Many people have found becoming debt free requires a trip through a lifestyle that feels like deep poverty. Living debt free is far from it. As your debt falls away, you earn interest instead of paying it. Your ability to negotiate prices increases dramatically. You work for your benefit and not to enrich creditors. A number of differences surface as you adjust to living debt free.
1.) Make savings deposits instead of debt payments.
Most of your payments become deposits. That $400 per month for a car can add up very quickly in a savings account. An $800 per month mortgage goes a long way toward funding your 401k and Roth IRA accounts. It does not take long before you realize just how much extra cash it required to service month after month of crushing debt.
2.) The joy of paying cash.
Paying cash is fun once you learn how. When you wave cash in a seller's face, prices drop and deals are made in the blink of an eye. You not only will stop paying interest to the finance company, but you will also find far more bargains are in the world of paying cash and living debt free.
3.) Vacations are more relaxing.
Almost everyone has had the troubling experience of being on vacation and trying to remember if all of your bills were paid before you left. Leaving your financial boat to drift along while you are out of town is a scary experience when you are dragging along large amounts of debt. Coming home from vacation without ever-increasing debt is like leaving vacation to go home to a vacation.
4.) Holiday buying does not dig a debt hole.
Gift-giving at the holidays is often overshadowed by the realization that you may have just added on months or years of debt payments. When you can walk away from Christmas knowing that everything has been paid for, it will make your holidays much more joyous. If you will develop the habit of making a special account to save your holiday spending money, it will even take the guilt out of those spending excesses that sometimes accompany that time of the year.
5.) Never get a collection call.
Because you have no debt, collection calls will disappear from your life. Even car repairs and medical expenses can be handled as they arise. Most people would not be too terribly upset if debt collectors were out of business because there were no longer any debts to collect.
6.) Checks do not bounce.
As people shuffle which debt to pay first or next, available cash becomes a real problem. This cash flow issue can easily convert to overdraft fees at the bank. While you could be weak enough at personal accounting to still make a mistake that results in an overdraft, it should never happen when you are debt free. You have much less cash flowing out and more often deal with cash. This reduces the likelihood that you will have a bounced check ever again in your future.
7.) Car payments become a resource.
That car payment that you curse at every month will now become the way that you save up for your next car. With the interest that you bank will add to your account, you will pay far less for your vehicles. When you have a five or six year car loan, you pay between 1/3 and 1/2 more for the privilege of driving the same car as when you pay cash. This means that you pay $30,000 for a $20,000 car. By saving up the payment until you can pay cash, you may very well get that $20,000 car for $18,000 or $19,000. Bargaining power increases as the cost of the item goes higher.
8.) You cannot be evicted from your house because your mortgage is too expensive.
Never worry about being upside down on a house again. Your home is paid for. This means that you can live there year after year without writing out a monthly check to the mortgage company. Your appreciation on the property goes into your pocket.
9.) You can have a credit card.
Debt free does not mean no credit cards. It does mean no credit card balances that are not paid in full each month. Some people find that credit cards are a good alternative to having holds put on their checking accounts for car rentals and motel rooms. As a result, having a credit card may still be part of your life. Just control the urge to buy now and pay later or debt will creep back into your life.
10.) Financial emergencies are few and far between.
If you have cash in the bank, you can cover those unexpected expenses as they crop up. A $1,000 cash emergency does not seem too critical if you have $25,000 or $50,000 in the bank. The fact is that you will most likely stop seeing any of these occurrences as emergencies.
1.) Make savings deposits instead of debt payments.
Most of your payments become deposits. That $400 per month for a car can add up very quickly in a savings account. An $800 per month mortgage goes a long way toward funding your 401k and Roth IRA accounts. It does not take long before you realize just how much extra cash it required to service month after month of crushing debt.
2.) The joy of paying cash.
Paying cash is fun once you learn how. When you wave cash in a seller's face, prices drop and deals are made in the blink of an eye. You not only will stop paying interest to the finance company, but you will also find far more bargains are in the world of paying cash and living debt free.
3.) Vacations are more relaxing.
Almost everyone has had the troubling experience of being on vacation and trying to remember if all of your bills were paid before you left. Leaving your financial boat to drift along while you are out of town is a scary experience when you are dragging along large amounts of debt. Coming home from vacation without ever-increasing debt is like leaving vacation to go home to a vacation.
4.) Holiday buying does not dig a debt hole.
Gift-giving at the holidays is often overshadowed by the realization that you may have just added on months or years of debt payments. When you can walk away from Christmas knowing that everything has been paid for, it will make your holidays much more joyous. If you will develop the habit of making a special account to save your holiday spending money, it will even take the guilt out of those spending excesses that sometimes accompany that time of the year.
5.) Never get a collection call.
Because you have no debt, collection calls will disappear from your life. Even car repairs and medical expenses can be handled as they arise. Most people would not be too terribly upset if debt collectors were out of business because there were no longer any debts to collect.
6.) Checks do not bounce.
As people shuffle which debt to pay first or next, available cash becomes a real problem. This cash flow issue can easily convert to overdraft fees at the bank. While you could be weak enough at personal accounting to still make a mistake that results in an overdraft, it should never happen when you are debt free. You have much less cash flowing out and more often deal with cash. This reduces the likelihood that you will have a bounced check ever again in your future.
7.) Car payments become a resource.
That car payment that you curse at every month will now become the way that you save up for your next car. With the interest that you bank will add to your account, you will pay far less for your vehicles. When you have a five or six year car loan, you pay between 1/3 and 1/2 more for the privilege of driving the same car as when you pay cash. This means that you pay $30,000 for a $20,000 car. By saving up the payment until you can pay cash, you may very well get that $20,000 car for $18,000 or $19,000. Bargaining power increases as the cost of the item goes higher.
8.) You cannot be evicted from your house because your mortgage is too expensive.
Never worry about being upside down on a house again. Your home is paid for. This means that you can live there year after year without writing out a monthly check to the mortgage company. Your appreciation on the property goes into your pocket.
9.) You can have a credit card.
Debt free does not mean no credit cards. It does mean no credit card balances that are not paid in full each month. Some people find that credit cards are a good alternative to having holds put on their checking accounts for car rentals and motel rooms. As a result, having a credit card may still be part of your life. Just control the urge to buy now and pay later or debt will creep back into your life.
10.) Financial emergencies are few and far between.
If you have cash in the bank, you can cover those unexpected expenses as they crop up. A $1,000 cash emergency does not seem too critical if you have $25,000 or $50,000 in the bank. The fact is that you will most likely stop seeing any of these occurrences as emergencies.
