Being completely debt free means simply not having any debts to pay back, and technically this would mean being in a situation where you owed not a scent to anyone. However despite this, the majority of people would consider having only a small amount of debt as being debt free where it was expected. For instance someone who only owed money for their mortgage, or a student loan, might still class themselves as ‘debt free’ – as might someone who had purchased something on finance or who had just a little credit card debt left to pay. Under the very most rigid of definitions, very few people are ‘truly’ debt free. Nevertheless, those who are currently struggling with their debt would be happy with any measure of freedom from debt.
So what does it really mean to be completely debt free? The repercussions it has for the rest of your life are greater than you imagine and it can feel truly like a burden has been lifted. Here are just a few things you will notice about being debt free:
- Your money is your own – the amount of money you have in the bank is the amount of money you have.
- You can start building up a savings account and earning interest when you are debt free – as opposed to gaining interest on what you owe and losing money
- You will have no sense of guilt – and you can spend your money without debating with yourself as to whether you can really afford it
- There is no stress with regards to debits coming out of your account and no risk of bank fees
- You will have an improved credit rating and when you do need to take out small loans in future you will be met with no opposition
- You will own all of your own belongings and have no fear of repossession
This is just a few ways in which being debt free is liberating, but the sense of achievement and peace of mind that comes from paying every last debt will effect you in more ways still. It also means you are much safer and financially secure so that you can finally start planning toward your future. Being in debt is a serious risk, and it is something that by its very nature will often tend to gain momentum. By being debt free you can stop this self perpetuating vicious cycle and begin to build your finances up securely once again.