6 False Assumptions About Debt-Free Living

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Professional counselors are taught that there are occasions when you must help a client decrease expectations. At times it becomes clear that those struggling with an addiction are so passionate and focused on overcoming the addiction that the new reality (life without addition) is sure to disappoint. The counselor must help decrease expectations so the person will not relapse when reality does not match their expectation.

Likewise, many people have exerted so much energy and time to paying off debt, that once they become debt free, they no longer have a clear sense of financial purpose or focus. They are left confused wondering, what should I do now? With so many people preaching the benefits of debt-free living and so many positive testimonials from those who are debt free, it is easy to let your expectations about debt-free living grow to an unrealistic point. If your debt-free expectations are too high, you will be disappointed. Here are six false assumptions about debt free living.

1. I’ll never have to say “no.”

Just because you have more disposable income does not mean you now have unlimited income. I’ve never met a person who couldn’t want more stuff than what they have available for spending. I always laugh (to myself, of course) when someone says, “If I had as much money as him, I’d buy a (fill in the blank)”. The reality is, you would never have that money because you would SPEND it.

Once you are debt free you will need to look ahead to other important components in your financial plan. In order to continue to grow financially fit you will still need to sacrifice, but perhaps not to the same level.

2. I’ll never have to make stressful financial decisions.

This, my dear friends, is the biggest myth of all. You will, in fact, now have more financial decisions. Before, you got to be a one trick pony — get out of debt. Anytime you got a dollar you knew what to do with it. Now, you need to decide between so many good options like increasing your giving, saving for retirement, and saving for kids’ schooling. You’ll still need to stay within the recommended budget spending categories.

When you are debt free you’ll have to make more financial decisions than when you were in debt.

3. I’ll automatically start sleeping better at night.

If you worry about money while in debt, you’ll probably keep thinking about money after debt. You’ll be concerned when the market drops, and you lose half your investments. You’ll wonder if you have the best asset allocation. When you look for great buying opportunities, you’ll wonder if this really is the best time to buy or if you should wait.

Debt-free living does not automatically remove stress from your life.

4. I’ll never have another money fight.

Last time I checked, even rich people get divorced — with the exception of those in Hollywood, of course :).

Money fights do not happen because of debt. They happen because you have different spending priorities, and you have trouble communicating those priorities. This will continue whether you are debt free or not.

Now, one thing that is true is that there will not be so much pressure on every financial decision. It is no longer like you are walking a tightrope, and one false step will cause you to go falling towards your financial death. While the pressure is removed, however, the disagreements and fundamental issues will remain.

5. I’ll never have to keep a budget again.

People falsely assume that a budget is their punishment for being in debt. However, the truth is that once you become debt free you will need to continue to follow a budget. You can adopt a simpler budget, but you still need a budget. Budgeting is not only the single most important tool to helping you become debt free; it is also the single most important tool to helping you remain debt free.

6. I’ll be able to give to any cause I believe in.

Many people struggle with the question of giving while in debt.  They assume that if they did not have debt, giving would happen naturally. Typically, if you can find a reason not to give while in debt, you’ll be able to find a reason not to give when you are debt free. You’re still the same person with or without the debt.

When you are debt free, there will still be charities you wish you could give more to, but you’ll feel limited by your budget.

Am I suggesting you remain in debt?

No way. Life with debt is yucky. Debt-free living is amazing. There will, however, still be financial issues, decisions, and pressures when you are debt free. The more prepared you are for those issues, the better debt free living will be.

What things about debt-free living surprised you? What other false assumptions do people have about debt-free living?

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6 False Assumptions About Debt-Free Living

This is a guest post by Craig Ford, author of Money Wisdom From Proverbs. Read more from Craig on his blog, Money Help For Christians.

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Guest's picture

Good post! My feeling is that people mistakenly think they'll have all sorts of financial freedom once they're out of debt. I think that staying out of debt is harder than because you can't spend, spend, spend.

Guest's picture

It all depends on what you consider "financial freedom." If you consider it to mean that you don't have to worry about paying unsecured debt every month, then yes, you can achieve it. But if "financial freedom" means never having to worry about spending, that's another story altogether. I think that most people strive to pay off their debt. It's staying OUT of debt that can be difficult for many, and what you said is very true.

Guest's picture

I enjoyed this blog post so much, I blogged about it myself.

Guest's picture

The truth is that financial freedom takes constant effort. You don't magically have it once your debt is paid off. In fact, once you stop your efforts, you could end up back in debt! Financial freedom requires planning and consistency.

Guest's picture

This is a great statement. Well said.

Guest's picture

I believe this is important for those trying to become, or living, debt-free to really think about. It can be related to any one trying to lose weight or any number of other things in our lives. Just because someone loses 50 lbs does not mean that they get to eat Baskin Robins every day. There is always a component of work and maintenance that must continue once the goal is reached.

I am currently working to become debt free and find myself slipping into thinking some of the above points. It is always great to gain or re-gain perspective.

Guest's picture

My wife and I are debt free. if anything, being debt free has made us more cognizant of spending, spending decisions and watching every penny. so, although I agree with the article above, when you have the kind of freedom we have - we tend to make damn sure it stays this way.

dont get me wrong we sure do enjoy ourselves, but still save up for things we want as if we didn't have any money.. that is the secret.

Guest's picture

"I’ve never met a person who couldn’t want more stuff than what they have available for spending."

I wouldn't say there are many who have reached the point of "enough is enough [stuff]", but they definitely exist. Keywords are "simple living" or "anti consumerism".

Guest's picture

He said "couldn't" not "won't". People who live simply are still capable of wanting more than they can afford but they've figure out how not to.

Guest's picture

After we're debt free any considerable non-necessities we want (vacation, new kitchen table, etc.) will go on a wish list. We'll prioritize that list and save for each one. Hopefully that will occupy us and keep us debt free.

Guest's picture

For me, I felt my small amount of CC debt was something hanging over my head that would be a relief when I was finally out of debt. For that, I was right.

It's easy to be very short-sighted when you're working your way out of debt--it can be so all consuming. There were times that I felt like if I just had my debt paid, everything would fall into place. What I found was that you just find tons more things you need to save for. I was no longer paying off debt but I was trying to make sure I put enough money into my retirement account, saved for an emergency fund, and started saving for a car.

It is great being debt free but it is definitely more work being responsible with your finances than it is just paying off debt.

Guest's picture

The sad thing about this is that many people see becoming debt free as the light at the end of the tunnel, and yet they find that once they get there, there's phase of their financial journey that have to cope with. How do you recommend people approach that transition? How do should they take advantage of their much earned accomplishment without falling back where they came from?

Guest's picture

You will still have to set budgets etc. It does feel great for a short while to know you are fully in control though.

Guest's picture

After becoming debt-free the next challenge is to become financially independent!

Money management never ends, the problems to be solved just change. For me the next step is to reach true financial indpendence. After that is reached, I am sure that the problems of maintaining that independence from an ever-increasing greedy gov't, inflation, and life's woes will keep me busy.

Guest's picture

I was doing Dave Ramsey and drinking the kool-aid, when I got out of consumer debt and then the goal was the emergency fund. It was more stressful than the debt. I was seriously bummed that the next step on the journey, I had less money to spend. I looked at all the steps and realized I could "Live like no one else" when I paid off the house, probably when I turned 60ish. That is when I stopped drinking the kool-aid. The odds of me making it to 60 with all the medical problems I had were miniscule.

I live right now, don't go back into debt, but also don't feverishly work on the emergency fund. Everyone is happier.


Guest's picture

This info is spot-on! We paid off our mortgage and became totally debt-free in June 2009. I can tell you that everything you said is correct!

Also, people forget that being "debt-free" doesn't mean that you don't "owe" anyone...because you still have your utilities, insurances, etc...your "living expenses", so to speak. You just aren't paying any debts that contain interest. People think when you say you are debt-free that you get to keep 100% of your paycheck...no...I only get to "keep" 50% of my paycheck...and even that has to be invested for the future...so like you said, I still live on the same budget that I did before I paid off everything. And, like losing weight...if I revert back to my bad spending habits, I will be right back to square one.

There's a lot of saying "no" even after getting debt-free. But I'd rather be on this side of the coin than where I was prior to June 2009!

Guest's picture

Great post!

It is well understood that most people's lifestyle will match their income, i.e. spending goes up with income. However, this is fine as long as you are spending cash and and not making use of consumer credit. The problem is when you spend all you make, you have nothing to save... one of the keys to financial freedom.

Life will always present you with stressful problems and challenges. The trick is not to "wish" you didn't have them but instead learn to deal with them effectively. I totally agree that being debt free does not mean problem/stress-free life. You just have to get better at dealing with issues.

Giving money and your time is really nothing to do with being debt free. It is part of living a balanced, purposeful life.

Again, great points made in this post. Everyone should strive to become debt free and look forward to a whole new set of challenges.

Chack Pesh.
Publisher, FreedomHabits.com

Guest's picture

Being debt free is just the first tiny step. You need to SAVE a lot and make sure your cash flow continues even if you lose your job or get seriously ill. Don't try shortcuts by putting your money in risky ventures. The law is that the higher the return, the higher the risk you will lose it all. Don't buy the crap about being young and being able to recover if things go bust. A loss is a loss. Only feel safe when you have enough money saved so that the interest will keep you going. Investing in rental property that is in your name also brings in cash flow, assuming you don't buy it with substantial loans.

Guest's picture

Hey , this is interesting,
and debt- free situation occurs when you can freely appreciate more space, more creativity
thanks for this article

Guest's picture

Having been mired in debt, and having lived debt free for almost a decade, I can say without hesitation that debt free is infinitely better.

But I think you've written a good article: once you're out of debt, it's not easy street for the rest of your life. The road's certainly smoother, but there are always problems.

And I still stick to my budget...

Guest's picture


Guest's picture

It is quite true to say that being debt free does not relieve one from having to make stressful financial decisions. We paid off our mortgage last August and being debt free but which leaves us very little cash. Now I found myself worrying about the savings for retirement, savings for kid's education, etc. I even worry about our grocery bills. It will take a lot of effort and consistency to build up savings again. Every financial decision that I make even it is small for example buying a book, requires a lot of thinking because I really do not want to be wasteful. I have reviewed my financial decisions for all these years and I realize that I could have saved a lot more money if I had been more careful in spending for the past years.

Guest's picture

Don't throw away the budget just because you pay off your debts. Keep the budget, but build in a little more breathing room. If you pay off the mortgage, you free up several hundred dollars per month. Use most of that for retirement, reserve a little for yourself.

And as far as retirement is concerned, think of it as long-term debt(to yourself). You can't pay it off until you retire from a working income.

Guest's picture

I think if you're in debt and want to give to a cause, write it down somewhere. You can give it to them later.

Guest's picture

I know exactly what you mean.. Although I am FAR from debt free, I spent the last 4.5 years working 2 jobs to keep our family's head above water. Everything I did was so incredibly frugal and only had an eye to the fact that "there are bills to be paid". Debt free wasn't even in the picture because it wasn't even a possibility.

Now suddenly, my husband, who has been battling a debilitating mental illness, has become well enough to work. And suddenly we have enough money to pay bills and enough to actually have discretionary spending again. And I don't know what to do. I don't have a plan for this, and I find myself making stupid decisions with that extra money because I don't have a plan. All I've yearned for these last years was "If only I had enough money to pay all the bills every month."

Now that's come to fruition, what do I do next?

Thanks for the words of wisdom.

Guest's picture

The most important thing about getting out of debt is STAYING out of debt. You can't all of a sudden abandon every thing you learned in the process. I am blogging about my debt free path to keep me going.

Dollars not Debt

Guest's picture

But Craig, this is all on the presumption that the person/couple did not have a long term plan in the first place. People get so worried about sticking to the "baby step" plan and not deviating from it or focus only on "getting out of debt" that they miss the goal of REAL FINANCIAL FREEDOM.

And for Christians, if the focus is not on financial obedience (Malachi) how can there be peace and real freedom (not necessarily just from money).

Guest's picture

I appreciate the concern which is been rose. The things need to be
sorted out because it is about the individual but it can be with
everyone.The initiative taken for the concern is very serious and need an
attention of every one. This is the concern which exists in the
society and needs to be eliminated from the society as soon as
Debt Free Seattle

Guest's picture

"People falsely assume that a budget is their punishment for being in debt"

In my experience, it is more important to budget when times are good. I had a few nice years of very high income and I did not budget. Now that times are tough, I wish I have saved much more during the good times. It would have made the lean time easier to handle.

Guest's picture

People need to get realistic about money and debt. The economy has suffered due to too much debt. And I agree with you: it is okay to live debt-free. When did it become a social faux pas to live within one's means? We need to teach our children from a young age how to manage money. There seems to be few people able to do the teaching however.

Guest's picture

Great post. My opinion is that debt-free living is definitely better than the alternative because your thinking flips. You think about what to save, spend and do instead of what payments to make and what's left over. Being debt free gives you more control over your money. You don't have banks or other companies telling you what you have to do with your money. You make more of those decisions.

My wife and I have my student loans and mortgages on a couple properties we own. The properties are rentals and (usually...) pay for themselves. But even with them usually paying for themselves, the uncertainty adds some stress. If we owed nothing on them and did not owe student loans (I have a plan for those - http://www.stepawayfromthemall.com/2010/07/january-15-2035.html) our financial certainty would increase and stress would decrease? Why? Because we live a simple life well under what we earn. Without that added element being debt free would not help.

Guest's picture

Thank you so much for this eyeopening article. Although a big debt-free advocate my husband and I have been struggling with issue #6. You've made me realize that the time to start giving is now - whether in debt or not. We are going to start tithing 10% of our income again.

Guest's picture

Then my family is living a lie. I guess it all depends about the expectations, but being reasonable I would disagree with all these statements.

1. I’ll never have to say “no.”
Again, if I want to buy a Porsche Cayenne every day, of course I would have to say no, but for every day living. Wanting a nice tv, buying a new car every 5 years, going to disneyland twice a year. Living debt free makes all those purchases much more enjoyable because we don't wonder... I should have saved that money for food the next day.

2. I’ll never have to make stressful financial decisions.
Stressful is the keyword. If I have to choose between getting more in debt of buy food, or pay Dr's bills. That will be stressful, living with the fear a collection agent was going to come an knock the door. Yes, there are financial decisions, but if you automate the savings, there is no additional stress. Money goes to 401K, money goes to 529, money goes to emergency fund, money goes to pay bills. There is no stress if you know how to live within your means AND are debt free.

3. I’ll automatically start sleeping better at night.
I have always been a great sleeper, but knowing that you own your home completely, makes for very restful sleep. There are other things you worry about, but not about money.

4. I’ll never have another money fight.
This was one of the main reasons we paid our mortgage. My wife wanted to keep saving and preventing us to enjoy our income until our home was ours. Our conventional 30yr mortgage turned into a 5 year of prepayments. We no longer argue about buying a little thing, we do all our purchases checking with the other anyway, but at least this way I can convince her to get me buy a toy from time to time.

5. I’ll never have to keep a budget again.
If you mean worrying about a budget, then it is different. I agree with you in this one. but again budgets can be done automatically, our budget is very simple. We have all our accounts online, we see how the graph grows to the right every month. If it didn't we see why... was it because we had to pay vacations? was it because the market went down?, Only big decreases over long periods of time require a re-adjustment of the budget, but other than that it is flying in automatic and not having to reshuffle payments from one low APR to another APR, and look at hidden fees, etc. Yes you will need to keep a budget, but it can be very easy to set it up and track it.

6. I’ll be able to give to any cause I believe in.
Well, in this case we have two small children, and our cause until they have college prepaid is to save for their education. Indeed, if you feel obligated to donate to charity, what we do is we donate our time, it is another great way to support causes that you believe in, you meet very nice people with similar interests, and you don't have to go broke because you missed the monthly donation.

Guest's picture

These are wonderful points. I love the last one about donating your time to your charity off choice!

Guest's picture

We are nowhere near being debt-free, but we have turned our lives around and are working hard towards our goal of complete debt-free living.
We are chronicling our struggle and hoping to encourage others by keeping a blog called TwentyFourPoor at


We have a dream of one day turning our own efforts at becoming debt-free into a tool and delivery system to help others escape debt and even pay some of their debts for them.

Guest's picture

"many people have exerted so much energy and time to paying off debt, that once they become debt free, they no longer have a clear sense of financial purpose or focus. They are left confused wondering, what should I do now? "

That certainly didn't happen to me 5 years ago when I paid off my house. I have been completely debt free since and have been banking 12% of my pre-tax income and 100% of my after tax income. My interest income from my investment accounts pays all my monthly expenses. I gained an even better sense of purpose - retiring before the age of 55 (in my case before 52).

Guest's picture
dr p

that's awesome, I just finished ALLmy debt at "debt free at 53!!!" I have increased my savings to 38% investments, bitcoins, etc. etc., I love what I do so I think 20 more years would be great, I will tell you best thing I set up. evry 5th week take mini or big vaction to somewhere, nowhere, everywhere, always excited never bored, and now I have a reason to work for ME

Guest's picture

Living debt free does not remove the need to plan a budget and prepare for the future.

Guest's picture

I disagree with this post and the false assumptions. Living debt free starts by learning how to say "no." It was a learned behavior that now comea more natural. I think about my spending and if need be, I can tell myself and others no.

Making stressful financial decision is a part of debt free living. It was a complete mind shift. even seemingly small decisions can be stressful, because I wasnt accustomed to telling my money what to do. I allowed society and outside influences make those decisons.

You will have money fights. I am currently in the midst of a money fight. I live off a budget, using onlycash. My boyfriend freely likes using other people's money, ie, credit cards, with high interest rates.
and it drives me crazy because he's "moving" things around to cover for a purchase..

BUDGET...it's a word to fall in love with and you will and should always creaye amd follow your budget.
You will be able to give to any charity. But you are correct, it is a mindset...if you dont believe you can afford to give you will not give. However, start giving, even if it is a dollar...then do a self check and see if you dont feel a little better about your decision to give. I give more now because of my change in attitude.

Guest's picture
Darren Guest

I really like #3. No matter what in debt, out of debt, rich or poor, people will always worry about money. Money will keep every in constant worry. If you do fall into debt I recommend using CuraDebt. They really helped me out a lot with dealing with debt.

Guest's picture

ok a budget does not limit you or the things you can do. A budget is just a financial plan if anything it will give you more freedom.