The Secret to Living Free of Personal Debt

Living debt-free is not easy for most people whether they have a six-figure income or a fixed income. Our society thrives on consumer debt, “buy now and pay later” philosophy. A dictionary definition of the word debt is “the amount of money that you owe a person, bank or company, etc.” (Merriam-Webster)

Wouldn’t it be nice if all your debts were wiped clean?

If this happens miraculously, great. In the meantime, there are things we can do to achieve a debt-free lifestyle. If you want to pay off debts and your income is not increased, then living expenses must be reduced if possible. Cutting back is feasible if your expenses include wants such as restaurants, entertainment, expensive clothing or vacations. Some things are fixed expenses: rent or mortgage, utilities, groceries, medicine, and transportation.

Some fixed expenses can be adjusted

If you own your house you can renew your mortgage to reduce monthly payments. (Beware penalties may occur.) You can cut back on hydro expenses by doing laundry and using the dishwasher by avoiding peak hours.  If you pay high rent, move to a place with lower rent. You can negotiate insurance costs with your insurance broker or shop around and even cut life insurance if you are older and have no one to care for when you’re gone. photo credit suphakit73 photo credit suphakit73

This was our house and car a while ago!

Small but debt-free.

I remember when we first bought our first brand new car. I had just started my first teaching job so we financed it. But about a year later, we decided that a house was a better investment than a vehicle that depreciates the minute you drive it off the lot. We sold the car and used the money as down payment for a small house.

Our car expenses were kept low as we bought a rust bucket 1965 Valliant. The hole on the floor board gave us some grief until my husband fixed it. We paid only $100 for it and even made a profit when a lady hit me from behind and paid $300 for the damage.

If you have two cars, sell the one and use the cash to reduce your debt load. Or take a bigger risk. Sell all cars and use public transportation or car pool. Many are doing this, especially in large cities. Then when you need a car for road trips or special occasions, you can always rent one.

Reducing expenses is not the only way to clear debt

It may actually hurt you in the long run depending on what expenses you have. Lifestyle changes caused by drastic budget cuts can cause more stress that it’s worth. As an example, you may change your eating habits to save money. Long-term stress can cause illness also. Your health could be affected in such a way that you could no longer work. Disability income doesn’t stretch as far. Your debt reduction would then be impossible and perhaps you would go into more debt. It’s a vicious cycle if this happens.

What else can you do to pay off debt?

When cutting expenses is no longer feasible, you have to make a different choice. The other side of the equation is to make more money. Anything is possible. If you’re still healthy and of working age, you can get a part-time job outside the home or work from home. Or create your own self-employment on the side.

One time we needed more income, so my husband got a job delivering flyers. That year he was the most fit! He should have hired me as his assistant.

What are you good at? Building?  cleaning? computers? Sell your skills on the Internet. Declutter your home and have a yard sale. Rent out your basement room or apartment, and even collect rent from your adult children still living there! credit Stuart Miles credit Stuart Miles

Another way to increase your income is to change jobs if possible. Often we don’t think of looking for a new job or even a promotion. It’s easy to get stuck in a rut. I’ve worked as a teacher but also worked in offices. I did whatever was necessary to increase our family income.

Every time you get a raise or get extra income from gifts or inheritance, you could pay off long-term debt or invest it to produce more income.

During this tax season many of us think about personal finances. How can we save or pay taxes. If you get a tax refund will you use it for necessities or to reduce debt? (Credit card debt is not debt if you pay it in full each month.)

I know this was a little long and dry but I’m a geek when it comes to finances. The main thing is that we live happy and stress-free.

“Owe no man anything except to love one another.” Romans 13:8 (NKJV)

What other ways can we live debt-free?

Pirkko Rytkonen

Wife, mother, and grandmother. Christ follower and seeker of truth. Blogging to inspire and encourage others.

4 thoughts on “The Secret to Living Free of Personal Debt

  1. You are so right Pirkko. Living without debt does make for less stress. My husband and I are debt free for the first time in our lives. We are very conservative. But as we age, we do find it more difficult as the cost of living rises along with health care expenses. If we want to buy something, we ask ourselves if it is a need or a want. That’s been a big help. Great post!

    1. Thank you so much for your comment. Much appreciated. I try my best to ask if it’s a want or a need but often forget to ask. As Canadians our health care costs are mostly covered for everyone so we have less medical costs. I, do, however, carry insurance for medications, dental, eye care, and travel.

  2. Great post, Pirkko. I strive never to buy anything that I can’t pay off in three months or less (except cars and houses). I’ve been able to pull this off most of the time the last few years (since retirement). It makes life less stressful to not always be worrying about the bills.

    1. Thanks for your comment. At retirement we are more conscious of our spending than when we worked. I watch Suzy Orman show and see what she says people can afford and how close to guessing I am. I don’t always agree with her, but it’s fun.

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