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The Most Important Reasons Why You Should Avoid Debt


This site often features articles on how to get out of debt. Learning how to get out of debt is an important step toward financial success. Being hunted down by debt collectors is no one’s dream. Living in debt can often turn into a nightmare and if you don’t attack the balance of your loans as soon as possible, the interest will make it almost impossible to repay. The best way to avoid this mess is not only to get out of debt as soon as possible, but to avoid it all together.

It’s Possible to Avoid Debt

Living in debt seems to be all too common these days. While having lots of debt can be the fault of poor financial planning, it can also result from unavoidable emergencies. Certain health or family emergencies do come up for certain individuals. I am not trying to suggest that this is their fault. However, getting in over your head with debt can be avoided most of the time.

A common area where people get into debt is getting through college. With the high prices of college tuition, many people are forced to take out student loans just to get through. I write about how to graduate from college without student loans on my blog. It takes a lot of hard work, but it isn’t impossible. For example, I am currently in grad school. I am working full-time at the university and as a result, I get free tuition. Most universities offer free tuition to all full-time staff members. If you can land a job at the university where you want to get your degree, you can save yourself from the student loans that could haunt you for a long time after you graduate.

Why It’s Important to Avoid Debt

Planning ahead and working as hard as you can to avoid debt offers more than just the interest that is charged on the amount you owe. Here is what staying out of debt can offer you:

  • Interest: This is the obvious one. If you don’t have any debt, you aren’t paying interest to your lender. This equates to more money in your pocket.
  • Freedom: Living a life without any debt ultimately means more freedom when you are deciding what to do with your life. When my wife and I graduated from college, we didn’t have any debt. Instead of jumping into 9 to 5 jobs to start paying back loans, we went to Latin America to teach English at a university. You can also think of Mrs. LAMF’s recent choice of whether to pursue her photography business or find another day job. While she hasn’t announced her decision yet, I imagine that she wouldn’t think twice about avoiding another “regular” job if they were in debt. Simply put, staying out of debt gives you lots of options down the road.
  • Peace of Mind: Having peace of mind is priceless. Instead of constantly worrying about how you are going to repay your loans, you are able to rest easy. You don’t have to look over your shoulder for debt collectors or wince as your open the bills. Knowing that you don’t owe money to anyone takes a lot of weight off your shoulders.
  • Compound Interest: I know you are thinking that I already covered interest, but being debt-free allows you to invest money. Instead of having to put part of your income towards debt, think of what you could do with that extra money. If you invest the money, you are capable of earning money on your money. How great does that sound? All the more reason to invest now!

If you are thinking about taking out loans to pay for something now, make sure that it is truly unavoidable. Thinking towards the future and avoiding debt at all costs can make a huge impact on your life.

How have you avoided debt?

This post was written by Corey, a staff writer from 20’s Finances where he shares his story staying debt free. He writes to help others plan for their future. Follow @20sFinances on Twitter for updates.

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My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. All very good reasons to avoid debt. I am on the other side of the compound interest equation, and it is working against me. But I do plan on getting that situation reversed and am making some progress.

    • Thanks CFM. I’m sure you will make it soon.

  2. Excellent advice. We are in the process of paying down student loan debt now that my husband has graduated. It is a looooong process. I’ll be glad when it is gone so we can move forward in our lives. . .

    • Thanks Melissa. It will be a great feeling when you get rid of school loans.

  3. Thank you for the amazing blog post. It was very helpful for me and my brother. My brother always used to be in debts and that too for unnecessary expenses. I send this link to him and he realized how much important it is to avoid debt for peace of mind and many other benefits.

  4. Hi!

    Avoiding debts is very important to live life peacefully. Compound interest just eats away your potential savings. I realized it when I had taken three loans for purchasing printer and laptop and was constantly worrying about repayments. I have paid them now and feel that I can do so much other investments. Thanks for the amazing post.

  5. One of the hardest lessons I ever learned (even though I understood the logic) was the negative power of compound interest. While starting a business I went into debt, and when the business didn’t work the debt kept growing, even after I got a decent job. It became nearly impossible to get out, so I know how people feel when the debt gets too big to handle.

    • I’m sorry to hear that, but I am glad you learned your lesson. It’s an important one to learn.

  6. I am all for the peace of mind benefit. There is enough stress already in life let alone adding debt to the equation. If you can avoid it, do so.

  7. Student loans can be killer. I wish I would have realized how much better off I would be if I had made better choices about money in college.

  8. It may be my frugal, cheap little self that hates payig obsecene interest rates for things. The funny thing is because of good credit, I can pay much lower interest rates than most. I hate paying interest unless the government subsidizes me (mortgage interest).

  9. Avoiding the easiest debt is the most challenging for me, it really takes consciousness thought before every purchase. I use the credit card for almost every transaction and clear the balance on pay day with a transfer from the checking account. It’s very easy to spend beyond the budgeted amount when you use the card all the time.

    • Hunter, your right. It takes a lot of discipline. Keep paying that balance off though. 🙂

  10. Unless you are making money, at a rate higher than the interest you are paying, debt should be avoided as it is very expensive.

    • Very good point WOF. You should always consider the interest rates.

  11. Those are all very important reasons to avoid debt. Freedom and peace of mind are the two that keep me away from the stuff. Seeing my savings balances grow makes me feel much more in control than seeing my debt balances shrink/ or worse, watching them grow.

    • True, Ashley. It is much nicer to see savings balances grow than debt balances. 🙂

  12. Avoiding debt and therefore debt free offers you flexibility and options in life! Yes of course, and peace of mind. How have I avoided debt? Hanging out with people who shares similar money mindset and spending habits as I do so I am less tempted to live above my means such as chasing fashion trends, gadget trends, go to vacations I can’t afford…

    • Great point SRL. Hanging out people who aren’t trying to keep up with the latest gadget or technology is a great way to stay out of debt.

      • I am just starting out on blogging venture and you’ve just acryonomed (this may not be a word but it works in this case) me. Thanks 🙂

  13. How I wish! that is a big dream come true. I just want to be financially stable, I don’t want to get rich. I am working on it and slowly I can sleep well now.

    • Linda, keep at it. Not everyone is able to avoid it, but it is possible to get out of debt and live a financially stable life.

  14. I didn’t realize some universities offer free tuition to their full-time employees. That’s great to know! Too bad I didn’t know that a few semesters ago. 😉 Avoiding debt makes life much easier.

    • Yes, it is a huge benefit, Little House.

  15. What a great blog post! Great tips and advice. I wish I’ve known some of them earlier so I won’t have to much trouble with debt. Fortunately, I’m almost done with all my payment then after I’ll use what I’ve learned here!

    • Yes, sometimes we have to learn the hard way. It sounds like you have learned your lesson. Just think of the huge sense of achievement once you are finished with your payment plan.

  16. I definitely agree on avoiding debt for depreciating items and items which do not earn you money. In other instances the use of debt can accelerate gains if used properly. ie. income properties where one is basing returns on rent received rather than asset appreciation.

    • YFS, that is a very good point. Well stated. Using leverage and going in to debt can be a good thing.

  17. We don’t have any consumer debt, but we owe a lot of money on mortgages. I’ll have to write about this someday.
    It’s best to avoid consumer debt.

    • That sounds like a great place to be in RB40. I would definitely be interested in reading that!

  18. This is very true. If you don’t have health insurance and something happens and you have something happen then it can lead to massive debt. Trying to be prepared and staying out of debt will help give you that peace of mind you need.

  19. Debt sucks. I am almost 40 and will be debt free by the time I am fourty. Our debt has just accumulated throughout the years, a little here- new carpet there, etc. I wish our net worth had grown in the same fashion. I worry about debt more than anything I now know that I am a person that just cannot handle debt and need cash. It has taken me 39 years to learn this but it is a valuable lesson.

  20. Great post! This is timely for people today… Avoiding debt can make you feel better. Without debts, you can feel the contentment of what you have earned.

    • Not only that! Getting rid of debt can propel you onto the financial fast-track! Think of how much you could save if you didn’t have any debt whatsoever! You could have an extra $3,000 a month! After only one year, that’s an extra $36,000. You could probably buy a foreclosed house with that money and start earning rental income! Your finances will never be the same. 🙂

  21. Hi,my name is Raha and I live in Iran! not at all,I never get loans, because all banks in my country recieve high monetary interest, unopportunity.

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