Most people dream of the day they can be debt free. They know there must be a ton of benefits of being debt free because debt freedom is talked about so much as the ultimate financial goal.
They imagine what they will do when they are finally able to stop worrying about making their monthly payments on time, and instead focus on creating a better life for themselves and their family.
But is that really possible? What does it take to get there in the first place? And how long does it take before you see all the amazing benefits of being completely debt free coming your way?
what happens when you become debt free?
When you become debt free, what happens next is what’s most important. This is what your whole journey has been preparing you for. This is what will make the difference between a life that’s just okay, and one that’s fantastic.
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What does it feel like to be debt free?
Given the amount of debt that so many people have, it’s no wonder that many people have begun to think that being debt-free is the new rich! It certainly feels like it.
You feel rich because you have no debt hanging over you. Being debt free is awesome and feels like the weight of the world has been lifted from your shoulders.
There is really nothing quite like it and when it’s your turn to have this happen (and it will be), then you will know exactly what I mean.
Is it worth being debt free?
Too right it is! Being debt free is awesome and the only way the world really works today. If you have the choice to be in the red or the black then the smart money is always on being the one that’s not in the red.
People who are deep in debt live their lives under a dark cloud. They act accordingly, they feel accordingly, they think the world looks at them differently. They have money blocks that hold them back and mean their money mindset is one of doubt and poverty.
Being debt free means the opposite of all this. It feels like the sun has come out and you get to enjoy the benefits that it brings.
One of the benefits of being debt free is you no longer feel like your whole life is a struggle because of the debts hanging over you.
So, is being debt free worth it? Absolutely yes!
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Is it better to be debt free or have savings?
Many people think it’s better to be debt free than have savings.
Debt is not fun and it can feel like a straight jacket that prevents progress in all areas of life. Whereas the feeling of freedom that comes with being debt-free cannot be overstated.
If you are drowning under your debts and expenses then I invite you to set yourself free! You will experience an amazing sense of freedom when debt stops controlling your every thought. This means greater peace, more creativity, more happiness!
The reality is, you do need some savings while you still have debt. You need an emergency fund.
If you have a financial emergency while you still have debt, how do you pay for it? You guessed it, by taking out more debt. Which costs you more money in interest payments.
We’re living in times when you receive very little interest on your savings so you might be asking yourself: what’s the point of a savings account these days? The point is, it’s a place to squirrel a little of your money away, even while in debt.
Saving money is important, even though you still have debt. You will be thankful you did, I promise.
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The disadvantages of being debt-free
Are there both pros and cons of being debt free? There are a few disadvantages to being debt-free that naysayers may raise. The biggest disadvantage is that you cannot put your normal life on your credit card.
You have to get used to living within your means and not spend more than you can afford on things you happen to want.
To become debt free takes effort, a lot of effort. And many people don’t stick with the program to reach debt freedom.
You have to get used to sticking to a budget, to saving up for things you want to buy, to not giving in when you see something you fancy. If it’s not in your budget, you can’t buy it.
But! These disadvantages are only temporary (well mostly), because once you are free of debt, the effort you have to put in to get there is not longer needed. Sure, you still need to live to a budget and not get silly with your spending. But the graft is gone.
Why is it important to be debt free?
Why is being debt free so important? There are many reasons why this is the case. For one, it’s very liberating to get your debts under control and have them all paid off. You will love living without that burden on you.
Having your debts paid off means you are controlling all your money. You don’t owe anything to anyone, and that is extremely powerful.
It’s important because it’s the biggest step toward you being able to make decisions about your financial future that don’t have to take account of debt repayments.
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9 benefits of being debt free
1. your budget is less
While you are hard at work paying off your debt, a big chunk of your income is assigned to debt repayments. When you are debt free, that line in your budget disappears.
This leaves you with more money in your budget for saving, for retirement, for investing and for fun! Your debt free status can also make it easier to qualify for a better mortgage rate and/or lower your payment.
2. peace of mind
For me, peace of mind is priceless. Nothing is more stressful than always wondering how you are going to pay your next bill, or clothe your child. It’s even worse when you know you need something but you can’t afford it.
Living in a state of perpetual debt is not sustainable or healthy and has negative effects on your mental health and relationships with others.
Peace of mind, less stress, less worry and more sleep are all things I achieved once I became fully debt free. Is being debt free worth it? Too right it is! It’s priceless!
3. You are a role model for family and friends
Being debt free is a golden opportunity to be a role model for others. You are demonstrating to family and friends that being responsible with money is possible. To never be in the kind of debt that you have had or worse, get into more debt.
Many people wonder what a debt free future looks like, and here you are showing them exactly what it does look like.
Being an example like this, especially for young family members, can make all the difference in their lives. You can show them that the hard work, the doing without, the saying no to nights out, are all worth it.
You becoming debt free can help your family and friends achieve the exact same thing.
4. Your money is your own
When you are paying off debt, part of every paycheck is not yours, it belongs to your loan companies. Become debt free and your money is your money. Everything you earn, you can choose how to spend it.
This is a great freedom. When you are debt free that feeling of being in control increases every month as your earn more money, but it all truly belongs to you – what you do with it is up to you!
You can spend money on the things that matter the most to you and those around you, rather than being forced into spending it on debt and the interest debt costs you.
5. Freedom of choice
Debt repayments lead us to needing to earn a certain amount of money with never a gap in the income your earn. It stops us from making choices about so many things in life.
One of the benefits of being debt free is that because all of your money is your own, you get to make more choices.
You can change jobs, take a sabbatical, move house, move country! You are free to do anything and everything you want with your money.
6. Achieve your dream money goals
No longer will debt hold you back and stop you from even dreaming about big, gorgeous financial goals. Debt freedom means you can dream big and achieve big.
It means being able to save for a deposit on your first home, being able to invest in an amazing holiday or being able to afford the retirement you deserve.
You set the goals and you choose how to achieve them – that is what being debt free means. No longer are you being held back by high interest debts and large repayment plans.
You get to decide with more clarity about what you want the next chapter of your life to look like.
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7. Stronger relationships
Debt can be a nasty, negative thing that drags everyone down. It is often the cause of stress in relationships, disagreements between friends, fights between spouses and family members. It’s the number one reason marriages ended in divorce.
Once you are debt free you no longer have to worry about how your finances affect those around you. You are free from the worry of not being able to afford things you need, or having to tell loved ones that a simple trip out is just not in your budget right now.
Debt free family and friends are happier family and friends. Arguments about money cease (or at least reduce) and your debt is no longer the elephant in the room at family gatherings.
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8. Build savings faster
Not only does debt stop you from working towards your savings goals, it is taking money straight out of your pocket as you pay the interest every month.
With that gone, you can save more money faster. Your debt payment schedule becomes a fast saving schedule.
An extra boost to savings like this is a beautiful thing! Plus being able to earn interest on the money you have saved is icing on the cake.
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9. Better financial health
With no debt, and savings in the bank, you are in a much stronger position to deal with the financial blows that life can throw at you. You will have the financial strength to weather job losses, unexpected bills etc.
With less outgoings you have more abilty to cut your spending and slash your budget to deal with a financial curve ball.
You can’t reduce debt repayments easily, so you have less of your paycheck to play with when you get hit with an unexpected bill.
Whereas when your biggest money spend is savings, they can be reduced, cut back or frozen for a month or two. Thereby freeing up much needed cash.
Time to get serious on your goal of being debt free
It’s never too late to end the cycle of debt and start living a more fulfilling, freedom-filled life. With so many financial benefits to being debt free, it’s time for you to get serious about your money.
The most important benefit is peace of mind knowing that your money belongs to you – not the bank or credit card companies!
You can also achieve your financial goals faster when you’re not paying interest on loans each month. Achieving debt freedom will give you peace of mind and being able to sleep easy at night.
You don’t have to stress about how long you’re going to be in debt for or how to pay all your bills when debt takes so much of your paycheck. Your money is your own again, and that is priceless!
Start taking back control of your money by grabbing your copy of the Money Saving Starter Guide today.
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Last Updated on 13th September 2021 by Emma