The month of March is an exciting month for me. It’s the anniversary month when I became completely debt free! After about four or five years of hard work, I made my last and final payment. I owed my grandma $5,000 plus interest for a loan she gave me years ago to rehab a fixer-upper house I bought in my early twenties. It took me ten years to finally pay off that $5,000, and I was thrilled to be able to get that monkey off my back.
I used to dream and imagine how that last payment would feel. After years of hard work, I pictured writing the final check to the last debt I owed and crowds of people cheering for me. I imagined balloons, confetti, music, and a huge celebration! And cake! Every party needs a little cake!
But those imaginary balloons quickly deflated when I gave my grandma the check. She said, “What’s this for?” Uhhh, what? She didn’t even remember that she loaned me the money! SERIOUSLY? I worked so hard to get this last debt paid off, and she didn’t even remember what was owed to her. And that was the end of my triumphant journey out of debt. It wasn’t at all what I pictured it to be. But since then, being debt free has been nothing short of spectacular.
I want to share with you what I’ve learned over the last five years of living completely debt free, and I hope it inspires you to continue or start your journey to financial freedom.
Being broke is quite normal. You could say it’s the American way. Most people spend all of the money they earn, save very little, and wait for their next paycheck to start the cycle all over again. I lived paycheck-to-paycheck my entire life. I was broke like many other people, but now that I'm debt free, I’ve discovered that being broke was a terrible way to live life. Take it from me as I’ve been on both sides. I’ve been completely broke, having no savings and owing everyone all of my money and now I'm on the fun side that has lots of money with lots of savings and lots of investing and paying for things with cash. The verdict is in: being broke sucks!
Have you ever bought something with the goal of trying to impress someone? I think we all have. I 'm sure you’ve heard of the term, “keeping up with the Joneses.” When I was broke, I looked excellent on the outside. I had the beautiful house, the nice cars, the new clothes—everything seemed nice, except my bank account. I, like many people, used to care what people thought of my stuff. That thought process kept me in some serious debt, and I know it does for many other people. Becoming debt free and staying debt free allowed me to shed a bunch of stuff and a bunch of payments. What I found during the process is that people didn’t care if I drove the latest car or an old beater that was 20 years old. The marketing of debt and products tricks us into thinking that people care and that impressing them is important. Don’t believe me, just watch and pay attention to most car ads these days. Here's the truth: most people don’t care, and if they do, it’s only for a short period. Don’t buy stuff or go into debt to impress other people. I learned my lesson.
Money fights and money problems rank in the top three reasons for divorce in this country. When getting out of debt or thinking about money, it’s easy to concentrate on the math and the numbers. But, money is emotional. One of the most significant payoffs of being debt free has been the benefits it’s brought to my marriage and my family. My wife and I spend very little emotional energy on the topic of money. And when we do spend energy on the subject, that emotion is almost always excitement because when you have money, it’s fun to make plans, save, buy stuff, go on vacations, and fund your dreams.
It’s also improved our parenting skills. Being broke is stressful. Whether we like it or not, we bring that stress into our family life and it most certainly affects our patience and focus when parenting our children. If I'm mentally freaking out because I'm worried about how I'll keep the lights on, the mortgage paid, making the car payment, and the credit cards, it’s pretty hard to be the best parent under those circumstances.
My son is benefiting from our debt-free lifestyle, because as parents, we are his best example of how to handle money. So not only did we change our lives, but we now have the opportunity to teach our son how to save money, stay away from debt, and build wealth at an early age, which will hopefully help him avoid the common pitfalls that many of us have experienced. Your kids are watching you, and if you struggle with money, it’s likely they will too, because they learned it from you. I've coached countless people who have said, “I grew up with debt. It’s all I’ve ever known! I was never taught how to handle money.”
I used to think that debt was the only way to get stuff. Vehicles, clothes, homes, tools, and vacations! You name it; I had payments on it. This might blow your mind, but did you know that businesses also accept cash? I discovered this long before getting out of debt, but using money and having money is way more fun than using debt. By using cash, I get to do even more of the stuff I love to do! And get this, if you own all the things you buy, it doesn’t have a chance to come back and haunt you when you can’t pay your bill!
Most people fear losing their jobs and their paycheck. When you’re deep into debt, have little savings, and depend on every single dollar that comes in, it’s easy to be fearful when there are rumors of layoffs or firings around the office. When you’re debt free, and you have a sizable emergency fund savings, you don’t depend on your income nearly as much as you used to. In fact, we set ourselves up so well that we were able to fire our jobs and take risks that we otherwise wouldn’t have been able to because we no longer had payments. I started my own business that helps people with their financial challenges. My wife started her own direct sales business, and together, we no longer punch a clock and answer to a boss. We own our time, we work when we want, and we are having a blast.
One of the most significant benefits of getting out of debt was the return of opportunity. Opportunity or the loss of opportunity is the biggest expense that most people don’t account for when going into debt. Let’s say you sign up for credit cards, a car loan, and maybe a personal bank loan. When signing up for those loans, you are committing to paying them back. In many cases, you're committing years of your life to making payments on that stuff. Then opportunity knocks. Maybe it’s career change, the job you’ve always wanted, but it comes with a much lower salary. Maybe it’s a pregnancy, and you long for the opportunity to stay home with your new baby until they're ready for school. Perhaps it’s a passion you have, and you want to open your own business. But, not so fast! You committed to paying off the debt you’ve accumulated, so you aren’t in a position to lose your steady paycheck. This now becomes opportunity missed all because you went into debt. We are debt free, which allows us to say yes to so many more opportunities we otherwise wouldn’t have been able to while making payments.
According to the American Psychological Association, 64% of adults say that money worries are a significant source of stress for them! I know all too well what this statistic feels like. I remember those sleepless nights of wondering if we would have enough money to make our monthly bills. Those days weren’t fun. When you’re debt free, say hello to stress-free living! It’s true, we don’t stress about money, like not even a little bit. We have a plan, we have an emergency fund, and when unexpected things come up, the plan changes, but we never break. Being free of debt provides incredible amounts of flexibility to deal with life’s emergencies without the stress!
When I had a lot of debt, I had a lot of stuff to go with it! As I slowly paid off my debt, I came to realize that the fewer things I had, the more simple life became. I also became a lot more choosey of the stuff I spent my money on. Now that we have dreams that we are working to achieve, our purchases are aligned with making those dreams become a reality. Many people, including myself at one time, stroll through life in a fog, with little direction or a clear destination. This makes it very easy to spend money on a bunch of stuff that does nothing for you, in fact, it pushes you even further off track from reaching your desired destination. I still love buying things like most people, but that stuff has to meet some strict criteria before I bring it into my life.
I find it rather fascinating, but I don’t think about money nearly as much as I did when I was broke. You would think because I have more of it, it would take up more of my time, but it doesn’t. Being debt-free is simple and easy. It doesn’t require much emotional energy or thought. Once your plan is in place, you just work the plan. Sure, I still take time every month to work on our budget. I take time every month to invest our money for our future. I take time learning new things that might help us. This is a win-win. Financially, we are doing great, but I also have more time to do more of the stuff I love to do, like spending time with my family and working on my business.
Before becoming debt free, I wasn’t confident at all in my future. Heck, even using the words future and money together was a joke. Considering the future for me back then was figuring out if I had enough money for lunch that week. Thinking of retirement, dreams, goals, or saving brought on sheer panic! I did my best to ignore anything that had to do with looking into the future. Those days are long gone. We have a solid plan that includes our dreams and our goals and how we will achieve them. Not only does that provide confidence, but it also provides a lot of peace of mind, which allows us to spend even more time on the things we love.
I remember when I would ask myself if all the hard work I was putting in to become debt free would be worth it. I’m happy to say that IT WAS SO WORTH IT! I try so hard to instill this in our Roots of Personal Finance members, or anyone who is putting in the work to be debt free. I know your struggle. I know it’s hard work. I know there are days you want to quit and go back to being normal and broke. I know it’s not easy. But I want you to know that all the hard work you are putting in right now is worth it! Becoming financially free will completely change your entire life. Just keep going and don’t quit!
So there you have it. These are the top things I’ve learned over the last five years. Being debt free in today’s society is a rare thing. But, this freedom has provided my family and me a beautiful and stress-free life, and I wouldn’t trade any of it for the world.