
I Want to be Debt Free Because...
Complete this sentence:
What is your number one motivation? How do you regularly remind yourself and keep your priorities straight?
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Bottom line is because most debt is dumb! You're paying for something with money you don't have usually at ridiculous interest rates. Notice how I qualified that statement with "most"? On the other hand, I have no interest (no pun intended) in paying off my rather large (because So Cal) 3.25% mortgage. I'd rather have cash on hand (at less than 1% difference in savings) and even futher out funds in investments at what should be a higher rate over time.
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... it offends me to think about paying interest to a bank simply because I cannot manage my budget properly.
(We're already debt free except for a low-interest mortgage, which we keep by choice. I'm very aware that we're lucky to have a good income and have not suffered from life-altering calamities or illness.)
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I want to be able to stay home and raise our family, and living on one income is much more difficult to wrangle with debt payments. It will be hard enough without, I'm sure, since that is not the norm. Perhaps this is only a pipe dream (I know life throws unexpected twists in the rope, and everyone does the best with what we've got), but I hope it works out.
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I had a friend who said, "I am heavily investing in my past." Obviously he was joking about being in debt, but really, I'd much rather be investing in my future than in my past.
when you're paying for past mistakes and paying for interest on top of that, it really reduces the options you have for your money.
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I want to be debt-free because I don't want to work today for something I bought last month and forgot about after a week! I want to be debt free because the choices I make today affect the kind of future I have. I want to be debt free because every hour of every day is mine, not the bank's or the store's or the finance company's....mine!
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Made me look. A similar question was posed on a forum I was following in 2006, and at that time (over a year before I found YNAB), I wrote this:
The top three reasons I want to have no debt:
1) Security
2) Security
3) Security
Let's examine these reasons in a bit more detail.
First, there's security. There is no such thing as job security in today's world. I am blessed with a job that pays me well. If this job were to go away, I would have some trouble finding a job that pays as much. Having no debt means that I could consider jobs that pay significantly less if my current employer goes out of business or decides they no longer need my department.
Second, there's security. I hope to retire, although I don't expect to retire early. Having a big pile of savings and no debt is security in retirement. Debt is anti-savings, required cash flow, and in general risk and insecurity. In and of itself, that's a reason to not carry consumer debt.
Finally, there's security. Like many other people, I find that there are aspects of my job that I don't like. I'd really like to have a big enough pile of F-U money that it doesn't matter whether I tell my employer what to do. Having consumer debt is contrary to having F-U money, and also requires me to have a higher income in order to service the debt. Being able to live off much less than I am paid, and having a big F-U fund to tide me over until I find other work, is being secure in the knowledge that even though I may take the BS at work, I don't have to. If I'm willing to pay the price, I can go do something else. This knowledge makes work a lot more tolerable.
Carrying large quantities of consumer debt is incompatible with security, undermines future security, and doesn't go well with security.
That's my story and I'm sticking to it.What's happened since then? I found YNAB when I was experiencing a perfect storm of financial changes. It exceeded my initial goal of getting me through that storm while avoiding dis-saving. In 2016, when I was 60 years old, my employer changed working conditions in a way that annoyed me. I looked, and found that I had enough F-U money. So I retired.
Investing well was part of what made early retirement work a decade after I thought it would be impossible. Another big part of it was finding YNAB, and learning to avoid spending that wasn't important to me. That part enabled me to throw more money at investing and retirement savings than I would have without a budget.
The current YNAB sound track is very heavily focused on the situation of being broke and just needing to get ahead of the paycheck to paycheck cycle; I was blessed to find YNAB at a time when it preached Living on Last Month's Income and clarity of how much money is accumulated for what purpose. Those principles are still very valuable to me in retirement.
I still have no debt, as defined by most people. In nYNAB terms, I continually have debt consisting of current cycle credit card charges. Using a card to spend next month's income this month is a fool's game; but I'm quite happy spending last month's income this month, paying for it next month, and getting a dab of cash back from it the month after next.
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I want to be debt free because, in my mid-to-late 20's I made some stupid mistakes and I am still paying for them years later (I am 34 now).
I want to be in complete control of my money instead of debts having first chunk of it and I get what's left., which quite frankly. most months.. isn't enough.
And most important, I want to invest so I am not stuck working until 68 which is the new retirement age for civil service in the UK. 60 would do me fine, so I need money for that :) (will probably pop my clogs at 59!)
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I want to be debt free because... I'm tired of being afraid. Afraid I won't have enough to retire. I come from a poor family. The vast majority of my family will work until the day they die. That isn't inherently bad, but they don't do it because it is a hobby or in a field they love, they have to do it to make end meet. I don't want to become complacent and just go through the motions for the rest of my life.
Since starting YNAB I've been thinking about What I want my money to do for me. There lots of things I want, mostly electronics, but there are some things I need. I need to make memories, I need to experience all the world has to offer. The airfare, hotel, and food money are really the bare minimum I need to experience the world and while I may not have the means to travel this year I do plan to budget for it in the near future.