What it Feels Like to be Debt Free

debt freeOne of the reasons I started Personal Finance Utopia was to share my story of how my wife and I battled out of heavily oppressive debt. I wanted to inspire and encourage others burdened by massive amounts of debt to not give up hope.

Our struggle to break free from the bondage of debt was intense. We pushed hard and made many sacrifices along the way. But it was so worth it!

A Quick Recap of our Journey to being Debt Free

In early 2009, we decided to fight back against our whopping $140+k debt. The debt consisted mostly of student loans the biggest of which was my wife’s $100k consolidated loan with a 8% interest rate!  A little less than 3 years later (at the end of 2011) we made our last payment. We accomplished this feat by living off my salary alone and fully devoting my wife’s salary to debt repayment.

The sense of relief we felt when making the last payment on my wife’s student loans was like floating on the clouds!

However, even though we paid off the bulk of our debt, we were not entirely debt free. My wife still had a car loan and some Federal student loans (at a much more manageable interest rate of 3.375%). Even though we were down to a few hundred dollars of cash we could have continued our push to be debt free. Instead, with the expectation that kids would soon be on the way, we shifted our focus to saving for a home down payment because we knew it would take several years to amass enough money.

Thus, for nearly 3 years we were in savings mode. Along the way we managed to pay off what was left on my wife’s car loan. Unfortunately, my car kicked the bucket after 10 years and we had to take on another auto loan.

We ended up buying a house in September of 2014. We still had what was left of my wife’s Federal student loans and the car loan. So, what did we do after getting settled into our new home? That’s right, we got back to eradicating what was left of our debt.

I’m proud to say that as of June 23, 2015, we are completely debt free*!!

All told, we paid off over $165k of debt principal over the 6 year period and also managed to save up for a down payment.

* Note – Yes, I am classifying us as debt free even though we have a mortgage. Unlike other forms of debt, such as student loans or credit card debt, there is an asset tied to our mortgage debt which can “go away” if we sold our house. We have approximately 20% equity in our house so selling would not be a problem. If we were forced to do so – poof – the mortgage debt is gone. Thus, in my mind, we are debt free.

How it Feels to be Debt Free

  • Less Fear of the Unknown – None of us knows what the future holds in store. While blessings often come our way, so do the unfortunate strokes of luck. When you are debt free, you are in a better position to financially handle any setbacks that may arise. For example, if I were to get laid off tomorrow, there’s no doubt it would be a tough situation to handle. Yet, because we are no longer buried under a mountain of debt, I am confident in our abilities to navigate the turmoil until I found another job.

In years past, being let go from my job would have been exponentially devastating. It would have put us further in the hole financially and really wreaked havoc on our future. Having actually been laid off I can attest to just how horrible of a nightmare this situation can be (I think I probably lost a few years off my life!). Fortunately, I landed back on my feet and we were able to make the aggressive push to being debt free.

Now that we are debt free I no longer have the same fear of being so dependent on a company or manager for my job security. If I lose my job, or if any other unexpected expense comes our way, the increased cash flow from being debt free allows us to be flexible enough to handle it. Don’t get me wrong, I am not worry free about the future. It’s just when you are debt free – the fear of the unknown is eased.

  • Excited about the Future – I am excited about the future for me and my family. I feel like the opportunities are endless and grow each day. Right now we are focusing on building up some emergency savings. Once we get past that goal, we have so many choices.

We could start contributing more to our retirement accounts like my 401k or a Roth IRA. Or perhaps we could invest in dividend stocks or tax-free municipal bonds. Maybe paying down some of the principal on our mortgage makes sense. Simply getting the power of compound interest to work even more so in our favor is a phenomenal feeling.

We can even afford to make the occasional splurge that would have been harder to swallow before being debt free such as a family trip to Disneyland.

A point of clarification – you can be excited about your future while you are aggressively paying off debt. We certainly were. That’s a different kind of excitement though. It’s one where you are limited by the bounds of trying to become debt free. Once you are debt free, you get a sense of opportunistic excitement where the choice is yours on what you want to do with your money.

  • Different Mental Approach – I have a different mental approach about finances and life in general now that we are debt free. It’s difficult to describe and was a natural result from getting to debt free status. I am still frugal by nature and mindful of expenses, but I don’t stress as much if the electricity or grocery bill is higher in a given month than it should be. Before, knowing we were stretched thin and in dire need to divert as much cash as possible to debt repayment, I would often get worked up over finances. Now, I feel liberated to the point where I know we won’t be knocked off track in situations like those. I am certainly not financially care free. Rather, I am less nitpicky – the trivial things do not bother me as much.
  • Physical Health – Your physical well-being is influenced by many factors such as diet, exercise, genes, etc. A huge component to physical health is your mental health. Large debt balances can cause extreme amounts of suffocating stress which can, in turn, negatively affect your physical health. Becoming debt free isn’t akin to discovering the fountain of youth. However, you stand to gain improvements to your mental and physical health. I did and so did my wife.

You Can be Debt Free Too – Do Not Give Up

Hopefully my description of how it feels to be debt free provides some motivation and encouragement for you. To get to the debt free “promised land” isn’t easy. It takes dedication and perseverance. You absolutely can do it though. There is always a way and the best time to get started is now. To help, I suggest reading our debt story for inspiration, having a money mindset and, perhaps most importantly, read what I believe is the secret to getting out of debt.

If you are debt free, how do you feel or how did you feel when reaching the accomplishment? If you are still suffering with debt, how do you imagine it feels to be debt free?

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Image courtesy of adoseofshipboy at flickr.

21 Responses to What it Feels Like to be Debt Free

  1. Kurt August 31, 2015 at 2:12 pm #

    I think the best things about debt freedom are 1) the FREEDOM, and 2) the flexibility to take advantage or opportunity or better pursue one’s dreams. Tough to give up a respectable and reliable paycheck, even from a job one hates, if the debt bell is tolling. To maintain motivation to work toward debt freedom, I encourage people to regularly take 15 minutes and do nothing else except visualize what your life would be like if your debt magically disappeared. For many, it’s truly transformative!
    Kurt recently posted…August 24 ETF CalamityMy Profile

    • Mr. Utopia August 31, 2015 at 8:00 pm #

      The visualization exercise isn’t a bad idea. I know for those mired deep in debt, it might be difficult to really imagine and believe any visualizations at first. However, by keeping at it and visualizing a little bit each day, then it will start to feel more and more real and you just might find yourself moving towards becoming debt free.

  2. Michelle August 31, 2015 at 9:18 pm #

    Love this! Being debt free is an amazing feeling. I eliminated my student loans a few years ago and I am still extremely happy that I did it! It’s a great feeling.
    Michelle recently posted…Beginner RV Tips – Dreaming Of A Life On The Road?My Profile

    • Mr. Utopia September 1, 2015 at 9:02 pm #

      An amazing feeling indeed…the journey to get there can be rough, but it is completely worth it once you become debt free. I have never been to jail or prison and then got out, but I imagine the feelings are kind of similar. After all, debt is a type of financial prison.

  3. DC @ Young Adult Money September 1, 2015 at 6:55 pm #

    I go back and forth on the mortgage. I think I tend to agree with you that having only mortgage debt is essentially debt free. But if you are paying down debt (including low interest debt) simply because you want the psychological feeling of being debt free, then mortgage debt should count. For example, if your student loans are at 3% and you have $80k of student loan debt, you could argue you are “debt free” if you have $80k of investments. On paper you are debt free, similar to a mortgage. The counter-argument is that the debt isn’t tied DIRECTLY to the investments and that the investments can lose money. Well…so can a house.

    Maybe this is a discussion for another post 😉
    DC @ Young Adult Money recently posted…7 Common Financial Myths – ShatteredMy Profile

    • Mr. Utopia September 1, 2015 at 9:08 pm #

      Excellent points. The definition of “debt free” is somewhat up for interpretation which is why I wanted to be forthcoming. To me, the distinguishing factor is that the mortgage debt is directly tied to a tangible asset. I sell the house, the debt is gone. With $80k of student loans and $80k of investments, your net worth would sum to zero but you could sell the investments and blow the money without extinguishing the student loans. Perhaps the debate is worth another post!

  4. Luke Fitzgerald @ FinanciallyFitz September 2, 2015 at 4:52 am #

    Congrats! $165k of debt principal is no joke! Way to go!

    I agree 100% with all your points – especially the different mental approach. The only way to pay down that amount of debt is to have a plan and follow it. Now that it’s gone, you still have a plan but it’s one of preparing your life as opposed to repairing. Everything looks, feels and is perceived a little different now that you have this perspective in your past!
    Luke Fitzgerald @ FinanciallyFitz recently posted…Hyperbolic Discounting and Why I Need a New Alarm ClockMy Profile

    • Mr. Utopia September 2, 2015 at 8:22 pm #

      “Preparing your life as opposed to repairing.” That’s a great way to phrase it.

  5. Holly@ClubThrifty September 2, 2015 at 5:26 am #

    Congrats! It does feel good, doesn’t it???
    Holly@ClubThrifty recently posted…Are Your Finances Out of Control?My Profile

    • Mr. Utopia September 2, 2015 at 8:05 pm #

      Thanks, Holly! It feels better than good…feels spectacular!

  6. EL @ Moneywatch101 September 2, 2015 at 8:03 am #

    Congrats I can only imagine the feeling. The process is hard and time consuming, but with focus it can be done. In this next stage in life if it were me, I would build wealth on hyper drive.
    EL @ Moneywatch101 recently posted…Nordstrom’s StockMy Profile

    • Mr. Utopia September 2, 2015 at 8:15 pm #

      With focus and with some time it can be done. We blazed through the majority of our debt pretty fast. Others may not be in the same position to make such rapid progress. But any progress is good progress in the fight against debt. The amazing feeling one gets when becoming debt free is still the same no matter how long it takes. And, yes, now that we are debt free the focus is on building wealth and growing our net worth.

  7. Brian@Luke1428 September 3, 2015 at 7:59 am #

    Congrats on this accomplishment! Debt freedom brings a financial peace like nothing else. It also allows for more personal freedoms in other areas of life. I was able to quit my job and be a stay at home dad after we became totally debt free. That’s been a tremendous blessing for our family.
    Brian@Luke1428 recently posted…Why Parents Should Never Give Kids Money for A’s at SchoolMy Profile

    • Mr. Utopia September 3, 2015 at 9:06 pm #

      Thanks, Brian. That peaceful feeling is amazing, no? I would totally be up for being a stay-at-home dad. Despite now being debt free, we still aren’t in the position for me to make that move. Maybe one day…

  8. Laurie @thefrugalfarmer September 5, 2015 at 7:19 am #

    HUGE congrats to you guys, Mr. Utopia! Must be an awesome feeling. Can’t wait until we are there too. 🙂
    Laurie @thefrugalfarmer recently posted…Physical Fitness and Self SufficiencyMy Profile

    • Mr. Utopia September 7, 2015 at 8:04 pm #

      Thanks so much, Laurie. I can confirm – it is an awesome feeling! I’m not sure how much longer you have to go to be debt free, but I’ll bet you get there before you know it as long as you keep focused.

  9. Ben Waple October 10, 2016 at 12:43 pm #

    Congradulations on being debt free. Without a doubt, it is a wonderful feeling to have this terrible burden lifted off your back.
    Ben Waple recently posted…Best Ways to Repair, Rebuild, and Protect Your CreditMy Profile

  10. Elicia Smith August 24, 2018 at 6:21 am #

    When you buy things on credit, you don’t really own those things. Think of all the people who have lost their homes in recent years because they couldn’t keep up with mortgage payments.

  11. click here December 13, 2018 at 11:12 am #

    Next time I read a blog, Hopefully it won’t disappoint me as much as this one.

    After all, Yes, it was my choice to read, nonetheless I genuinely believed you would probably have something interesting to say.
    All I hear is a bunch of moaning about something you could fix if you weren’t too busy searching for attention.
    click here recently posted…click hereMy Profile

  12. Eden Fantasys March 31, 2019 at 9:40 pm #

    Thanks Brian. Bad habits are the worst. It s definitely a big accomplishment, not to mention the best decision of my life. Although I do wish I did it sooner. Congrats you made it. It needs dedication, mind set and lot of concentration to achieve what you did. Now, at your age and being debt free it s higher time you enjoy your life ??


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