The Freedom of a Debt-Free Life


For some people, living a debt-free life is just a dream, but for others, it's a reality.

It takes commitment, self-control, and discipline to move from a life full of debts to one free of them. Although the process of becoming debt-free may not be luxurious, its end results are worth all the pain and sacrifice it may require.

Debt-free individuals experience financial freedom that allows them to live life more fully, since they do not have to be held back or stressed by burdensome debts. This is definitely a nice place to be at, and all it requires is personal commitment and determination. (See also: 6 False Assumptions About Debt-Free Living)

Why Debt Is Bad for You

One of the biggest problems with debts, especially large ones, is that they prohibit you from spending your earned money the way you want to. For example, your may want to save money for retirement or invest to secure your children's future. However, your obligations to pay back your mortgage, a personal loan, or any other loan may hamper your efforts to reach these life goals.

When you accumulate many debts and are unable to pay them, it can also greatly affect your credit rating. Such a situation may occur due to late payments or defaulting on your monthly obligations. In addition, you may also have to pay hefty fees and penalties, which can further destabilize your financial status.

Getting Rid of Debt

When your money is unable to work to your advantage because of debts, it means you need to take the necessary action to eradicate the debts. Failure to address the issue will only slow your efforts towards achieving your goals.

Creating a budget is one of the simplest, yet most effective means of getting out of debt. Cut down unnecessary expenses in order to create a surplus in your finances. Direct the extra savings towards loan repayment. Remember that sacrifice is necessary when trying to get rid of debt. Once you have the budget in place, stick to it to the best of your ability and strive to make your loan repayments in time every month. In time, this budget should help you pay back your debt and meet all other financial obligations while giving you a clearer picture of how you use your money.

Benefits of Living a Debt Free Life

A debt free life means more money. Since you will have less monthly expenses, your cash flow will definitely increase.

More cash flow will enable you to have greater financial freedom. You might even be able to go on that vacation you have always desired or comfortably pay for your child's tuition in a good school.

Not having to deal with debt will also allow you to invest your money for greater returns. You will therefore be able to generate more wealth and increase your financial status. You can also effectively fund your retirement to secure your future.

What are your reasons for getting out of debt?

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Guest's picture

My reason for getting out of debt is because having debt is risky! You never know when a financial emergency will occur -- and if you have tons of debt, you're already almost all the way to insolvency...

I'm using some unusual methods to pay off my six figure debt, but I'm confident that I'm making the smart decision.

Wishing those who are currently paying off debt all the best!

Guest's picture

While I like the advice to start a budget, I wish the article did more to address specifically what kinds of debt people should focus on getting rid of and how to do so. I'm not necessarily sure I like the reference to mortgages as if they're one of the "bad" debts because the amount is large. Who can afford to buy a house in cash? Not only that, but there's no reason to pay off your mortgage early from a purely economic perspective unless your interest rate is 6% or more. You can get a better return from investing that extra money in the stock market. Especially at the interest rates right now, since you're NOT getting any sort of return from bonds or other dividend-heavy investments, you might as well at least invest in stocks since those always give a long term average of 9-11% return. Home loans are around 4% right now...why slice your possible return in half?

Guest's picture

Nice article David.

Creating a monthly budget is wonderful advice. I'm a big Dave Ramsey fan and this was the first thing I learned from his teachings. I think it's the quickest things someone can do to feel like they are in control of their money.


Guest's picture

Debt never made sense to me. If you have to put something on credit or finance something, you cannot afford it. You may have to use debt in the beginning to such as a student loan or business loan. But your goal should be to pay it off as fast as possible when you get income coming in and then using the money you make to create wealth.

Debt should always be used for appreciable assets and never for liabilities or depreciating assets

Guest's picture

I want to be able to send my son to a quality school as well as make some improvements on our house. And finally to go to Mexico once in a while so that my husband can see family he hasn't seen in some time

Guest's picture

I am trying to get rid of all debt as we speak! We are now down to mortgage debt only and will have our house paid off in 3.5 years at age 36.

At that point, we plan on increasing our retirement saving, traveling abroad with our children, and possibly exploring other career opportunities.

Then we are going to retire early. I do understand getting a mortgage but all other debts suck your life away.

Guest's picture

I was hoping for more when I clicked on this. Not bad, just very fluffy, and didn't really say much of substance. At least it is pointing in the right direction.

Guest's picture

Living debt free is the only way to be able to accomplish your financial goals and be on the path to financial freedom. In my practice, when someone or a family approaches me for advice, I always try to help them first repay as fats as possible their debts. Then, we begin the most appropriate for them investment/savings strategy. But getting rid of debt is definitely the top priority. Always!

Guest's picture

I really like the sentiment of this article - not only is it reassuring and uplifting, it's also quite poignant. Too many of us are struggling with the crippling effect that debt can have on our lives, as it takes a stranglehold of your finances preventing you from doing the things you want to do. It's good to know that there is a way out...

Guest's picture

Great article bringing up a huge point: People need to get out of debt! However, as some comments mentioned, there is all kinds of debt, and not all can be eliminated the same way.

What about private student loans?! About 8-10 million people have them, and account for $150 billion in total outstanding student debt.

And there are few options to get a lower rate on these loans after graduation.

That's why the Credit Unions put together a viable debt elimination strategy for private student loans: The cuGrad loan, with rates as low as 4.75%

Here is the product sheet:

Guest's picture
Jeremy R

I am terrified of debt! I try to stay away from it as much as possible. I can't avoid the debt I'll be in from my student loans, but I want to keep that as the only debt I'll have to worry about.

Guest's picture

Great article, only when we rid ourselves of debt can we start to live true life freedom like we were meant to.

Guest's picture

After poor examples of money management from my parents, foolish choices/early independence in life on my end, and finally a chronic health condition I have come to hate debt with everything in me. I met my husband a year or two after I really began a debt elimination program, and we have been steadily been paying things down while paying cash for school, cars, travel, etc. in the meantime.

I have seen a slow but steady transformation in how I see money... the way we manage it has the power to put us in bondage for years on end, or to enjoy life to the fullest. Freedom is what it's all about for us at this point! Learning to say no and live within my means have been some of the best skills I've gleaned from the whole process. Painful but I'm a better person for it!