After nearly three years of serious debt repayment, we will be debt-free very soon! I’m getting pretty excited and can hardly wait.
Actually, the time has flown by. It’s hard to believe we’ve been living in my in-laws’ basement for nearly four years. Even though the time really has gone fast, we are so ready to be done paying off debt and move on to other financial goals.
Our six figures of student loan debt will be gone, but that doesn’t mean its time to drift into financial foolishness. After discussion with a few of you, I wanted to make a list of things to remember when we’re out of debt, both to keep us out of debt and to make sure to not turn into debt-free snobs. Maybe it can help some of you who have already made it as well.
Little things add up
For good or bad, those little things add up. You’ve probably seen this happen with both your spending and saving. A little treat on a regular basis adds up to quite a bit over time. Cutting out those regular splurges and making small sacrifices over time adds up to real savings.
Just as those little expenses can add up to wreck your budget, little contributions to saving or debt payoff also add up. If your debt-free journey motto was “slow and steady wins the race,” then you already know how those little contributions add up over time.
When you’re debt-free, it will be easy to let little expenses slip back into your spending routine. If you’ve made plans for these expenses, then you don’t need to worry. It’s those, “Oh, it’s just $5” justifications that will add up and bite you.
A budget is best
If you didn’t love to budget before you were in debt, hopefully your journey to get out of debt has taught you the value of budgeting. The “b” word engenders stress, guilt, and worry for a lot of people, but really, choosing to create and live by a budget is just choosing to actively manage your money. Tracking your expenses and being intentional about finances was probably a key element to your success (it definitely was for us). Don’t stop now!
It will be really tempting to get lazy with budgeting now that you’re out of debt. Don’t succumb! You’ll likely have more disposable income now that you don’t have any debt payments. Make a plan for that excess so it doesn’t get lost (because if you don’t, it will).
Interest is powerful
Calculating how much we would pay in interest over the life of our student loans was one of the main reasons I was convinced we needed to get on the fast track to pay off our debt. If you haven’t done it lately, calculating your daily interest can be a great motivator to get moving on your debt payoff and can help to put your debt into perspective.
When you’re on the other side of debt, you have the opportunity to have interest working for you instead of against you! Instead of accruing and paying interest on your debts, you can earn interest on the money you save. Don’t forget to take advantage of having interest (and time) work for you.
Hard work pays off
If you paid off a large sum of debt, it probably required some dedication and serious self-discipline. I know it has for us!
Keeping the “hard work” aspect of your debt payoff at the front of your mind will help you prevent relapsing into debt again. Reminding yourself of the hard work it was to pull yourself out of debt might be just what you need to keep yourself from letting it happen again.
Also, remembering the incredible feeling of accomplishing something difficult gives you the strength and motivation to do other hard things. You know that when you put your mind to something you really can do it!
You used to be in debt.
Now that you’re on the other side, doesn’t mean you’re any better than anyone who hasn’t made it yet, even if they haven’t started or are still digging themselves deeper in debt. While it’s great to be in the debt-free club, shaming those who aren’t doesn’t help anyone.
It’s okay if others haven’t caught the vision of being debt-free. Paying off debt is a long, hard road and one that you really have to choose yourself. You can’t be thrust on to it by someone else.
Remembering that you used to be in debt will help you be compassionate toward those who feel like they’re drowning in debt. Your understanding, support, and encouragement will do more to help them than flaunting your debt-free status and lifestyle.
Hopefully remembering these five things will give us (and you) the perspective needed to stay out of debt (well, besides the mortgage that we’ll be getting in the near future) and allow us to keep our friends too!
If you’re just getting started with your debt payoff (or you haven’t even begun), I will show you step-by-step what we did to pay off over $100K in three years. My free 7-day email course Smash Debt will walk you through exactly how we made a plan and stuck to it. You’ll get printables to help you assess your situation and plan your debt attack. Sign up to get Day 1. You’ll be so glad you did!
How about you?
- What do you want to be sure to remember when you’re out of debt?
- If you’re already debt-free, how has that changed your financial habits, and what hasn’t changed?
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