5 Benefits of Debt Free Living
Debt Free Living – 5 Benefits Await You
Are your debts causing stress and you want a normal life? Do you struggle every month just trying to make the minimum payments on your credit cards? Do you really want to achieve debt free living?
It’s so easy in today’s life style to get caught up in the “charge it” philosophy. You see your friends and acquaintances driving that new car or buying a very large house with new furniture. You think to yourself, if they can do it, so can I. What you don’t see is your friend’s , large mortgage, car loan, and several maxed out credit cards used to furnish that new house.
The average American is used to living with debt. Credit cards are used to buy things we don’t need, car loans for seven years because we like a luxury vehicle. Larger homes than we need are bought because we can get a mortgage for 30 years to lower the payment. We won’t get into the sensitive area of student loans in this article.
Debt free living is not just a simple choice. It’s a brand new life style that you decide to undertake, and it is by no means an easy route. Many try it and fail for a variety of reasons. Primarily, it is their lack of financial discipline.
If you’ve had enough stress and anxiety due to juggling payments on credit cards with balances that never reduce, maybe it’s time for a change.
Instead of the debt route, choose the debt free living road. There are many benefits that we can list for living debt free. For our purposes here, we’ll list the five major ones:
Stop paying interest and fees.
Current averages say that the rate of interest on a credit card is around 15% and the average balance carried is about $5,500.00. To make matters worse, credit card interest is not tax deductible. Keep in mind that those are only averages. Many that I have seen in my practice have credit card balances of $25,000.00 and higher. The decision to go with debt free living isn’t easy, but it can be done. I know it’s a difficult decision to make a life style change and I speak from personal experience.
My wife and I made that change many years ago, and by eliminating all debt, we’ve been debt free for over 20 years. We use one credit card for certain purchases to get points that can be used as cash. That card is paid in full every month. We’ve been able to pay cash for a new car (not a luxury vehicle), and we have no mortgage or a home equity line. Once you attain debt free living, all of that interest, including your mortgage payment, can go into savings which takes us to our second point.
Set up an emergency fund
Recent statistics issued by the Federal Reserve show that about 25% of American households don’t have any savings. In addition, the average amount in retirement funds is about $35,000.00. These figures are deplorable at best.Every household needs to have an emergency fund that should cover your total living expenses for at least 6 months. When you’re living paycheck to paycheck, and mired in debt, it’s next to impossible to spare any money for it. If there’s one thing for certain, an emergency will happen.
Establish a retirement fund
This is one area that everyone needs to start and the earlier the better. Even if you can only spare a few dollars each month, that will mount up over the years. If you’re debt free, you’ll be able to fund this account more and have a nice nest egg when you finally retire. As we mentioned earlier, it’s a difficult road, but with a good budget and controlled spending, it can be done.
You’ll have the freedom to make life style changes
Living with heavy debt and struggling to make the monthly payments limits you tremendously. However, If you’re already on the road to debt free living, you aren’t bound with those chains. Perhaps you’re in a job that you no longer like, you now have the freedom to make a change. Or you may want to move to a different area of the country. This leads to our fifth point.
You can live with less stress and worry
I can tell you for sure, debt free living most certainly reduces and/or eliminates a lot of stress, both financially and personally. The peace of mind of not having to decide who and how much to pay each month is a stress reliever.
We realize that with the previous recession and current economy, many are in debt. Some have lost their job and some are trapped in jobs with stagnant wages. Even worse, many have upside-down mortgages with little chance of recovery.
There are so many others though that can make the decision to take the road to debt free living. The sooner they do, the sooner they can enjoy the five benefits above. Give it a try!
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8 responses to “5 Benefits of Debt Free Living”
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Gust Lenglet – Platinum Author
Debt free living sure sounds tempting but it seems hard to achieve if you’re currently in debt and have bills piling up every month. Where do I even start? And just as it says in the article, it also depends on your employment situation. So as great as it sounds, it’s not always an easy choice to make.
You’re right, Robert, making the choice to live debt free can be very difficult. It takes strong determination and will power, especially if your friends spend all of their money for the nice things in life. I can tell you though, from my personal experience, life is a lot less stress free.
I was always told that the first step is an emergency fund, then pay off debt, then fund your retirement plan. Looks like this advise was true. I really need to get on this and stop stressing.
Thanks for your comment Tammy. If one can achieve the status of being debt free, a lot of stress is gone. It does take dedication and will power, but it sure is worth it.
I hope that one day I’ll be able to live completely debt free but for the time being I’m still in the loop. My family had a financial emergency last year that drained most of our savings. Right now we’re working on eliminating our debt and setting up an emergency fund. It’ll take some time to get back on our feet but we’ll get there.
Yes, Mark, with a positive attitude, I’m sure you’ll make it. Sounds like you’re on the right track, and don’t get discouraged if it takes a little longer than you thought.
Hmmmm. This looks like something I can get my husband to try. I mean, we have different credit cards and we pay interest which is quite high. Maybe using just one and cutting down some other things would really help reduce the debt. Speaking of retirement funds, we’ve got no plans yet. It’s just not fair paying debts all the time with almost little to store for the future.
Thanks for your comment Black Pearl. If you’re only paying interest on some cards, it will take forever to repay them. Pick the card with the highest interest rate, and apply extra money there until it’s paid off, then start on the next one.