What Would You Do If You Were Debt Free?

Money

 

I came across an inspirational quote on Instagram the other day that read: “What would you do if you were debt free?” The whole point of the quote, I think, was to get me to imagine how great I would feel if I were debt free right now. Presumably a whole world of possibilities will open up to me.

But frankly, my answer is, “Nothing in my life would really change.”

Being debt free is just one step in the path towards reaching financial freedom. Even if I were debt free today, I wouldn’t just walk away from my job and leave everything behind to travel all across the world with my family. I still have a child heading to college in three years to provide for. I still have my own retirement to save for. There are still things that I want to accomplish in my professional career.

Being debt free doesn’t suddenly mean that I am now free to live the life of an independently wealthy person. Only being independently wealthy will do that!

There is this idea that having debt or being in debt means that you are living a life that is less than what it could otherwise be. But that does not have to be the case. I firmly believe that you can structure a life that both allows for debt payoff and working towards other life goals.

Joseph and I have had debt from the moment we met each other. We were both carrying our student loans and the remnant of debt from our respective divorces—not shockingly, neither of us had great money habits in our youth and neither did our prior spouses. In time, we paid off that debt. But during that time we also bought and sold houses, took vacations, changed jobs, moved halfway across the country, all with a child in tow.

In other words, we lived the heck out of our lives and had a blast along the way.

Life can be that way. You can work towards paying off debt while also making room for the other important things that are a necessary part of your life.

Now this does not mean giving in to every whim or extravagance that strikes your fancy. That kind of mindless consumption is usually what got us into debt in the first place. No, I’m talking about taking a realistic look at your finances (because you have a budget right?) and deciding how you want to allocate your resources in light of your defined life goals and priorities.

Before I elaborate on that, let’s take a minute to pause and reflect on the concept of toxic debt. Unlike most of the personal finance sphere, we don’t think debt is bad or evil.  Like most things, certain kinds of debt, when used responsibly, can actually be beneficial. But too much of anything is rarely ever good. Even too much water can kill you. Similarly, over reliance on debt or using predatory debt vehicles (balances on high interest credit cards, payday lending, etc.) is just not beneficial to your financial or mental wellbeing.

Instead of blaming debt for our problems, as many personal finance gurus encourage (or more like shame) us into doing, Joseph and I prefer to focus on and eliminate the issues that led us to spend in ways that weren’t in accordance with our actual values in the first place. That’s where the true blame–if we absolutely have to talk about the source of an issue in negative terms–really lies.

Having said that, it’s absolutely true that in some instances it might make the most sense to prioritize debt payoff over everything else.

For example, I recently sat down with a friend of mine who insisted that she really didn’t need a budget and that everything was fine. I managed to convince her to let me make a budget for her and we discovered that she was spending $500 more a month than she was earning! This meant that her credit card debt, which was already pretty massive, was getting bigger and bigger every single month. Meanwhile, she had a gorgeous, leased luxury vehicle that was costing her $800 a month between the lease payment, car insurance, and gas. She also had a $100 a month nail salon habit and a $250 cable bill.

Looking at her debt load made me feel claustrophobic. In that moment I could understand why there is the push to get rid of debt ASAP. I would feel that way too in that situation! My friend was drowning in toxic debt. Debt that was on high interest credit cards. Debt that stemmed from purchases where she couldn’t even recall exactly what she had bought. In other words, mindless spending.

This kind of debt makes us feel powerless because it comes out of nowhere and is so hard to get out from under it. But the same problem that caused her to get into the problem in the first place, wanting to impress her friends and coworkers, was the same problem that was keeping her in debt. She did not want to follow my recommendation to sell the car, get rid of cable, start doing her own mani/pedis, and start taking public transportation. It was too much of a hit to her ego.

I worry a lot for my friend now that I know what her financial state is. But it’s a perfect case study that shows how we, not debt, are our own worst enemies. We overspend to self-soothe, to fit in, to stand out. But even if we become debt free and cut up all of our credit cards, if we don’t address the underlying issues that led to the overspending in the first place, we still won’t be happy. The pressure of debt will be gone, so we will certainly feel some amount of relief. but is being debt free a magical pill that we can take to suddenly drop us into the midst of living our dream life? No.

The only thing that actually gets us on the path to living our best life is to decide what that life looks like (and use that goal as a compass to guide our behaviors and habits.  Being debt free is just the beginning (or for us, the middle or end game). It might be the primary focus of our attention at this moment or it might not. Just remember that you don’t have to wait to be debt free to start living your best life.

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