A Life Without Debt: The Big Payoff

People frequently ask me why I’m so committed to living without debt. Am I debt phobic? Afraid of bankruptcy? Am I afraid that I’ll get in over my head? Am I just out of touch with “the way people do things these days?” I always answer no to all of these questions. The reason I am committed to living a debt free life is because I know what the payoff looks and feels like and I am not willing to give that up.

So what is the big payoff? Peace of mind and an ability to ride out economic downturns without freaking out. Right now, while many of my friends and co-workers are losing their minds about the economic crisis, I’m just cruising along living life pretty much as normal. Does the recession affect me? Sure it does. My investments have tanked just like everyone else’s. My dollar doesn’t go as far as it did a year ago. Gas prices are higher, package sizes in the store smaller. I complain bitterly about government bailouts and wasted tax money.

The big difference between myself and my friends is that my debt free lifestyle has put me in a place where those things aren’t nearly as painful for me as they are for my friends who have a lot of debt. We have enough saved so that if we were to lose our jobs we could live comfortably for a year on just our savings, even if we had no income whatsoever coming in. If the pain went on beyond that, we could raid some of our investments and live for another two or three years in spite of the fees, taxes, and penalties that would come along with the early withdrawals. Everything we own is paid for so there is no concern about rising interest rates and no one can take away our cars, house, or furniture. It’s a good feeling.

Of course there was some sacrifice required to arrive at this place of serenity. People often tell me, “Well, it’s nice that you’re debt free, but think of all the things you missed out on by not spending.” It’s true that there were some very lean years. When we first got married, our apartment was a tiny one bedroom with no furniture except a bedroom group purchased at a yard sale. The cars were clunkers that ran but did nothing to improve the beauty of the neighborhood. We both worked and lived on only one salary. We banked all of the second salary. As time went on, we were able to buy some furniture, move up to a two bedroom apartment and upgrade our lives as our salaries increased. Still, we banked one whole salary. Before long we had enough to buy our house with fifty percent down. The rest was financed on a short term loan that was paid off well before the due date.

Because we aggressively saved and invested money in those early years and avoided any debt, we only “suffered” for about five years. After that, we were comfortable and were able to do some fun things like travel and buy better (but still used) cars with cash. Those five years gave us the start we needed to create a comfortable financial base. Because we’ve avoided debt and kept our lifestyle reasonable for our income, we’re still able to bank my salary and that is what has led to the large savings cushion that we now enjoy.

So, yes, we suffered some. We didn’t have everything we wanted. (Now that we’re comfortable, we still don’t have everything we want; we pick and choose.) But we had a plan and we knew that any suffering would only be temporary. We never felt like we missed out on anything because we knew that the places we wanted to go and the things we wanted to do would still be there once we were stable financially. The Grand Canyon and the Vatican weren’t going anywhere and there would always be TV’s, computers, game stations, and other fun gizmos to buy later. Instead we spent time together and enjoyed low cost meals and entertainment options. We never felt deprived because we knew that it was more important to build that cushion than to have expensive fun.

We’re now ten years beyond that “suffering” and we’ve been enjoying the big payoff ever since. We travel as frequently as our schedules allow. We own some fun gizmos and recently redecorated the house. Our cars, though still used, are nicer and more fun to drive. We go out to eat occasionally and enjoy some of the finer things in life. But the really big payoff is the peace of mind that we enjoy during economic down times. We’ve had layoffs and medical scares, just like anyone else. But we sleep at night, knowing that no one can take our home or cars. We know that, in the event of job loss, we’ll be okay. We’re still able to do the things we normally do without having to scale back our lifestyle significantly. These times certainly aren’t fun, but they are much easier to bear when you have no debt and you have a large savings cushion. That’s the long term payoff you should be aiming for, not the short term payoff of having and doing the things you want when you can’t really afford them.

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17 Responses to A Life Without Debt: The Big Payoff

  1. Sacrificing now to enjoy both a better and more secure lifestyle in the future is a powerful message. Too bad that so many people were unwilling to do so.

    Being debt free would certainly provide a huge amount of peace of mind for many.

    That said, I have no objection to debt which is used for the right reasons – it has been a positive thing for our family’s investments (even after the recent declines in asset values).

  2. What a refreshing article to read about a couple with NO DEBT!! We are so many years away from that due to stupid financial mistakes and the “I want it now” syndrome. However, as I have gotten older, my priorities are so different from where they were years ago. Reading your story gives me hope that the PEACE and TRANQUILITY we will find once there is NO DEBT in our lives (including our mortgage) will be well worth it! Thank you for your beautiful words!


  3. Pingback: Something to look forward to … - Debt Reduction 101

  4. Shane says:

    Great post… thx for writing it !! 🙂

    I especially like the part about being able to travel regularly !

  5. Monkey Mama says:

    Great post. We’ve always had a debt free lifestyle and feel the same way.

    One interesting thing I notice is that since everything we own is paid for, we also have considerable assets to sell in hard times. For one, people upside down on their cars (average american anyway) will lose their cars. To me our second car is a nice 3-month emergency fund, in the worst case scenario.

    For us it only took 2-3 years to build substantial financial security. Maybe saved 90% income for a year and 50% for a couple of years. I wouldn’t give it up for anything. But yeah, if you hit the ground running, it doesn’t take that much sacrifice to sprint ahead.

  6. Ben Malley says:

    I’m on my way to being debt free. I can’t wait to be back in the black. I really appreciate this kind of positive message; it makes me look back on my spending habits and feel, well, silly and frivolous.

    Best of luck to everyone! Here’s to being almost back in the black!

  7. Pingback: Monroe on a Budget » Sadie Morris: A life without debt

  8. Alex says:

    Debt Free Journey, I hear you, loud and clear. At a very late age (50’s) I learned the hard lesson the hard way. Now my mortgage is my only debt, and I’m still trimming the budget. I am trying to unload (for a bit of cash recovery) all those stupid things I couldn’t live without. The simple life — one credit card, no dept. store credit cards, no shopping, no cable, no land line, eating out rarely, not coming home with junk from shopping — is marvelous. Instead, there are nature hikes, cooking from scratch, and sewing, quilting. I can’t say enough about the simple life.

  9. Kate says:

    Seems to me this payoff is more about early savings than it is about debt free living. Don’t misunderstand me–I see how the early savings led to the debt free lifestyle, but I think the biggest thing I got out of this wasn’t about the payoffs of living debt free, but of the payoffs of saving early and often and leveraging those savings to live debt free in the future.

  10. A Marino says:

    It wasn’t that long ago, maybe 3 years that many were poking fun at those wanting to be debt free. We were told that everyone needs debt because you would not be able to see your dreams fulfilled amd it would take too long to save.

    Today, many that had that mindset are having their credit lines shut down, foreclosing on their homes, losing their cars, losing their jobs or downsizing, and lastly – some are in unemployment lines and maybe having to use food stamps for the first time.

    The amount of people using coupons in the stores has easily doubled.

  11. John says:

    Thanks for a great post. I have just entered the black 4 days ago, for the first time in 5 years! Feels great!

    Now I need to plan how and where to save. I still owe on my 1 car, but the other is paid for. My immediate plan is to sell the paid for one, and settle the one I still owe on (its the better car). After that I’m 100% debit free.

    Coming from 5 maxed credit cards! I feel so light right now, not owing anything to anybody.

    I rent at the moment, but need to urgently put a plan in place to start saving for a flat / house. I plan to save up until I can pay cash. As silly as it may sound to some, thats my plan.

    Any advice for me?
    How should I go about it?

  12. manageME7 says:

    Everybody dreams to live a debt free life but most of the time we succumbed to the never ending financial situations. Everybody wants to improve the standard of living. With limited income, inflation, recession, job retrenchment etc., one has to take loan. The best we can do is to get rid of our spendthrift habits, use credit more wisely and manage our money effectively.

    Life is so simple, do not make it difficult. Just try to manage yourself.

  13. Adwoa says:

    I am curious to know if you’ve “upgraded” your house? By upgrade, I mean have you purchased a bigger, nicer, newer or whatever home just because you wanted a bigger, nicer, newer or whatever home? I’ve had this debate going on with me boyfriend about whether it’s better to upgrade for the sake or upgrading or payoff and invest that money in other things.

  14. Sadie says:

    @ Adwoa: No, we’ve never upgraded the house. When we bought, we had saved up enough to afford something bigger than a small “starter home”, but still not that big. (It’s about 1600 sq. ft. heated) but on a big plot of land. This is plenty big for us, esp. since we don’t buy a lot of random “stuff” to fill it with. So we’ve never felt the need to “upgrade.” We love the neighborhood and the location.

    We’ve just always felt that the money we’re not spending on a mortgage is better used for other things. Retirement, travel, savings, etc. are all more important to us than a newer house when this one suits our needs just fine. There’s no pressing need to trade up, so we direct the money elsewhere.

    So, no, we’ve never felt like upgrading just to get something bigger, newer or nicer. We have done work over the years on it — redecorated, new floors, added an island in the kitchen, converted a dining room to an office, those kinds of things to make it work better for us, but the actual house remains the same.

    I can’t swear that we will stay here till we die; if we have to move for work or something we might have to look at something else, but for now and the foreseeable future, we’ll keep this house and use the money for other things.

  15. Human One says:


    Id stick it out where your at. Like Sadie we also enjoy a similar lifestyle, house, cars all paid in full. I’m not up to the “buffer” they have but we are on our way. We have only been “denying” ourselves for 3 years and we have given up allot around the compound here.

    On that note, we are living in the same house I bought right out of high school, that’s 20+ years or so. Granted I am ready for a change in a big way, but there is only me and the wife, it’s enough house, we just want a change.

    You are looking at an investment opportunity of a lifetime. The markets will never be lower than they will be under this president. He will try to crush capitalism, but my bet is in the long run he will fail.

    All our savings goes into the market, we buy on the way down and on the way up, we buy no matter what, but especially now, we save even harder, go without fixing things longer to get every once of juice out of this market.

    Back to the compound, we have set a lofty goal, save the money up front to buy our next house in cash.

    Anyway that’s my pennies worth.

  16. Gail says:

    Terrific post. We are hopefully looking at everything including our mortgage and a rental property mortgage all paid off in about 7 years, sooner if we can swing it.

  17. How to pay off debt says:

    By upgrade, I mean have you purchased a bigger, nicer, newer?

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