The End of Debt: Owing Nothing Before Taking a Leap

chainsSince I started my job and have been earning a solid income, I’ve committed first to eliminating all my debt before I start focusing on my “escape the job” fund. I’m happy to admit that I only have about $2,800 left in student loans to pay (I just threw another $400 at the principal), and I’ve committed to getting rid of that by the end of 2011.

I realize that I’m “lucky” that I don’t have more debt, but the reason I don’t is largely due to my own smart decision making in life so far. I don’t want to get preachy here, but some of the best things I’ve done so far in life are because I have so little debt: attended graduate school, completed a year of service, gone of a couple European vacations, and now setting my sights on leaving my job. I’m so close to achieving zero debt, and here’s what I’m looking forward to enjoying very very soon.

A debt-free goal will make you work harder

I’ve been a little bit lax with my SMART goals, but I’ve defined 3 of them very well.

  1. Pay off all debt by 12/31/2011
  2. Save $10k by 5/25/2012
  3. Leave my job 5/25/2012

So far, I think I’m on track, but I know I need to generate more income to ensure that I meet these goals. Since I’ve already declared on here multiple times that these are my goals, I feel the pressure to make sure that I achieve them. That’s a good thing.

No need to concentrate on paying debt instead of concentrating on earning money

I want to take some risks while I’m building my freelance and other businesses, and there may be some times were cash flow is a little low. Being debt-free will give me one less bill (and a large bill, at that) to worry about paying each month and will ease the pressure to just generate income instead of managing my time goals in a more sustainable way.

Debt holds you back and will catch up with you

Being in debt feels is like a form of slavery. They essentially own a piece of everything you earn until you’re able to pay them off. I really want to get that burden off my shoulders. The idea of no debt just sounds and feel great!

You can concentrate on other financial goals

I need to be saving, not paying down debt. Until I pay off my debt, it feels like a distraction from that. Honestly, I can’t wait until the it’s gone because I can send a ton of my paycheck right towards my $10k fund. I’m not a Dave Ramsey superfan or anything, but his quote about “gazelle intensity” when it comes to debt has stuck with me. I’m so close to the payoff now that I’m motivated even more! Plus, monthly payments are another due date to worry about (and I’ve detailed how much I hate dealing with multiple bills before).

Since I have my goals above, my first priority when my paycheck comes in is always paying my loans and other bills before spending on anything else. Oftentimes, there’s little left out of my paycheck for spending on other things once I make all the transfers to meet my debt and savings goals.

Debt breeds more debt

For the obvious reasons of paying interest, having debt isn’t a good financial choice. I’ll save somewhere around $4,000 in interest by paying my loans off now rather than waiting 10 years. That’s powerful.

Advice for others before going into debt

Unless you want to be tied to your debt for years to come, don’t get into debt in the first place. That’s easier said than done, but really think twice before you purchase anything (including your education) on credit. Before you take out student loans, think twice about it. Do you need to go to the school that you’re taking out loans for? Do you actually need the loans themselves to pay tuition, or could you get a job that covers the cost while you’re in school instead?

When you purchase a house or a car, you’re stuck with the debt, but you’re also stuck with the house or car! Obviously, you can sell either of these things, but there’s no guarantee you’ll get back what you paid for them (especially with depreciation and the cost of cars), and selling a house is difficult in this market.

I don’t think it’s always bad to go into debt. I understand it from the perspective of buying a house. But, if you want to live like I want to live, getting into debt is a bad choice.

I’m really hoping to never have to go into debt again in life after this, and, hey, since I’m such a big fan of renting, it’s actually possible!

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photo by: Colin-47


  1. Good plan to pay off your debt as soon as possible.  Some people save on college costs by living at home, going to a state school, and even by finishing in 3 years.  They do the latter by taking a full load of classes in  the summers.  Not everyone can handle that and you lose the chance for summer jobs that could help a lot with college costs.  Congratulations on having definite  goals that motivate you!

  2. As soon as you succeed with the debt goal the other two will fall in place I guess. May be you mentioned this before in detail, do you have your life mapped out after you quit? Just curious…

    • No, I don’t have my life mapper out for after yet, but I’m working on that. I’m sure I’ll have a more detailed post up soon. My basic plan is to rely on savings while I bring my freelance income up. Not sure yet where I’ll be living while doing that, but I’m going to keep costs down as much as possible, of course.

  3. Yes!  I think that’s a great idea.  You can’t have your debts following you around while you are trying to life the life of your dreams.

  4.  I got rid of all my debt at the beginning of 2010. No debt is awesome.

    I’ll admit, however, that I am currently carrying a small amount of debt. I bought a MacBook Pro for 0%-for-12-months on a Barclay’s card. Then, I set up automatic payments to have the card paid off in 9 months (plenty of buffer). The way I see it, if you can be diligent about this type of scenario then it’s free money and can help build your credit up.

    Aside from that the only person I owe anything to is myself. Over the past few months I’ve been over budget (preparing for a wedding is actually quite expensive, who knew!?) so I mark down how much I’m over budget on a white board and work each month to pay it off (typically taking out of my ‘entertainment’ budget).

    But yea. Not having debt is exactly as awesome as you think it is. Fortunately for me, Future Wife is also debt free.

    You may want to check out a book called Debt Is Slavery. It’s a short, good read from a friend of a friend!

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