Debt Free Living - it's great
Debt free living is another one of the great ideas for frugal living that has substantial rewards. Living debt free means not taking out a loan for anything. In the absence of debt, you aren’t paying interest to anyone.
You're free from financial slavery.
Paying interest may not sound like much, but it's huge, especially with big purchases and any purchase financed over a long term. If you financed $100,000 at 6% for 30 years, your payments would be roughly $600 per month.
That doesn’t sound too bad, but at the end of the loan, you would have paid $216,000 for the $100,000 you borrowed. Ouch, that's more than double. That doesn't sound frugal to me.
Despite what appears to be a high cost of borrowing money, the attractive part is that it makes things affordable.
The down side is that it puts you in debt – sometimes for a long time. The more things that are affordable through extension of credit, the more you are in debt and the longer you stay there.
Debt is enslavement of sorts, so the thought of debt free living should be very attractive.
I never considered having car payments because my cars were always inexpensive used vehicles. When I finally bought my first new car, I simply wrote a check. What a great feeling to know that you own what you have.
Even a house doesn’t have to put you in debt, at least not in the conventional way. There are houses on the market for less than $10,000 if you know where to look. Cheap houses sound great to me. I saw one in Saginaw, Michigan recently that came with 3 city lots. It sold for less than $3,000.
A house for less than $3,000 has to be one that needs repair, but just how much might you invest to make it livable? Who knows until you investigate? It could be quite an investment if you only consider the value of the 3 city lots.
Saginaw might not be where you want to live, and most certainly the house needed work, but with a $3,000 house, this could be a great way to be instantly debt free and have a roof over your head.
If you have conventional financing, you can pay off your home early and live without a mortgage payment. Imagine what it feels like not to have to write a mortgage payment every month. How much less work would you have to do if you didn’t have to pay rent or mortgage? Debt free living is an excellent goal for you to achieve as part of your money management plan, and it's one of my favorite ideas for frugal living.
Done with Debt Free Living, back to Mindset of Frugality