Some Benefits of Being Debt Free

Pros:

• You will sleep much better at night.
• Your marriage will improve; the #1 reason given for divorce in the U.S. is money arguments.
• You can take advantage of good deals or investments that arise. Chicken breasts on sale for $1.69lb? You’ve got the funds to buy a few hundred pounds if you want. 
•  More freedom to move or change jobs if you want/need to. 
• Graduating with now student loans will enable you to start saving sooner and investing in your future.
•  You are not paying interest to The Man on stuff that you probably can’t even remember purchasing. 
•  You will be able to establish an emergency fund and start saving for retirement, vacation, new home or car etc…
• You will be able to help others more easily, Donate to your church, favorite charity etc…            

Cons:

• Since you will be sleeping better you won’t be able to watch all those late-night infomercials.  How will you know which new product will be the next Pillow-Pet or Snuggy?
• With no money problems, you will have to find something else to fight with your spouse about…maybe he/she squeezes the toothpaste tube in the middle.
• You will no longer get to keep eating non-sale $5.99lb chicken.
• You won’t have an excuse to keep living in that house you are upside-down in and keep working in that sucky job you hate.
• Since you didn't borrow for college, you won't get to pay back $50,000 in loans over the next 20 years.
• You won’t get to pay 18% to Visa and MasterCard for those carbon-fiber golf clubs that are gathering dust in your garage, sitting next to a financed sports car.
• You will have to find your excitement elsewhere since you will be missing out on the excitement of living paycheck to paycheck and being on the financial edge.
• You will have to say yes when someone knocks on your door collecting for the Association to End Cat Juggling

Go Small to Get Big

Small steps x lots of time = big results.

Like training for a marathon, the actual race (the end result) is the fun part, getting there is tough and takes baby steps. You might start out running 2 miles the first time and work your way up to running more. At first the 2 miles will seem like it’s gonna kill you, it’s not. After a few years 2 miles will seem like nothing and your weekly long run could be 20 miles. When you were just starting out the 2 miles was tiring and you felt like quitting. You never thought you’d get to the point where you could run 20 miles.

It’s the same thing when dealing with money. You might think that skipping going out to lunch and saving $10 isn’t going to help. But do that every day and over time magic happens.

What would happen if you stopped going out to lunch daily or gave up the cigarettes or stopped drinking? Besides the obvious health benefits, the financial ones are awesome.

Let’s look at some numbers:

By discontinuing eating out during the work week and investing the money: after 10 years you’d have $36,000 and after 40 years you’d have $698,000. I’m assuming $10 a day, 5 days a week and an 8% return in a no-load stock index fund.

Give up that 6-pack of daily beer: after 10 years you’d have $38,000 and after 40 years you’d have $735,000. I’m assuming $7 a day, 365 days a year and an 8% return in a no-load stock index fund.

Quit that 2 pack a day smoke habit: after 10 years you’d have $65,000 and after 40 years you’d have $1,255,000. I’m assuming $12 a day, 365 days a year and an 8% return in a no-load stock index fund.

So give up the smokes or beer or eating out. Or whatever your equivalent is. Find something that you waste $10-$12 a day on and stop doing it. But don't just waste the money you save on something else, invest it. Stick it in a no-load stock index fund and watch it grow over time at an 8-10% rate.

Heck if you do all 3 and quit all 3, you will be rolling in the dough in the future. 

 

***all posts apply to my family only - your results will be different***