A debt-free lifestyle? Pay off ALL of your debt? Is that even possible?
Like most people, I grew up surrounded by people financing much of their life: houses, cars, student loans etc.
This is normal, right?
Like many, I wasn’t totally financially illiterate, though. I did have some good advice given to me like, “always pay off your credit card at the end of the month” and “always have a savings account.”
When someone brought up the concept of debt-free living (and more importantly, what that meant exactly), it opened up a whole new world of opportunity and ideas.
So, what’s the big deal about living debt-free and how can you do this?
How to pay off debt quickly
How to live a debt-free lifestyle
I ran into a couple, a few years ago, that lived debt-free. They were planning for early retirement and some of the things they were speaking, ignited a fascination within me. This couple said to me, “How do you want to live?”
I’d never been asked that question before. I’ve always been ask
ed, “What do you do?” or “What do you want to do?”
This successful couple was retiring young, living debt-free, they didn’t have financial burdens, plus they were now able to give. One of the things I noticed was how at peace and happy the both of them were. This couple weren’t going to pass away someday, leaving behind debt. Both of them were going to leave a legacy behind. They were so financially set that they could focus on others and giving rather than themselves and their own debt. I had never thought of that. What a selfless way of living. This was so different than anything I had experienced.
Why live debt-free
Many have heard of Dave Ramsey (his book, The Total Money Makeover is #1 on Amazon for budgeting and money management and has sold more than 5 million copies) and others who talk about debt-free living. It can be a challenge and I find it to be a completely different mindset than I had. Why live debt-free when you can just finance things? It’s so easy. Many find themselves wanting to finance a house, a car, furniture. Most already have.
So, what’s the big deal?
1. You gain the freedom to work less
We payed off credit cards, student loans and bought our cars in cash. Because of this, we don’t have to fill out any of those “debt” boxes when doing our budget that negate each month from our income.
Check out how to create a solid budget here: BUDGET + FREE PRINTABLE, FOR BEGINNERS
How much extra would you have if you paid ZERO in the category of debt? For us, that meant that we could live on ONE INCOME. That meant, we could plan on having a baby someday and deciding if I wanted to work or not.
To me, it wasn’t worth having a new car, a new house etc. in order to go to work and put our tiny little new baby into daycare (leaving her all day long!). Going to work, spending forty minutes in traffic, sitting at a desk all day, and working to build someone else’s dream while another person is experiencing my child taking her first steps, first laugh etc. was heartbreaking. So, we devoted ourselves to getting debt-free, getting on a budget and getting our finances in order.
The more debt you have, the more you have to work to keep up with those kind of payments.
It’s important to realize what you could do with no debt. Would you work less? What would working less do in your life? You would have many more free hours of your life. For many, that would reduce stress. Would you travel more? Spend more time with your family? Donate to charity?
Let’s say you started working when you were sixteen and retired at 65 (which may not happen for the millennial generation and below). You have worked for 49 years of your life at that point. If you work a forty hour work weeks for 49 years, that is 101,920 hours worked. Right now, the average life expectancy is 78.74 years. That means you have lived for 689,762.4 hours. I am not the most amazing person at math, but you can probably see where this is going. This means we spend about 18.54% of our adult life working.
What do you really want to do with those 101,920 hours of your life and 2,080 hours in a year?
2. You can retire young
Freeing up disposable cash allows you to put that money towards retirement. If you get on a budget, imagine having a goal towards a young age of retirement. What age would you like to retire? Being able to retire young and healthy instead of older and not able to travel, could make a world of difference for your life plans.
3. You will feel more secure with your finances
This is a big positive of living debt free. The feeling of having zero debt allows peace of mind, stability and wellbeing. In addition, getting debt free will give you much more financially experience. You’ll become a smarter spender. I think about spending even a dollar and take control of where that money goes. When working to be debt free and live this lifestyle, I’ll spend only the cash we have allocated, thinking over purchases intelligently.
On the other hand, when we were not living this way, I didn’t think twice about swiping my credit card. Most of the time, I didn’t even need my card, I had the number memorized! I was working 60+ hours a week, over my head in debt, had no idea where my money was going, didn’t want to know and it was one of the hardest times in our life.
4. You can live a life of giving
The happiest people I have ever met, live a life of giving.
I spoken to many a person, asking about goals they want to achieve in their life. Many have some sort of giving they strive for despite their income: wanting to build a charity or donate to one, being able to pay for their parents’ expenses, or a grandmother who needs help etc. But they can’t.
They are working at a job close to minimum wage and have a ton of debt. Basically, doing what they are doing right now, is not going to allow them to give back the way they want. In fact, living how they live now, more than likely, will allow for their burden of debt to pass on to their children or families. Getting debt free allows us to secure ourselves, so that we can help secure others. To me, what better way to live than to give?
How to live debt free
This all sounds great but you may be wondering how to pay off your debt. You may even think that it’s impossible. You absolutely can get debt free but you will need to change your mindset.
It all comes down to each of your purchases and making the decision to be out of debt rather than buy that cute dress or that Starbucks coffee. It’s truly a mindset and a lifestyle, just like healthy living is all about eating well and exercise!
Here are some tips that will take you to the debt free lifestyle:
1. Read The Total Money Makeover by Dave Ramsey. This will expand your horizon on the how and why from a qualified expert.
2. Jump on Mint.com and organize your finances. This is like knowing where you are on a map. Until you first know your location, you wont know how to navigate towards your goals. Mint also has an AH-mazing debt goal calculator. This tool allowed us to set goals and get $20,000+ of debt paid off. It also shows you how much interest you will paying and saving depending on the date you will pay off your debt. That was a big reality check for us!
3. Create a budget. The absolute best place to start tackling your financial wellbeing is right where all the money goes: the source. If you know where every dollar goes, you can start paving your path. Download a budget sheet now and check out my post on how to do a proper budget:
BUDGET + FREE PRINTABLE, FOR BEGINNERS
4. Get organized in your home by minimizing room by room and getting rid of things you don’t need. Sell them on eBay, Facebook marketplace or other avenues that flip things for cash that you don’t need.
5. Trade in the car you have for one that you don’t have to pay off.
6. Find ways to save money in your lifestyle like cancelling cable, lowering your phone bill, internet bill, eating out expenses and car insurance bill.
7. Use the cash envelope system and track all of your spending.
8. Find a side hustle like product flipping, starting a blog, a successful MLM with great mentors etc. I was able to leave work due to minimizing the bulk of our debt, getting our finances in order, and starting a company that’s technically classified as an MLM a few years ago. Check out how I did this:
HOW I WAS ABLE TO WORK FROM HOME AND RAISE OUR BABY
9. Take a course from a financial expert. A course will allow you to understand what it means to live debt free and be financially independent. Adam Hagerman’s course “Budgeting for Haters” is absolutely amazing. It helped us so much. After this course, you will have a solid path in order to move forward towards your financial goals.
10. Save money in every area. If you are working towards a debt-free lifestyle and looking to be more frugal, you have to check this out. This year, I penny-pinched on a monthly basis, making many phone calls and searching Google for all ways I could save. Every cent mattered. In the end, we saved hundreds. Here is the entire list of all the AMAZING ways I found to save a lot of money: