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

 

Go Ahead and Splurge

No really, I’m serious. Splurging once in awhile can help you get out of debt faster and save more in the long run.

If you are constantly paying down debt and/or stashing money into savings and doing nothing fun, you may soon become frustrated. Especially if the results are slow in coming. And then you might go out and blow a ton of money on something silly instead of just blowing a little bit.

Living like a desert monk is good for the finances but all that scrimping and saving can get to you. Instead set aside a bit of money each payday for fun. Call it your Blow money. Once you have it, go Blow it on something. Dinner out, new shoes, a box of Lucky Charms cereal, disco-ball, whatever meets your fancy.

Just don’t go bonkers and spend tons of money each payday doing this, make it a reasonable amount for your current financial situation.

Want to splurge on a larger purchase? Then save your monthly splurge money until you have enough and then go for it. Buy that leopard-print couch or that autographed collection of Kim Kardashian bikini pictures*.

*this website does not endorse the buying of this product, nor accept any responsibility for what happens to your eyes if you look at this product

Is it Time for Drastic Measures?

Not enough income to bust up the debt and get ahead?

Do something radical. Get crazy and creative. Bump up the income and/or slash the expenses.

Sell stuff. Gather up all the unused things in your house and start selling them. Besides getting some needed extra cash, you’ll de-clutter the house a bit and learn some detachment.

Create an eBay and PayPal account, if you don’t already have one, and start listing things. There are plenty of articles online on how to do this. We did this last Fall and sold over $2,000 worth of things. Find things that are easy to ship.

List things that are hard to ship on Craigslist. Just be careful. Don’t sell to some psycho-killer and end up as the subject of some crappy movie on the Lifetime network.

Have a garage sale, get other families involved and make it a large sale to attract more buyers.

Get a side gig: cut-grass, delivery pizza, wait tables at night, leverage your existing skills (handyman, computer repair).

Get rid of other money sucks:

Too much house? Move and downsize. Besides a lower payment, the taxes, insurance, maintenance and utilities will be less. Or just rent for awhile if rental rates are good in your area.

Car payments draining your funds? Sell the car(s), payoff the loans and buy some reliable older ones. New cars can be a huge waste of resources. After 5 years, the average new car as lost 63% of its value. Your $30,000 car is now worth $11,100. Be the person who buys the 5-year-old car and keeps it for another 15 years. Buy an air freshener if you want that “new car smell”. They make them in that scent.

Spending a bunch of money each month on pets? Get rid of them. No I’m not talking about dumping Fido in the country. A cat maybe, but never a dog. Find a good home for them. Better they go and that the kids are fed.

Get rid of the expensive gadgets. A free pay-as-you-go flip phone will make a call just like that Smart Phone.

There is nothing wrong with going a little crazy every now and then to avoid going insane. You are not your khakis.