Am I Truly Free from Financial Bondage? A Life Without Debt

I talk a lot about being debt free, but recently this question came up amongst friends: Am I as free as I think I am? I have no debt of any kind, so I am free from obligations to creditors. The bank cannot come take my house if I don’t pay my mortgage, my car can’t be repossessed by the financing company, and the credit card company cannot harass me for payments. I own all of my stuff outright. In that sense I am free.

However, I am not free from financial obligations that may mean the loss of my stuff. If I don’t pay my property taxes, the county can take my house or car. If I don’t pay my income taxes, the IRS can take almost anything they choose. If I don’t pay my car inspection and tag fees, they can take the plate and make it illegal for me to drive it. If I don’t pay for state mandated car insurance, I won’t be allowed on the road. There is a long list of bills that I am still required to pay, even though I have no debt. In that sense, I am not free.

As my friends and I talked it over, we agreed that we are not as free as it may first appear. Should we fall on hard times, we risk the seizure and restriction of some of our belongings. However, the good news for us is that with no debt payments that day is likely farther off than for many. Short of moving into a cave, there is virtually no way to become completely financially free. There will always be some required payment that you must make if you want to keep your stuff.

The difference between debt and these other types of payments is twofold. First, these required payments don’t carry interest charges (unless you pay late), so you do not owe more than the item is worth. Your taxes reflect the cost of your home, not the cost of your home plus another 5% APR. While you may have to make the payments, they are fixed and do not end up costing you more than the market value of the item. Second, I could avoid some of these expenses if I had to. I could sell the car or the house and escape at least some of the insurance and taxes. With debt, you cannot escape the charges. Even if you sell the car, the bank still wants it’s money back. If you sell the TV that you charged on the credit card, the credit card company doesn’t care; they still want their money. You cannot walk away from debt without consequences whereas you can dodge some of these required payments if you choose to.

Yes, I still experience some forms of financial bondage. Even with no debt there is still a risk that I could lose my stuff. I am not truly financially free. Neither is any other debt free person, really. However, the fact that I don’t have debt means that I have a lot more money to put toward these other required expenses so I can keep the tax man away from my door much more easily. I may not be totally free, but I am still much less stressed and anxious than I would be if I had to make debt payments plus these other required payments. If I’m not totally free then at least I’m as free as I can be.

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5 Responses to Am I Truly Free from Financial Bondage? A Life Without Debt

  1. the money paradise says:

    Debt is one of the most dreaded financial instrument till the date. it feels good when taking but it is consuming while repaying.

  2. Stephan says:

    Couldnt agree more with your post. I have no debt, but have noticed since i moved into my own place just how many different fees, taxes, and charges there are on a daily basis. I guess its just something that college did not prepare me for, but I am certainly learning now just how important that emergency fund can be in case i lose my job!

  3. Susan says:

    Such a good point. Maybe as more and more of us become debt free, we will be more aware of how much we pay in taxes and people will not allow lawmakers so freely to take our money.

  4. Gail says:

    Oh the joy of property taxes! Don’t know about other parts of the country but here in mine, not only are income taxes due in April but also property taxes. Fortunately we had the money to be able to pay and get the 2% ‘early’ payment discount. But you are right in that there will always be bills to pay, but not having debt means that that money can be set aside until needed for bills. Although we had close to record snowfalls this year at least I didn’t have to have heart attacks with every propane fillup this winter as we had had enough to prepay for the fuel before winter hit and in the process saved between $700-800 for the winter. This is something that you can’t do when you are maxed out in debt and that is taking advantage of prepays and early payment discounts, unless of course you are dumping it all on a credit card and then the interest will wipe out any savings.

  5. Augustine Arize says:

    This is a nice and thoughtful post, and I wholeheartedly agree will the fact that we are debt-free doesn’t mean that we have made it. We always have debt to pay. Maybe someone could come up with a more acceptable terminology. I really like this post because it is based on deep analysis,hence much more realistic. I am very impressed Sadie’s thought process. Debt-free is placed in context or qualified. This is an A+++ work.

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