A Life Without Debt: Five Myths About Being Debt Free

Most people seem to have a lot of false beliefs about being debt free. They seem to think that those of us who are debt free never have to worry about money, or that we are somehow free from the concerns of everyday life. Some people work to become debt free because they believe that it will somehow solve all of their money problems and confer some sort of bulletproof status upon them. When they discover that the reality is somewhat different, they are disappointed and wonder why they worked so hard to become debt free if it doesn’t solve all their money problems.

Sure, there are some perks to being debt free and in a lot of respects a debt free life is a lot less stressful than one laden with debt. However, being debt free does not miraculously cure all your money worries or automatically make you rich. The debt free aren’t problem free. Here are the most common myths I hear about being debt free.

You never have to worry about money: It’d be nice if this were true. It would be great if being debt free meant that you never had to worry about money again. But it doesn’t work that way. Those of us who are debt free still have to worry about layoffs, pay cuts, medical issues, sudden tax increases, and other devastating financial events. While we might be able to weather a crisis better than someone with a lot of debt, we don’t get off scot-free, either. We may not be lying awake at night worrying about how to pay our bills, but we do worry about keeping expenses low, saving up enough to cover emergencies and long term needs, and dealing with unexpected expenses. Just because we can pay to replace the heat pump out of pocket doesn’t mean that we don’t worry about the ramifications of having to do so. How will we replace the savings? Can we still take that vacation this year? Do we need to eat out less for a while? We may not have the same worries as someone with debt, but we do have our own worries about money. If we want to stay out of debt, we have to worry about money.

You can have everything you want: People seem to think that if you have no debt that you can have everything you want. You can travel all the time, buy whatever you see in a store that you like, and buy a new car on the spot. I’d love it if this were true, but it isn’t. Most of us who are debt free are not rich (see number 5, below). We may have more disposable income than someone who is locked into a bunch of payments, but our disposable income isn’t unlimited. We still have to make some tough choices about what we want and need most. Do we want to travel this year, or would we rather redo the flooring in the house? Do we need to replace the car this year, or can we put the sunroom on the back of the house? To think that we can have everything is the path to debt. Even the debt free have to choose with care how we spend our extra money.

You don’t have to budget: I would argue that the debt free have to budget more than those with debt. If you’re willing to take on debt, it doesn’t matter where the money goes. There will always be a credit card or home equity line to pick up the slack. Overspend for a couple of months and you can just put the extra on a card. But if you want to remain debt free, you have to know where the money goes and then rein in the spending when too much starts to go out at once. You have to know what you spend on necessities, what you’re saving, and exactly what is left over for “fun” and unnecessary spending. You have to know where you can cut if times get tough and you have to know what to set aside for big expenses like taxes and insurance payments. A budget is practically required in order to remain debt free. It’s not something that we get to stop doing on the day we’re debt free.

You don’t have to worry about your credit score: People think that the debt free never have to sweat their credit score. The reasoning is that if we’re never going to take out a loan or credit card that it does not matter what our score is. That might be true if a credit score was only about getting a loan. But in a world where a credit score determines insurance rates, employment opportunities, and whether or not someone will rent to you, a good credit score is important. Chances are, debt free people have to worry more than those with debt. Because we carry so little debt and are reluctant to take on credit cards or personal loans, our lack of credit history is sometimes a problem. Lenders and others who use FICO consider someone with no or little credit history just as much of a risk as someone with bad credit. It isn’t fair, but it’s the system we live in. This means that a debt free person has to carry a credit card or two when they may not want to. It means that they may have to take on a small mortgage just to develop a credit history. It means that we have to be incredibly careful with whatever lending products we do use so that we don’t screw up what little credit history we manage to have.

You’re rich: I wish. There are two sides to this one: The first is that, if you’re debt free, you must have money because it’s impossible to be debt free unless you’re rich. This isn’t true. Most debt free people make average salaries and are not the recipients of family money or big windfalls. Sure, there are a few who have trust funds or received large inheritances. There are some who hit it big in the stock market or had their business bought up by a larger corporation. Yes, some are very wealthy. But not most. Most of us are average and we make average salaries. We’re debt free because we worked hard and exercised a lot of discipline through the years.

The other side to this myth is that being debt free makes you rich. Not true. Being debt free makes it easier to become rich someday with a lot of hard work and discipline, but it doesn’t make you rich automatically. It’s possible to be debt free and yet have very little wealth if you blow all the extra money on unnecessary items. We may have more in savings than someone with a lot of debt, but we are not wealthy enough that we can stop worrying about money or go drop $30,000 on a new car without breaking a sweat. We are not rich enough that we can do and have whatever we want without consequences. We may reach the point where we are wealthy later in life (and maybe sooner than those laden with debt), but most of us will probably never achieve Trump-like levels of wealth.

If you’re trying to become debt free because you think that it will cure all your money woes or somehow make you rich, you’re doing it for the wrong reason. A debt free life is generally a peaceful one and it is usually less stressful than a debt laden life. But it’s not without it’s worries and it doesn’t make you rich. You still have to exercise discipline, watch your spending, and worry about how to meet all of your goals. Debt free people may sleep better than those with debt, but don’t think that we all live on easy street.

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13 Responses to A Life Without Debt: Five Myths About Being Debt Free

  1. ParisGirl111 says:

    I think it’s a common misconception that people that are debt free are rich. However, to someone that is in a great deal of debt, people that are debt free have much more extra money every payday than someone making $700 in credit card payments every month. So, on that side of it, yes, they do seem to have it made. However, it does take time to build savings and allow the interest on investments to benefit you. Time and being debt free equal being rich. :)

  2. johnny davi says:

    I love your points, great article, i am personaly debt free, taken and unconvential approach to it.I worked for a company that went bk, in turn causeing me to get evicted, repo the car 10 cards charged off, ironically I became a collector for the next 5yrs and learned the laws and how to lose myself now I am a Sr. Financial Counselor in debt management as well as and advocate for financial litercy. I must agree these are great myths but at the end of the day CASH IS KING! I am not ricch and have to make important decisions on money(single income, 3 kids,wife is stay at home) My rent is 1800 alone so well written come check me out i speak on finances,parenting and life

  3. Forest says:

    I actually just see debt free people as careful people with the right mental attitude. I am not debt free but do intend to be one day asap…. When I am I realise it will be a constant struggle to be debt free and sometimes I will have to do without!

    Great post.

  4. teresa says:

    I am making the last payment on my house today!! I want to shout it from the rooftops! But it wouldn’t have been possible if I had bought a big house I couldn’t afford. We have friends that have big houses, new cars, boats, and RV’s plus eat out all the time, my husband sometimes wants that lifestyle until I remind him of all those lovely payments they have.

  5. Lillie says:

    Well, before I make the statement again, “If I were debt free…” I’ll stop first and reconsider the myths that you pointed out. I never considered the flipside but will definitely prioritize some areas in my life to getting where I need to be to achieve some debt-free goals.

  6. Jackie says:

    Clinging to such myths, especially the myth that you have to be rich to be debt free, is how some people justify giving up on achieving a debt free life. One of my coworkers said almost exactly that same thing, said “I could be debt free too if I were as rich as ______.” I tried to say it was his own choices that keeps him in debt, but he doesn’t want to believe that. It makes him feel better to think his debt isn’t really his fault, it’s just his bad luck to not be born into money (or get the lucky breaks that others who have money must have gotten).

    It makes me sad to see an otherwise perfectly capable person handicap themselves in that way.

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  8. Mike says:

    Thank you all for that reaffirmation in American financial confidence. My wife and I have three children and only owe money on our house; we have only ever paid 23cents to a credit card for interest (due to a late payment) and use them to get us free trips to Canada to visit family. My grandmother and wife’s parents taught us the time value of money long before we ever hear of Dave Ramsey or debt counselors; the great puritan work ethic and drive to avoid the overhead cost of mortgaging our livelihood by living without certain things is mostly where we offer credit for our thought patterns; this experience gives me the confidence to help others manage their current financial situations while building financial insulation for the future.

  9. ThiNg says:

    LOL, this article reminds me of the same arguments I hear about losing weight and being in shape. You never have to worry about what you eat! You never have to go to the gym! You must have perfect health! You never have to worry about your health!

    Bottomline, you only succeed in things that you work hard at. Easy as that.

  10. Robert M says:

    Great Points!!!!! We will have the house paid off in 3 years and 10 months..or sooner.
    I disagree with the FICO score. We will not pay interest to build our Fico score or play with the credit card industry. So be it if we pay extra for car insurance. If an employer refuses to hire me because I am debt free and responsible with money, and no or low FICO score, I am better off not being hired. I do not want to work for someone who is not able to think rationally.

  11. Mick says:

    The grass always appears to be greener on the other side. I guess the only real change is how you view your life, and not just focussing on getting rid of debt.

  12. Larabelle says:


  13. Alex says:

    This article is kinda crappy. First of all, it says debt-free does not eliminate your worries for becoming unemployed or lose your job. Yeah right! If you have your house paid and have some emergency funds, you’re not going to worry to much about the bank taking your house. If you had a lot of debt on your house and you are paying $1,800 or $2,500 a month for your McMansion, you’d be worried you’ll be living the in the streets. Not happening – if your house is paid.

    And whoever said people have to be rich to be debt free and have no budget. Being debt-free is a step-by-step process of eliminating debt, and people who are debt free knows how to budget and pay-off their debt. C’mon this article is a joke.

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