woman saving money to be debt-free
Time & Money Management

Debt-Free Living: 7 Life-Changing Financial Perks

woman saving money to be debt-free

There’s an allure to financing.  You can get what you want sooner.  You can buy something nicer than you might have otherwise not been able to afford with cash.  You can buy the things you “deserve” after all your hard work.  But there’s a dark side to debt.  Debt slowly depletes your resources and options.  Like a frog put in a pot where the water is heated slowly,  people often don’t realize the financial situation they are in until something lights a fire under them.

Maybe it’s an unforeseen job loss.  An illness.  A financial crash.  It’s only at that moment that many people see the downside of debt.  Rain falls on the just and the unjust.  Life happens.  And the more you can prepare yourself financially, the better you will weather the storm.  And even if the storm doesn’t come, there is no shortage of financial benefit that comes from debt-free living.

Debt-Free Living- 7 Life-Changing Financial Perks

1. More free income = more fun

While it seems counterintuitive, financing the things you want to do now hurts what you can do later.  Financing technology, trips, or clothes on credit cards take more income than paying cash.  So, while you get what you want now, you reduce your options for fun later.  Having freedom from debt means having extra spending money at the end of each month.

Take that money and stash it away in a fun fund.  Then, spend it without guilt- buy that fancy purse, go on that exotic vacation, enjoy that monthly pedicure.  It’s more fun to spend money when you don’t have to deal with the guilt later.

2. Increases your future earnings

Not having debt is like giving yourself a raise.  Instead of paying money every month to interest, you get to keep that money in your pocket.  Less money leaving your pocket to lenders means more money you can apply toward your goals.  While you might not make more money, when you get to keep more of what you earn, it feels like an increase in salary!

3. Less financial risk

There’s a lot of talk out there about good debt vs bad debt, but let me tell you, when you have more bills than money, it all feels the same.  I’ve had financially savvy people tell us we are foolish for working to pay our mortgage off early- it’s a low-interest loan and we could make more over time investing that money.

While that might not be incorrect, that theory also comes with a fair amount of risk.  If one of us was to lose a job, or there was another big expense such as a major illness, that mortgage still needs to get paid.  On the other hand, no mortgage means having a lot more cash freed up at the end of each month.  And that brings a lot more security and peace of mind than a low-interest rate ever will.

woman celebrating debt freedom with hands in air

I have a friend whose parents owned their own business.  They made great money and had lots of cash available at the end of each month.  They had owned their house for 20+ years but never prioritized paying off their 30-year mortgage early.  Then the financial crash of 2008 happened and their business didn’t survive.  Suddenly, they were at risk of going into foreclosure because they couldn’t afford their mortgage payments.

Had they prioritized using some of their excess money to pay their house off early, even choosing a 15-year mortgage over a 30-year, they would have been in a completely different situation.  The stress of the impending loss of their family home caused a lot of anxiety and led to some major physical and mental health issues.  I’m certain, in hindsight, they would have gladly given up some of those fancy Saturday night dinners and the extra clothes in their closets for peace of mind.

4. Bulk up your savings and investments

A big benefit of debt-free living is that it gives you extra money each month to add to your savings and investments.  They say it takes money to make money. Freedom from debt enables you to have money to invest, which then makes you money.  Investing money enables you to take what you make and turn it into more.  And having a healthy savings means being able to cover life emergencies without getting yourself back into debt.

5. Earlier Retirement- extreme or otherwise

If you’ve never heard of early retirement extremists, they are people who attack debt at a furious pace in order to achieve F.I.R.E. (Financial Independence/Retire Early).  The premise is to gain financial independence through debt-free living and then invest as much income as possible to gain financial freedom from a 9-5 job.

Whether you want to quit your job in 5-10 years like most F.IR.E. bugs, or just want to know you have a substantial nest egg for your golden years, being out of debt enables you to invest more money into your future, so that when you are ready to retire, whether at 30, 40, or 65, you have a savings to draw from.

6. Simplify your bills

Lots of debts mean lots of people you owe money to.  The more you owe to creditors, the more bills you have to pay each month.  Debt-free living means less time taken up each month processing bills and making payments.  This also reduces your mental load because you don’t have to remember to schedule bills around paydays.

At our house, we have very few monthly bills, and most of them are automated.  Debt freedom means there’s enough money in our account to pay regular, monthly bills. I don’t have to think too much about when a payment comes out.  I check in on our bills and payments once a month or so and it takes about 10-15 minutes max.  It’s hard to get more simplified than that.

feet by a lake

7. Freedom of choice

This is by far one of the biggest benefits of being debt-free.  Freedom from debt means you can make life decisions based on passions and priorities.  You don’t have to stick to a job you can’t stand or keep working if you desire to stay home with your kiddos because you will have freedom of choice.  You won’t have debt dictating how you spend your time and energy.  You can leave that unfulfilling job to work for a non-profit.  Quit your 60 hour a week job to raise your babies.  Change your career path and pursue something that fulfills your calling.

Being debt-free for life enables you to be more adventurous in your life choices.  You won’t be living paycheck to paycheck, so you can take that job that pays less but offers a better quality of life for your family.  You can take time off to travel without worrying about losing it all.  You’ll be able to start that business you’ve always dreamed of.  No longer laden with debt, you can finally pursue that atypical life- travel around the country in an RV, backpack across Europe.  Take the path less traveled knowing that you have the freedom of choice, thanks to debt-free living.

Need more convincing?  Learn how getting out of debt can transform your health and improve your relationships!

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Learn how becoming debt-free can change your finances- and your life! Learn how frugal living can build your investments, increase your fun money, create more freedom, and help you retire early! #debtfree #financialfreedom #frugal

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