I started this blog over 10 years ago. At that time, I was fresh out of college and had a negative net worth. In four years’ time, I paid off my student loans, got married, bought a house, got divorced (slight hiccup there ;)), paid off my new debt to my ex, and finally…paid off the mortgage. I was officially completely debt free by the age of 29. Woot woot!!
No, it wasn’t the conventional route, but who on earth gets everything right the first time these days? Pretty sure the answer to that is nobody!
Today, I’m remarried, have two fantastic kiddos, and life truly couldn’t be better. Well…we all probably could have done without the pandemic… But other than that, life couldn’t be better!
Completely Debt Free – The Downsides
Normal people have a mortgage.
Normal people have at least one car loan.
And, normal people have a bit of credit card debt…usually $6,000 or so.
If you’re completely debt free, you’re not normal anymore…and that leads us to our first issue of complete debt freedom…
When you’re completely debt free, you can pretty much only relate to conservative old people that are still a little afraid of banking because they remember when their parents lost their shirts in the Great Depression. So…that’s a major downside.
If however, you have friends that are in the hunt to pay their house off sooner rather than later, hang onto them! They’ll pretty much be the only ones you can really talk to when money conversations come up!
You May Be Losing Out on Investment Earnings
If you didn’t work your butt off to pay your mortgage off early and do it in 5 years or less, then you may be better off making the scheduled mortgage payments and investing the excess instead.
When I made a goal to pay off our house, I scrimped on all my bills, took on extra jobs, and created some side hustles! I paid off $54,000 and was mortgage free in less than a year.
Go at your mortgage hard like that and it will be a benefit. If you tackle it slowly and ignore investing, you’ll likely be worse off.
You May Have Missed Out on Some Fun
I got divorced when I was 27. I was $21,000 in debt to my ex and had a $54,000 mortgage.
One life option could have been to pay the minimums on everything and travel the world, see a bunch of friends, party often, and live the untethered single life again.
That just wasn’t me though.
I was more interested in cutting the ties with my ex – to have nothing keeping us together…and that debt was certainly forcing us to continue talking. I hated it. I wanted it gone. At that time, paying off all the debt was more appealing to me than partying around the world.
So sure, if you decide to hunker down and pay off your debt with a vengeance like I did, you might miss out on some cool experiences and interesting people, but if you keep on reading, you might discover that it’s worth it in the end. 🙂
Completely Debt Free – The Tremendous Upside
I’ll never forget the day I made that final house payment. I stood in the backyard in my barefeet in December. Why? Because I wanted to feel what MY grass felt like vs. the bank’s. It was different. And I loved it.
That was December 11th, 2014.
Fast forward 6 years and life is a lot different. And the benefits of being completely debt free are insane.
When you’re completely debt free, you’re a slave to no one. There are no more payments and no one can direct your life but YOU! There’s such a freeing feeling that comes with that.
And, on top of that, you know that if something goes wrong, you’ve got that emergency fund in the bank that will cover you. When you’re completely debt free, there really are no more emergencies, just annoyances that cause you to write a few checks here and there.
Did you catch my recent post about my $900 iPhone purchase? I seriously hate spending that much money (on a freaking phone no less!), but we’re in a position where we can splurge a little and make our lives more convenient.
Quite honestly, it’s been nice.
Here’s some other things we splurge on intentionally:
- An 8 year old Chevy truck (vs. a 17 year old car)
- Higher quality food at the supermarket (we really don’t look at price tags anymore…but FYI, we do still shop at Aldi ;))
- A 70 degree house in the winter vs. the usual 67 degree house. Those 3 degrees seriously make ALL the difference! See ya later indoor slippers!
As you can tell, we’re not exactly breaking the bank with our lifestyle inflation, but a few ounces of happiness from multiple areas in our life really does make a big difference!
Stay At Home Parenting
Dave Ramsey often says, “Live like no one else so that later, you can live like no one else.”
That’s what we did.
We knew many years ago that we didn’t want to send our kids to daycare. We wanted to parent our kids. After all, that’s why we had them…to be with them!
We became completely debt free so that we could live on just one income and still live well, even as a family of four.
It has been totally worth it. Absolutely no regrets!!
Being completely debt free made our cash flow ridiculous. It was amazing how fast our savings went up when we weren’t paying out money for a mortgage, car loan, student loan, etc.!! Every year, we’d have $30,000 extra that we had to figure out what to do with (serious problems, I know!! ;))!
We knew we wanted kids and that they were going to be expensive, so we decided to turn our money into more money!
We bought a rental property, and we still own it today.
Also, I still hold my day job, I earn money with this website, and my wife has picked up photography. We have 4 income sources, but really only one day job. It’s flexible, stress free, and the money just keeps rolling in!
Dang, debt freedom provides options in life!
Remember one of my earlier points where I stated that being completely debt free allows you to splurge a little? Well, once in a while it allows you to splurge A LOT! 🙂
We take one massive vacation a year, typically to Sanibel Island, FL. We take our two kids, fly down, and we rent a condo near the beach for two solid weeks. The entire adventure costs about $4,000!
It’s a pretty big chunk of change, but we have made so many great memories with these trips! And our kids just love it!
I’m so glad we’re debt free and can just pay cash for adventures like these. It makes them so much more enjoyable!!
Private Schooling for the Kids
I grew up in a private Christian school. The education was the best in town. Plus I was constantly surrounded by people that were willing to talk about Jesus, about Christianity. It meant a lot to me, and it still does today.
My wife and I want our kids to have the same experience. The only thing is…that comes with a price tag…of just over $100,000 to get them from kindergarten through 12th grade…each. That’s $200,000 that we’ve decided to shell out!
Thankfully, since we’re completely debt free, we’ve been able to save and invest heavily these last couple years. And you know what? We’ve already got $100,000 invested!
With the future interest this investment will earn, I believe this pile of cash will last them both through their senior year of private school! ie. We’ve already got their 13 years of private school saved up!
Without being completely debt free, private school probably wouldn’t even have been an option. And now we’ve already paid for it 15 years in advance!
Wow. Just wow.
If you’re still not interested in debt freedom at this point, I just have no words for you.
And then there’s college. Yet another expense from those money-sucking kids!! Lol.
The truth is, you don’t HAVE TO pay for college for your kids. And quite honestly, you should first focus on your own retirement before even thinking about giving the gift of college to your kids. But, if you’re completely debt free, then your retirement is probably already on auto-pilot and growing nicely each month.
Retirement isn’t all that fun to save for. Saving up for college is! And I mean, c’mon. Who wouldn’t want to tell their kids that their college is completely covered and paid for! It’s just up to them to use the money to the fullest and advance their lives to even a greater level than your own!
So how do you know how much to save up for college?
How much do you save for college?
The answer actually isn’t very easy since…
- the cost of college is going up every year, and
- the growth on market investments is uncertain
How can you possibly match up contributions from today and know what amount it will turn into 18 year from now? And what will the cost of college be then?
Yeah, the questions were tough…which is why I made a College Investment Calculator Tool! Use it for yourself to see what you have to stash away to cover your kids’ college costs! It was incredibly useful for us, that’s for sure!!
Ability to Give
This one is super cool.
You should be giving away money during your entire journey, but when you’re not completely debt free, money can be tight and giving can be difficult.
But, when you have no debts and plenty of income, giving starts to get fun.
- Someone in your church lost their job and they’re having trouble making ends meet? Anonymously deliver $1,000 in cash to their house!
- Have someone who’s credit card gets declined in the grocery store check-out? Just pay for it without even thinking about it.
- Do your parents desperately need a newer car? Buy them one for their safety.
Complete debt freedom is a trip. And giving is almost always the funnest part!
Eventually, Splurge a Lot!
Liz and I are starting to dream about our future and the things we might love to do. We already told you that we love going down to Florida and renting a condo there every year. But, what about when our kids are out of the house? What if we bought a place and lived down there for a month or two during the winter? Then, we could even invite the kids (and maybe grand-kids) down to stay with us if they wanted!
In the near-term, we’re thinking about adding a master bedroom to our house. Oh, and a pole barn for Liz’s photography studio and potentially a horse or two… (and my basketball court and golf simulator!). Maybe we’d have a boat or camper to go in there as well. Who knows? The sky is the limit when you’re completely debt free!
What Would You Do If You Were Completely Debt Free?
What about you?
What if you were completely debt free?
Would you do all of the above and more? Heck, maybe you’d travel the world, buy an airplane, start up a non-profit, or adopt a bunch of kids! Like I said, the sky is the limit when you’ve got absolutely no debt!
Tell us in the comments below! When you’re completely debt free, what are you going to do?
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.