Ever since Sporty and I paid off our mountain off debt we’ve enjoyed the smug, self-satisfaction that comes with doing something you never thought possible.
We feel the same way about quitting smoking.
Not owing anyone anything is a truly liberating feeling. There’s a security in knowing the money you earn is yours to do with as you please.
In our case, drink coffee, eat vegan pizza and go to the movies.
Money we would have paid to creditors now goes towards our savings and investments, where it can work for us.
Before, we’d use it to pay off things we couldn’t even remember buying. Which, ironically, cost us twice as much due to the ridiculously high interest rates attached to our credit cards.
It’s been close on a decade since we became debt-free, but we still get a kick out of knowing we’re in the black. It’s also made us super wary of how we handle our finances.
Rather than risk being tied into a cell phone contract, for example, we’ll choose the pay-as-you-go option. That way we’re in control of what we spend.
Pretty much the only place we’re open to tying ourselves into a long-term agreement is the lease on our apartment. And that’s only because we don’t have a choice. If we could pay month-to-month we would, no question.
I think it’s safe to say being in debt recovery has made us gun-shy.
The Benefits of a Debt-Free Lifestyle
Living debt-free allows you to save money at much faster rate than you otherwise would have. Especially if you live frugally and don’t blow all your earnings on unnecessary creature comforts and eating out five nights a week.
If we weren’t debt-free we’d never have been able to untether ourselves and go adventuring. Saying yes to house-sitting a permaculture farm would not have been an option, neither would moving to a small town just for kicks.
The Two Potential Cons to Being Debt-Free
You wouldn’t think there’d be any negatives to not having debt, but depending on the kind of life you live, there are two potential cons you need to be aware of.
It Can Have a Negative Effect on Your Credit Score
This whole debt thing can be a bit of a double-edged sword. On the one hand, you could end up with a bad credit record due to unpaid or overdue bills.
Sporty and I have both experienced that and let me tell you, it’s not fun.
On the other hand, you could avoid having any debt whatsoever and your credit rating will still suffer. Only now it’s because you have no way of proving you’re the kind of person who pays your bills on time.
If you have dreams of someday owning your own home or buying a car, you do need to ensure your credit rating is in good standing. This will not only secure you the loan, but afford you a lower interest rate as well.
Start by doing some detective work to see what sort of shape your credit rating is in. If you have past indiscretions, make finding out how to remove collections from credit reports a priority.
Been there done that and got the t-shirt.
Next, make sure you actually use your credit card from time to time. And then —this obvious but I’ll say it anyway— pay the balance in full at the end of the month.
You Risk Getting out of Touch
While you’re busy squirreling your money away under the mattress, the rest of the world will have moved over to Bitcoin. This is easily avoided, however.
You either have to live with Sporty or keep abreast by other means, such as reading reputable news sources and talking to people who aren’t conspiracy theorists.
Personally, I think the benefits of being debt-free far outweigh the potential cons. You can’t put a price on that kind of freedom and peace of mind. I’m must saying.