Debt, Frugal, Personal Finance, Saving Money

A Life Without Debt: It’s Not the Same for Everyone

I’m often asked two things: First, how can someone become debt free and second, how does one really live debt free? The people who ask these questions are usually seeking a blueprint; a set of fail safe steps that will get them debt free and give them instructions on how to live a debt free life. I wish I could give out a set of steps that would fit everyone, but it’s not that simple. While there are some general answers to these questions that I’ve touched on before, the experience is different for everyone. There are things you must do to become debt free, but how you do them is up to you. Once you’re debt free, your life and your money is (mostly) your own and it’s a liberating and relaxing experience. Beyond enjoying those feelings, your debt free experience will depend on what you enjoy. Trying to follow a set of steps exactly is likely to lead to failure because we are all different. What works for one doesn’t always work for another.

To become debt free you have to spend less than you earn. Often much less. This is true for everyone. But people have very different ways of making that statement work for them. Some people choose to keep their spending the same but get another job. Others slash spending to the bone and live on Ramen noodles for a few years. Still others keep spending on the things that are most important to them but cut down on everything else. There’s no one right road for everyone, but ultimately everyone who wants to be debt free has to take that step in some form.

There’s also no one right way to pay off the debt that you do have. Some people choose to pay the highest interest rates first and others choose to pay the smallest balances first. Others try to distribute their payments so that they make a little progress on each debt each month. However you go about it, the debt has to be paid off. It’s the method that’s up to you.

There’s no blueprint for how you should live your life once you’re debt free, either. Some people continue to scrimp and save, putting all their efforts toward the future. Others prefer to give away large sums of money and only keep the bare minimum for themselves. Still others spend on things that are important to them like travel or hobbies and keep saving in other areas. Your lifestyle choice is completely up to you. However, everyone who is debt free and wishes to remain so needs to continue to spend less than they earn. Ideally you have a strong emergency fund, as well, to keep you out of debt should problems arise. Beyond those two things, a debt free life is your own creation.

Your debt free journey and experience will likely not be the same as mine or anyone else’s. While you may choose to model your efforts after me, someone else you know, or a financial guru, ultimately you have to do what works for you. You have to take certain aspects of other people’s experiences that work for you and use them, while letting the stuff that doesn’t work go by the wayside. There are steps and feelings along the debt free journey that everyone will experience in some form. But exactly how you approach your journey and your life will be your own creation. The important thing isn’t how you become debt free or what you do when you get there. It’s not important whether your experience is the same as someone else’s or not. The important thing is that you do become debt free someday so that you can build wealth and live a comfortable life, unencumbered by debt.

5 thoughts on “A Life Without Debt: It’s Not the Same for Everyone

  1. Being debt free isn’t always a good thing. I could be homeless and debt free forever. No one would lend to me! 😀

    Though I’m pretty sure you’re referring to “bad debt” and not using leverage for gain.

  2. I teach a simple, guaranteed system to eliminate debt. I agree that you can pay off the debt with the highest interest rate first or the one with the lowest balance or maybe the one debt that annoys you.
    However, the advice to pay more than the minimum payment on more than one debt is totally wrong. Any extra money should be added to the payment of the debt you have chosen to pay off first.

  3. “the advice to pay more than the minimum payment on more than one debt is totally wrong.”

    But I think this is where things start to fall apart. There is NO one right or wrong to pay off the debts, and if people think there is, and fail at that way, they’re in trouble. I ALWAYS paid more than the minimum on all of my debts. The thought of just paying the minimum sickens me. How much more than the minimum is based on which I want to pay off first.

    For instance, I had 3 cards last year. Two had a minimum payment of $45, another had a payment of $60. One of the $45 payments was the one I wanted to pay off first. I calculated that, based on putting all of my excess toward that card, it would take me 4 months to pay it off. However, it would take me 4 months to pay it off and cost me $20 more in interest if I reduced my payments by $150/month. But I would save more in interest by putting those funds toward the other cards ($20 more for one card, versus $45 saved by putting it toward the others). Why should I give up $25 to not pay the card off any earlier than I otherwise would?

    Those type of blanket statements need to be banned. They just CANNOT be true in every situation. FWIW, I use to play around with the numbers and calculate the benefits of paying off the cards.

  4. I found that even if you can’t dump large amounts onto paying off your credit card debts that paying the minimum plus rounding the amount up to the next $5 or $10 helps knock that bill down, even to the next dollar if that is all you have. Decide this is the amount you will pay each month and send it in. When your next bill comes the minimum will be lower but if you continue to pay the same amount you originally decided to, soon you will see that ALL your credit cards are making progress.

    If you can dump a large chunk of money on one card, decide which one will give you the most satisfaction or better yet, set the money aside to pay CASH for the next item you need to buy instead of charging it. Getting into the habit of spending cash takes a new mindset if you are used to pulling out credit cards and you will need the cash to spend. If you are putting every penny into credit card debt, when you really do need to buy something will you have the cash to pay or did you put it on credit card debt and now have to increase your debt to pay for something again? It can be a vicious cycle.

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