Following up on the last post, “What is the Money Value of Your Time?”, I’m moving into a series called “What if.” This series will explore various topics in personal finance in a different way. Each post will start with a question that we will take a deeper look into. The first question is: What if you were completely debt free? I’m talking about being 100% debt free. No car loans. No student loans. No mortgage. No credit card debt. If you were debt free, how much money would you really need to live off of every month?
Zero Debt Costs
If you could to pay off all of your debts, your monthly bills would be substantially lower. Even after paying off all of your debt, many factors would still go into determining your monthly costs, and they will vary for everyone. The biggest factor causing the differences in monthly costs will likely be based on location, due to varying levels of state taxes, whether it is sales taxes, property taxes, or other types of taxes. Another large cost will also be health insurance for many people. If you were debt free, here are most of the costs you and your family would have throughout the year:
Property Taxes, Homeowners Association (HOA) Dues, & Homeowner’s Insurance
Car Insurance
Car Registration
Life Insurance
Health Insurance
Dental Insurance
Electric/Gas/Fuel Oil Bill
Cell Phone Bill
Cable/Internet Bill
Water/Sewer Bill
Garbage/Recycling Service Bill
Gas (for your cars)
Food
Other periodic but optional expenses could be:
Clothing
Entertainment
Streaming Services
That is still a long list of monthly costs. While everyone will have varying expenses, most people will have costs over $2,000 every month. But becoming debt free can a long-term financial goal you set and start working towards. Could you become debt free? How quickly could you pay down your debts? The first steps towards financial stability are the toughest because it will mean sacrificing wants that you splurge on and redirecting those funds to ‘fix’ your financial house. Just like taking out loans and building up debt were our decisions, the decision to become debt free is one that we each have to make for ourselves and our families.
So what?
Why even talk about this? You might think it is unachievable, and in some cases, it may be incredibly difficult. However, it is possible, and it is certainly worth it. If you did become debt free, what would you be able change about your life? Could you or your spouse stop working a job they don’t enjoy and find a new career? How much more could you save for retirement? How much less ‘money stress’ would you have in your life? How much more of your time would be for you and not for the companies you owe money? Being debt free can change your life. It’s worth the effort to get there.
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