I am in debt.  Quite a bit of it when you add it all up.  Fortunately I don’t have any credit card debt that I pay interest on ( like a lot of people do ), but with 2 car loans, a mortgage, and a 0% credit card, it adds up.  The problem is that all this debt means a large monthly financial obligation.  When I’m paying X for my mortgage, y for the cars, and z on my credit card, that’s all money that I have to, must, make every single month – or I’ll be in a big pile of trouble.  That’s also money that isn’t available for saving or investing – a big problem in today’s world.  Very few among us save enough for our futures, and part of the reason is because of our debt load.

If I had no mortgage, no car payments, and no credit cards, I would free up about $2500, each and every month.  That is, if I had paid for my home in cash ( and so only had to pay property tax and insurance ), and paid for my cars in cash, I would have $2500 every month to do with what I please.  Saving that kind of money can make for a really nice early retirement.  Or, I could build a large savings account and have a huge amount of financial security.  If my wife or I lost our job, it would not be as stressful, since we’d have a large pile of cash, as well as very low monthly obligations.  With our current situation, it could be absolutely ruinous.

Freedom from debt

I don’t expect to be free from my mortgage for a very long time.  After all, I just purchased my home in September of last year – I have over 29 years of payments left!  However I am aggressively paying down my credit card debt, and then I will focus on my cars.  At the same time I will do my best to invest for the future, and for my retirement – though the debt will be my main focus.  Once all my non-mortgage debt is gone, a huge weight will be lifted from my shoulders.  Money will flow into my savings and brokerage accounts freely, and I won’t feel the same sort of pressures that I do today.  If I want to work on my small business full time, it would be a real possibility – something that isn’t true today.

Get by with less

How does one live debt-free?  Learn to get by with less.  A smaller house than you want is a start.  Same thing goes for cars – don’t go for the V6 with all the bells and whistles, or ( blasphemy! ) an SUV.  Get a small, fuel efficient car that fits your needs, and no more.  Believe it or not, you don’t need the dual sunroof and navigation system – your last car didn’t have them, and your next one doesn’t need them.  Pay off your cars quickly if you’re unable to pay cash.  Note: I’m not a big fan of buying an old beater car, simply for the reliability factor.  You may feel more comfortable driving a junker, but I am not.  Don’t finance furniture or other household items – just save and pay cash.

It will take patience

Living debt free will not be easy.  No one said it is.  You will stumble along the way, and it will be hard.  But ultimately the goal is financial freedom and independence.  With patience, and diligence, we can all get there.  And like the saying goes, there is no better time than the present.