Pros and Cons of Being Debt Free

Being debt free is great for your finances and it’s also a great feeling. This may be even more important for larger families who have less wiggle-room in their finances. Not having to worry about debt and having an emergency fund set up goes a long way to giving you financial peace of mind. When life happens (car breaks down, medical emergency, appliance dies) it’s less stressful to deal with when you have the funds to cover it and don’t have to borrow to handle it.

On a personal level, this is our debt situation:

  • Credit card, car loan, and all other debt (except Mortgage) – Debt Free since 1988.
  • Mortgage – Debt Free since 2012

Pros:

  • You will sleep much better at night.
  • Your marriage will improve; the #1 reason given for divorce in the U.S. is money arguments.
  • You can take advantage of good deals or investments that arise. Chicken breasts on sale for $1.69lb? You’ve got the funds to buy a few hundred pounds if you want.
  •  More freedom to move or change jobs if you want/need to.
  • Graduating with no student loans will enable you to start saving sooner and investing in your future.
  •  You are not paying interest to The Man on stuff that you probably can’t even remember purchasing.
  •  You will be able to establish an emergency fund and start saving for retirement, vacation, new home or car etc…
  • You will be able to help others more easily, Donate to your church, favorite charity etc.

Cons:

  • Since you will be sleeping better you won’t be able to watch all those late-night infomercials.  How will you know which new product will be the next Pillow-Pet or Snuggy?
  • With no money problems, you will have to find something else to fight with your spouse about…maybe he/she squeezes the toothpaste tube in the middle.
  • You will no longer get to keep eating non-sale $5.99lb chicken.
  • You won’t have an excuse to keep living in that house you are upside-down in and keep working in that sucky job you hate.
  • Since you didn’t borrow for college, you won’t get to pay back $50,000 in loans over the next 20 years.
  • You won’t get to pay 18% to Visa and MasterCard for those carbon-fiber golf clubs that are gathering dust in your garage, sitting next to a financed sports car.
  • You will have to find your excitement elsewhere since you will be missing out on the excitement of living paycheck to paycheck and being on the financial edge.
  • You will have to say yes when someone knocks on your door collecting for the Association to End Cat Juggling

 

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