A Life Without Debt
A lot of people are realizing that a life without debt is both liberating and safe. It’s something that more and more people are striving for. The problem is, many people who would like to live a life without debt have no idea what that sort of life looks like. They have spent so many years financing their wants and needs that they’ve lost sight of what a life without debt entails. What happens when you’re debt free? How do you stay there?
There are a lot of books, websites, and experts that can tell you how to get out of debt. But what no one ever talks about is what it takes to live a day to day life without debt, or how to avoid debt in the first place. It’s assumed that once you get out of debt that life becomes easy. But as someone who has lived without debt her whole life, I can tell you that it isn’t easy. It takes work, dedication, careful decision making, and some sacrifice. But when times are tough like they are right now, every decision and sacrifice we ever made turns out to be so worth it.
If you’re wondering how it’s possible to live a life without debt and what that lifestyle might look like, I’m going to let you peek into my life over the coming weeks. As someone who lives the debt free lifestyle, I’m going to show you the day to day decisions that we make to avoid debt. I’ll share my sacrifices with you and give you an idea of what it takes to live within your means. But first, a quick introduction.
We have never carried any debt other than our mortgage and some small, very short term loans that were used to buy income producing equipment and supplies. We’ve never carried credit card, auto, or student loan debt. We’ve never had a home equity loan, either. Before you dismiss me and think that we must have some huge income, let me assure you that this is not the case. We’re in our mid-30′s now and earn (combined) about $70,000. It’s a good income, but not huge. When we were first married we were barely twenty-one and we made about $20,000. And we’ve stayed out of debt the entire time. And no, we don’t have wealthy families who were funneling us money on the side or leaving big inheritances. We did it all ourselves. We started out very small and improved our lives as our income grew. There were layoffs and pay cuts and emergencies along the way, but we managed. We stuck to our plans and did what we had to do in order to avoid debt.
Why would someone want to live without debt? Why was this so important to us? We decided early in our marriage that avoiding debt was a priority for us. We didn’t want to be tied to a bank and we wanted to own everything we had. We wanted the security of knowing that nothing could be taken away from us. We didn’t want to live in fear of the repo man. We didn’t want to fear a layoff or pay cut. We wanted the security of knowing that, if bad things happened, we would be okay. We wanted to plan and save for our future, not constantly be putting our future on hold because we had to pay off our past. Yes, it meant living very small at times, but we always slept well at night and lived a life without the fear that lot of people experience.
Just as there are challenges to being in debt, there are challenges that come with being debt free and wanting to stay that way. Join me in the coming weeks and I’ll show you some of those everyday challenges and how we deal with them. I’ll be honest and frank about our financial situation and I won’t sugarcoat everything to make it seem so easy. As my mother used to say, if it were easy, everyone would do it. I’ll also be taking questions in the comment trail, so if you want to know more, ask away.
To get started, here’s an example of the choices you have to make when you decide to live without debt. We desperately needed to redo the floors in this house. The carpet was a mess and the vinyl was peeling up. It was a project that we knew was coming, but put off in favor of more pressing things.
I really wanted to hire someone to do it. I have a low tolerance for mess and disruption to my life and I thought that hiring a team of contractors would get it done much faster and spare me some of the pain. So off we went to do some research and gather price quotes. (Research and comparison shopping is essential to living debt free. You have to learn to find the best price on what you need and want.) I was shocked at how expensive the installation was going to be. The flooring wasn’t that expensive, comparatively, especially since we found the exact flooring we wanted at a wholesaler for less than half of what the home improvement chains wanted for it. But the installation would kill us.
We wanted to do the whole house for under $5,000. We could afford more, but that was the limit we were comfortable with. Any more and we would have to re-prioritize some of our other goals. With installation, the project was going to run about $8,000. The installer offered 12 months same as cash to make it easier to swallow.
We debated for a few days about whether we should go ahead and pay for the installation and defer or forego some of the other things we were planning. We could easily pay off the loan before the 12 months were up, but in an uncertain economy we felt that taking on debt would be risky. If one of us lost our jobs and we had to live off our savings for a while, that loan may end up costing us interest. We could opt to pay the $8,000 all at once and avoid the loan, but then for certain other goals would suffer. Was having the flooring installed worth the hit to our other goals became the big question.
Finally, we decided to do it ourselves. It would take longer and be more disruptive to our lives, but the savings would be substantial. My spouse is very handy, so I knew we could do it. The cost for the flooring was under $3,000. Even after we added in the extra tools and materials we needed to buy, we were well under $4,000. Since we would be so far under budget, I took about $400 and bought some new light fixtures, moulding, and paint to spruce up a couple of rooms. For just at $4,000 we got all new floors, new paint, new lights and some other small updates.
Yes, it was a lot of work, but we did about 1,500 square feet in three weeks, working at night and on weekends. We saved about $4,000, avoided taking on a loan, and got more than we originally planned. We’re tired, but very happy with our project. (We probably did better than the installers because it’s ours and when something is yours, you take more care with it, I think.) We are still on track for our other goals.
When you decide to live debt free, you have to balance what you want, in this case peace and a quick installation, with what you can realistically afford without dinging other parts of your budget. Had we paid the higher amount or taken on the loan, we would have had a quick installation, but would have needed to give up some travel plans and contributions to our savings. Since we wanted the travel and savings more than the quick installation (and we didn’t want the risk of a loan hanging overhead), we chose to do the installation ourselves. We could deal with the disruption more than the loss of other things. We could have blindly taken the easier road and paid more, but it would have cost us in other areas. Making the best choice, which isn’t always the easiest choice, is essential to remaining debt free.
Great article and I look forward to hearing your story over the next few weeks.
It is all about sacrifice and having goals. Our society is a debt society. It is how are economy runs now and it is sad. So many lives are ruined because of debt. I wonder how the divorce rate would be if money wasn’t an issue.
I love that you are a DIYer. That is a great learning experience, it takes time, but it is also more fulfilling.