Finally, it was time. After four long years of making payments on my student loans, this was my last one.
I pulled out my laptop, logged into NelNet, and input the final amount: a lump sum of $15,336.04, to be exact.
And just like that, I was free.
If you’re still in debt, I’m sure you’ve dreamt of the day you’re free from loans and wondered, “What is it like to be debt free?” I often asked myself that same thing while working towards making it my reality (read about our debt free journey here).
So, to answer that question, here are the four major ways becoming debt free can change your life…
What Is It Like to be Debt Free?
#1. Less Stress
For many of us, holding large debt feels like there’s a weight on our shoulders, a perpetual feeling of running on the hamster wheel.
According to Bankrate.com, the average American owes over $90,460. Most of these debts are in the form of credit cards, personal loans, student debt, mortgages and car loans.
That’s an average of nearly $100,000 of debt, all with accruing interest payments! Owing that kind of money, most people are working just to stay afloat financially.
That’s a heavy weight to carry, and an exhausting way to live: Always working to pay for past financial decisions.
Living without debt means that burden is lifted.
While in the throes of debt- carrying the albatross of stress- it’s difficult for most people to imagine life on the other side.
But once one becomes debt free and lifts off that psychological burden, for many there is a feeling of freedom…
And freedom from loans feels so much better than a purchase with the monthly shackles of payments ever could.
#2. Finally Having an Emergency Fund
If you’re living paycheck to paycheck, you probably don’t have much of an Emergency Fund.
I didn’t have an Emergency Fund either, and luckily didn’t have a massive emergency come up while paying off my debt…
But flying by the seat of your pants is a pretty scary way to live!
Being debt free allows you to save all that money you used to put toward debt into an Emergency Fund.
A popular rule of thumb is to have a starting Emergency Fund of $1,000. This will not only boost your morale, but also cover major, unexpected expenses like a car repair, without needing to put it on credit or take out another loan.
When you’re debt free, saving up that initial $1,000 is so much easier, and you can build that up to a more robust, secure fund as time goes on.
#3. Better Relationships
Financial stress can wreak havoc on relationships. With money and financial decisions, emotions can run high, and if both people aren’t on the same page with how to tackle debt, problems can ensue.
As unfortunate as that truth is, it makes sense: Money is connected to many spheres of life from savings to retirement, home ownership, debt pay off, travel, kids’ education…
Getting out of debt allows you to focus on putting your money toward future, meaningful goals- whatever that looks like to you.
Saving cash to fund your future together is much more of a relationship builder than arguing over overdue payments!
#4. You (Actually) Own What You Have
Sometimes it’s hard feeling like the Joneses’ have so much more: A big house, a fancy car…
But more often than not, the Emperor has no clothes.
That big house has a monthly mortgage that needs paying, as does that fancy car. So who really owns those? The bank and the dealership.
Having no debt means you own what you have. There’s no monthly fees you need to pay under threat of having your property taken away.
This is a big reason why people say: “Being debt free is the new American Dream.”
#5. Freedom
I saved the best for last: Paying off debt means you gain your Freedom. No more living under anyone else’s heel!
When you’re living with loans, you don’t truly own that on which you make payments: The bank owns your house, the dealership owns your car, and if you default on a Department of Education loan- they can’t take away your degree- but, they will take portions of your paycheck in the form of “wage garnishment”.
Living a debt free life means you own your life, property, and have the freedom to pursue whatever you wish without the burden of owing anyone or anything.
It’s a powerful feeling.
Without debt, you can finally plan for the future; Your days are no longer spent paying off your past…
And that freedom is irreplaceable.
So, if you’re still working towards a debt-free life, know that you CAN do it! There are plenty of wonderful changes waiting for you on the other side!