Why Should You Be Debt Free?
You hear about it all the time, this whole ‘debt free’ thing. And you think how impossible that is for normal people. You think that it’s only for the rich (or you can only become debt free IF you are rich).
But it’s not only for the rich. Being debt free is for you. No matter what kind of shape your finances are in.
In a series of posts (look at the menu above that says Get Out of Debt Now), I’m going to tell you why should you be debt free. And after you accomplish that, you WILL become rich!
I am currently debt-free except for my house, and I want to share with you how to get there and what the advantages are.
The Advantage of Being Debt Free
Why should you be debt free? It’s very simple. The main advantage is that it completely magnifies the power of your income.
You’ve heard it said that the American dream is home ownership and a brand-new car in the driveway. But the way this dream came to be advertised to you the first place was only IF you were willing to go into debt.
“You’ll always have a car payment”, you’ve probably heard from more than one person. Do you think that’s true for you?
But what if I told you that you could have a new or practically new car in your driveway … and it’s completely paid for??
Do you think that the only way to have a nice, paid-for car in your driveway is for you to be financially independent? Read on …
What About the Home Mortgage Debt?
Home ownership, even if the bank actually owns it, is a real sense of freedom. This is the final debt that you will tackle and accelerate, but that comes last in the chain of debt to retire.
But let’s agree that owning a home is a wonderful sense of creating your own environment in ways that only you can envision or the help you get from experts can envision.
Even if you don’t agree about the benefits of owning a home, paying rent only gets the actual home or apartment owner rich. It doesn’t move the financial meter for you at all, and in fact backwards, unless it’s a part of your overall plan to reduce or eliminate debt. OR, you just don’t envision owning a home.
But just realize the pluses and minuses of NOT owning a home.
You can make renting work for your debt-free plan, if that’s your choice. The elimination of all other debts — except the mortgage or rent — is the key to making the home ownership decision at a later date.
I’m Debt Free Now, So What?
So you no longer have any payments, except for the house, so what? Where does that get you? Well, here’s a short list:
Extra cash in the bank
The car of your choice in the driveway, paid for
You pay cash for what you want, you don’t need a credit card
All of your living expenses are paid … with cash
When financial storms come, you’re ready
You give away your money like no one else
You carry on with your own business on your own terms
Extra Cash in the Bank
If you don’t have any debt, any payments, what are you going to do with your paycheck??! Well, I’m sure that you want to spend money on the stuff that you love, but my guess is that you’re going to have enough spend.
But here comes a new financial responsibility: time to save. Time to save for emergencies, time to save for a more expensive rainy day and time to save for retirement. I’m sure that you’ll have other categories for saving, such as travel or for expenses like long-term senior care.
What and how you save is your concern. But I’ll tell you that there’s an important formula for saving that will guarantee your long-term financial stability: a small emergency fund for cash-flow purposes. This is a larger emergency fund — 3 to 6 months of your income — as a cushion to guarantee that you stay debt-free and saving for retirement.
The Car of Choice in Your Driveway, Paid For
Can you imagine having a nice car that doesn’t have any car payment attached to it?? I can! I’m getting close. I’ve been buying used cars with cash and stepping up each time to the next level. The next car I get will either be just a couple years old or older, but in excellent shape.
Some people just have to have the new car smell in their driveway, and I get that. That’s nice. But there’s a price involved. If you buy a new car from the lot, drive it off the showroom floor and immediately lose $5,000 or more in value, what kind of deal did you just make!!!!??
Why not buy and nurse along clunkers, pay cash, and move up each time you purchase a car? In very little time, you’ll have the car of your dreams in your driveway.
No car payments involved! Ahh, but you say, there essentially ARE car payments because you have to fork over to fix it on a regular basis. You’re right, you will have car repairs. But trust me, the hassle is MUCH less money … and MUCH less frequent … than a car payment!
But used cars aren’t reliable and you hate the hassles of fixing them all of the time? Well, that might be true, but think of the price that you’re paying for this convenience: you get to give away one quarter, one half of your paycheck for that privilege.
Do you need a raise?! Quit having a monthly car payment. Start paying cash for cars. Start saving up to buy your next one TODAY.
You Pay Cash for What You Want … You Don’t Need a Credit Card
Why are you making the bank rich just so you can have the privilege of using their plastic card? Why would you go into debt just so you can purchase the things that you want/need before you can afford them??
If you’d get out of debt now, you won’t keep fueling the little fire inside of you that tells you that it’s ok to live beyond your means. Once that flame dies down, you begin seeing your billfold benefits 🙂
Living beyond your means is the exact reason bank executives are living it up while you’re suffering. They’re really glad you like their plastic.
The price you pay for being beholden to debt and plastic is that you will never be in control of your financial destiny. Learn to live within your means. You can spend all the cash you want when you’re debt free. Before that time comes, you’re paying a heckuva price for that.
All of Your Living Expenses are Paid With Cash
All of the monthly utility and household bills will be paid with cash every month. And it won’t hurt like it does now. As a matter of fact, they’ll seem so small.
When Financial Storms Come, You’re Ready
When the storms of this life hit, that air conditioner or that water heater needs replaced, you’re ready. You just pay cash from your emergency fund and move on with life. These pesky financial things don’t need to run your life. You have more important family and business things to attend to.
You Give Away Your Money Like No One Else
Maybe you’ve always wanted to be generous. You might feel like you want to give, but you’re just cash strapped right now and you can’t. You blame all of that on all of these outrageous bills that you have. And one day, you say to yourself, you’ll give like you’ve always wanted.
Or maybe you do give some of your income away right now. You’re doing ok with your finances, and you’re making the effort to give amongst all of your other bills. Bravo. But I’ll bet most of you want to be a better giver. Or at least to feel better about it.
When you’re debt free, you begin to be generous like no one else. It’s not because the majority of people with extra money are selfish that more money isn’t given away, it’s because the majority of people in this country have debt and feel that they CAN’T give it away or they’ll drown!!
You hear the phrase, “I’m taking care of #1 first!”. I’ll bet that person wouldn’t mind helping others with true need if they could.
You could be the person that gives money away like no one else. If you get out of debt, you’ll have plenty for yourself and then you’ll be able to give a ton of that money away you’ve saved from not having credit card payments.
You Carry on With Your Own Business on Your Own Terms
Maybe you’ve got a business idea but could never afford investing in it. Or maybe you want to start an online business. Whatever you decide to do with your time, you’ll enjoy the freedom of time and money like never before.
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There is more-than-enough money out there for everyone in this country. There is so much extra money with the wealthiest people. They’re simply piling up the money that you are giving up through credit payments and poor money decisions.
Why not begin paying yourself that extra money for you, your family and your neighbors?
Hold on to the money that is yours to begin with. Why should you be debt free? Because you were born for something better than to be a slave to the lender.
If a part of your financial dreams include having your own home business, then consider joining me at Wealthy Affiliate (full review). You’ll find much freedom in the world of owning your own business online. You’ll see that it is so easy and makes so much sense to begin.
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A working guitarist, guitar designer, songwriter, worship leader and online entrepreneur, I have discovered that the key to online success (and success is more than money) is simply to focus on helping people be successful.