It might surprise you to know that I am actually grateful for the debt we had. I wouldn’t have been able to afford school without student loans. I wouldn’t have been able to buy my Honda that I still drive today without the $7000 auto loan. I worked full-time, but I didn’t have the money then to pay for those things up front.
Debt, when used responsibly, can be helpful. It can be leveraged into education or a small business that can help us to grow our income and create the life we want.
While it can serve a purpose, that didn’t change my mind that I wanted to take out as little debt as possible and pay it off as quickly as possible.
I remember being a kid, hunched over my bedroom vent, listening to my parents argue about how they couldn’t afford to pay the mortgage or the second mortgage or my mom’s student loan or the credit card bill. I came to believe that the only thing worse than not having money is having negative money.
I vowed that if I ever had to take on debt that I would pay it off as soon as humanely possible.
Here’s the letter that I would have written to my debt:
Dear Debt,
Kick Rocks.
Jog On.
Take a hike.
Get lost.
Sincerely, FinanceRox
The aftermath
I’m happy to say that we paid off that $49,000 of debt in 2014 and have been completely debt free for the five and a half years since then.
I hope that this post inspires you to keep going on paying off your debt. It is truly a worthwhile endeavor and my dream is that everyone would have a chance to experience it at some point in their lives.
How has being debt free impacted my life?
Sudden high savings rate – Immediately after paying off our debt we had loads of money leftover after every paycheck. We had been making massive extra payments every month towards our principal. When the debt was gone, we suddenly had more than a $1000 gap between our income and expenses. Having a big gap between income and expenses makes everything better; emergencies are less scary, more fun can be had, more options become available.
Better sleep – Nighttime routine no longer consists of worrying about not being able to pay bills and crying about being broke. Stress reduction and anxiety reduction have been the best side effect of our debt freedom.
Can save huge stacks – Paychecks no longer go to pay for past decisions, they are spent on current and future expenses (investing). Nowadays we are able to save and invest aggressively, to the tune of having a net worth increase of $146,000 in 2019 (primarily from income but also includes unrealized gains from house value and investments).
Confidence – It didn’t happen right away, but overtime I’ve developed a lot of confidence in our ability to make and save money. Transitioning from fear and uncertainty to confidence is a huge win.
Learned to live happily on less – If you can find happiness living on a small percentage of your income while you pay off debt, then the likelihood of continued happiness is high. I don’t know if paying off your debt will lead to increased happiness but I believe that we shouldn’t postpone finding happiness until after the debt is gone.
Increased generosity – I’ve never been a particularly generous person. In fact, people that know me know that I’ve been quite stingy for most of my life. Being debt free has helped me to loosen up and give money and time away more freely. In fact, just last year we more than doubled our charitable giving.
Healthier relationships – Mr. FinanceRox and I don’t argue about who’s parents to call to ask for money to pay our debts.
Traveling – Since traveling is my favorite thing to spend money on, increasing the amount we can allocate to traveling has been wonderful.
Finding the joy – It wasn’t always easy to find the joy in making, saving or giving money. I’ve learned that managing money doesn’t have to be despised, it can be an enjoyable activity.
Get Real Rox
Now, I don’t want to give you unrealistic expectations for what it is like to be debt-free. Our lives aren’t perfect; we still have problems and thinking about/rehashing past experiences with money can still be painful.
Cultivating a healthy relationship with money takes time and is more about the journey than the destination. That may mean identifying opportunities to leverage debt and that may mean telling debt to kick rocks.
For Discussion:
If you could go back, would you sign up for debt again?
What are you most excited about experiencing after you become debt free?