The Consequences of Becoming Debt Free


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Debt Payoff

If you’ve been reading our blog for a while, you may be familiar with our debt story. In it, we go to great lengths (maybe too great) to explain our brief journey into and out of debt. The TL;DR version of it is that we acquired $20k in debt through student loans, and we paid it off in less than two years. And while we touch on this briefly in our story, we wanted to discuss why we got out of debt in the first place and, with the benefit of a few more years of context and perspective, how that decision has affected our finances today.

The Why

Financial

The most obvious reason for getting out of debt was a financial one. We owed money, and we didn’t want to owe money anymore. We wanted to know that every cent we were working hard to earn each month was our money. And we wanted the freedom of knowing we could make plans with our money that didn’t involve paying someone else first.

A huge motivation for getting out of debt in most situations is to avoid losing even more money to accruing interest. That was certainly in the back of our minds, but because we we had planned to attack and kill our Debt Monster within two years and because our loans had a low enough interest rate, this didn’t factor in too heavily.

Psychological

But why the rush to pay off our debt so quickly? It was all mental. We felt this weight hanging over us, the feeling of being unable to enjoy the money we were making because we knew it wasn’t truly ours. I mean it was, but someone else had a rightful claim to it, as well. We just couldn’t deal with that. We wanted to feel secure, and we could never quite feel that way while we still had debt.

This isn’t to say that everyone does or should feel that way. In fact, if you’re still motivated to get out of debt and you don’t have all these icky feelings, good on you! You’re living in the best of both worlds. But we probably needed this extra psychological burden so that we could eradicate it from our minds as quickly as possible.

The Why Getting-Out-of-Debt Affected/Affects Our Lives

Budgeting

Getting out of debt forced us to have a budget, a real budget, for the first time in our lives. And we still have one. In fact, we even have a blog about it! It has become as much a part of our family as our cat. We’ll likely always track expenses and monitor our spending on a daily (but sometimes every-few-days-because-we’re-bad-people) basis. We’ll never be unaware of how our spending stacks up to our savings over the course of a month. Whether it likes it or not, our spending is under our watchful eye forever and ever. Thanks, debt!

Big Financial Picture

Having a debt-payoff plan forced us to plan financially for the future. Not for the present. Not for tomorrow. But for years down the road. We had to look at our finances and make long-term goals using our estimated income and expenses. It was no longer just a question of whether we had the money in our bank account to buy what we wanted right in the moment. It was a question of whether that money could be better used to help us meet long-term goals. To this day, we’re always looking ahead — to our girls’ college educations, our retirement, future vacations, a down payment on a home, a rainy day fund. We’re no longer in debt, but that big-picture perspective has never left us.

Continued Debt Freedom

Working hard to pay off our debt had a big impact on our feelings about debt: we freaking hate it. And we’ve done everything in our power to not take on more debt. We’ve felt very fortunate to have avoided the Debt Monster again. We’ve had a few close calls, like considering financing our first and second and third cars, but we’ve stuck to our guns. We still have such a vivid memory of how it felt to know we no longer owed anyone a cent, and we want to whatever we can to feel that way forever (minus a future mortgage).

Lifestyle Realization

Our spending habits will never be the same. When we were paying down our debt, we realized we needed to build a lifestyle around our budget, not the other way around. Even though we’re now debt-free, we’re still happy living a lifestyle below our means. That feeling of financial independence will always be greater than any feelings of wanting to maintain a certain lifestyle. Thanks to those two years of accelerated debt payments, we’ll probably always be mostly reluctant to spend freely.

So while getting out of debt made us debt-free, it really served as the foundation for most of our financial habits and perspectives. So much of who we are now financially and otherwise is thanks to that decision to pay down our debt. So despite the interest rate or the amount left or the countless better reasons to not focus on paying down your debt, there’s a lot more to gain than just debt freedom.

For those of you who have or who are in the throes of paying off your debt, how has it affected your life? What has changed?

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8 Comments

  • Reply Money Beagle May 19, 2016 at 10:54 am

    Getting out of debt is often the end goal for many, but as you wisely pointed out, it’s really just the beginning of something bigger.

  • Reply Catherine Alford May 19, 2016 at 2:03 pm

    Sometimes I think about what life will be like after student loans, but we’ll still have plenty of financial goals to work on, so I’m sure we’ll just keep plugging away at them once we are debt free.

  • Reply Rob May 19, 2016 at 7:03 pm

    When you’re in your younger years, earning income, you are budgeting and saving to get out of debt. When you’re in your senior years, retired and living on a fixed income, you are still budgeting but also planning your spending so that you won’t eventually run out of money (and then have to depend on others, such as your kids, to support you). The constant throughout one’s life is proper and effective money management. So educate yourself accordingly and get expert help from others, as required.

  • Reply Sarah May 20, 2016 at 11:12 pm

    Many can’t believe the freedom they feel when they get out of debt and have more control of their money. Some think budgeting means they can’t do anything fun anymore or have nice things. It’s the exact opposite and once you have control over your money, everything else falls in to place…not to mention being less stressed. Great article..thanks!

  • Reply Jordan May 23, 2016 at 9:50 am

    Thanks for sharing this. It’s so important that people understand what all will happen once they finally get debt free. It’s good to know what to expect.

  • Reply Lisa May 27, 2016 at 7:12 pm

    I look forward to being debt-free ourselves because of these very reasons/consequences! I also have that mental pressure right now, thinking that my money isn’t exactly MY money because I owe others. Can’t wait until that pressure can finally be lifted!

  • Reply Francesca - From Pennies to Pounds June 9, 2016 at 1:01 pm

    Congrats on paying off your debt :-) I’m currently in the middle of paying mine down. I can’t wait for it to be gone!

  • Reply Melanie June 9, 2016 at 3:36 pm

    I don’t often think about being debt free, because I’m so used to it now, I can’t imagine otherwise. But this article made me think of how awesome it is to live debt free even though I take it for granted now. I love not having to factor any debt into my budget each month. It’s a great way to live and I wish it upon everyone! Thanks for re,inning me of the great feeling of this lifestyle!

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