As a society, we’re all pretty comfortable with personal debt. That is to say, it is totally normal and expected to have a lot of debt. It’s pretty abnormal and surprising to hear that someone has no (or just a little) debt.
Maybe you think that being debt-free isn’t a big deal. Or, possibly you haven’t really considered the possibility. When I talk to people about what being debt-free would mean to them, they can’t even imagine it. Instead, they vaguely assume that life after retirement will be a debt-free bliss – a hard-earned season of life during which to finally live out lifelong dreams without having to worry about money.
I’m sorry, but that vision isn’t inspiring to me at all – in fact, it’s completely suffocating. And in case you haven’t read my story HERE, David and I made a decision in 2004 to get totally debt free including the mortgage, and achieved that goal eleven years later. It wasn’t an easy task, and we started with a huge amount needing payoff. But, we did it and now our mindset, focus, and life has completely changed for the better.
So what’s the big deal about having personal debt?
Unlike most individuals, businesses can take the money produced by debt to build their income streams through investments, expansions, and so on. Debt is a great tool for a business: leveraging resources in order to grow and create more streams of income can be a smart thing to do.
People often use this kind of reasoning to justify personal debt. They create a mental separation between “good” debt and “bad” debt, and then categorize almost all debt in the “good” debt section. A mortgage on your house, student loans, and car loans are typically all seen as “good” and definitely “normal” debt. Debt for personal purchases or on credit cards else is really all that is left in the “bad” debt category.
None of this is wrong in itself – houses, cars, and education are necessary in this world. And yes, credit card debt is bad. So what’s wrong with the idea of “good” debt?
We have everything that our society says is normal, necessary, and good – but now we are stuck. We have all of these financial commitments that we literally cannot live our normal lives without. Nor can we pay off these financial commitments – we don’t have the kind of money on hand that a payoff in full would require. And, since our monthly payment won’t change if we make significant extra payments on the debt, we usually don’t make them. Instead, we use those funds for other necessities or things we want and continue life in the cycle.
Well, what happens if something happens? Businesses continually lay off their workforce, and it happens at all pay levels and education levels. What if we lose a job, and are unable to find work for several months, or if the job we do find requires a 30% paycut? What happens if a car accident causes your primary income-earner to be out of work for a year? What if something happens to one of your children, and an income-earner has to drop out of the work force to provide care?
Sometimes people will brush these things off, assuming that if or when a personal emergency occurs, the finances will all work out somehow. Perhaps that is true, but probably it’s isn’t. I personally feel it’s better to plan for “just in case”.
But there are other reasons to work toward a debt-free lifestyle. The biggest one is YOU. Wouldn’t you like the flexibility to do something different with your life? What are your dreams and goals? If you didn’t have to pay the mortgage, or the student loan payments, what would you be doing with your day today? What about tomorrow? What would your spouse be doing?
In addition to flexibility, paying off the debt allows the freedom to make big changes to our lives without financial worry. Without large commitments of debt repayments to make each month, you can focus your energy and finances on achieving larger goals. That could be as immediate as staying at home with your kids, or as complex as starting a family business.
Life without debt is possible! That doesn’t mean it is easy – these kinds of decisions aren’t generally the easy ones to make. You will definitely need to make some hard choices and possibly even some life changes in order to become debt-free. Ultimately, like anything else, it all comes down to how important it is for you.
I'm a homesteading, homeschooling mama to three little ones. I'm passionate about helping other moms find ways to live the homesteading life of their dreams.