instead of my creditors
It’s so great not having to budget for debt payments. My monthly expenses are directly related to how much my living costs are this month and not at all related to crap I’ve bought in the past. It’s great. This means that I get to use my entire income for me each month. Sure, I have to spend money on rent, food, insurance and all that stuff, but I get to use what’s left over for me. I get to transfer money over to my savings account every month. I can actually build wealth now that I don’t have to send all my money to creditors to help them build wealth. Forget helping all those corporations get rich. My money is for me now!
I can buy and do almost anything I want, but I don’t
It’s fun thinking about all the options I have now that I’m debt free. I could quit my job and pursue something else. I could take a vacation several times per year. I could buy almost anything I want in cash (outside of extremely expensive things like a house). I could invest in all sorts of things. I could give like crazy to those in need. I could move across the country. I could do a lot of things. Just thinking of all my options is fun, even if I don’t do any of them.
I feel great about myself and my ability to control my money
Ever since I’ve gotten out of debt, I feel very confident in my financial decisions. That’s probably because I feel getting out of debt was the best financial decision I’ve ever made and I’m happy with myself about it. People were telling me I was nuts. They would say, “Why would you pay your car off? You have such a low interest rate.” I would just shrug it off. You know, my student loan payment was only $60 per month. Why on earth did I pay that off? I didn’t even notice that money coming out of my account each month. Well, I’m glad I did anyway. I’m out of debt and with an attitude like that, I would still be in debt and probably not as well off financially as I am today.
Overall, I feel great about having gotten out of debt and making the decision not to go back in. Sure, I’m missing out on low interest rates while I could be investing the money in something earning a higher return. Sure, I could be traveling for free everywhere off of credit card points and miles, but instead I’m enjoying my zero balances. My feelings about debt may sound stupid to you, but that’s okay with me. I’m so happy to be out. My life hasn’t been the same since. Having control of my finances has been outstanding and it wouldn’t be this way if I was still in debt. Trust me. Being in debt sucks more than being debt free. Just ask those who were there and got out.