Personal Finance Advice

If you have managed to achieve the much sought-after status of Debt Free, whether that means with a mortgage or without, you deserve accolades for a job well done.

Now it’s time to buckle down and maintain your status.

Becoming debt free is not a magical transformation that guarantees you will never have another credit card or loan payment in your life.  In fact, unless you chopped up all your credit cards and swore an oath against ever acquiring debt again there is a really good chance you’re going to fall right back into your old habits and wind up right back where you started: relying on credit to get the things you want.

Becoming debt free probably took a lot of hard work, but staying debt free can also be a constant struggle.  After all, you know how easy it is to get the things you want instantly by using credit. You’re aware of the ease of use associated with credit cards and loans.  Regardless of how much trouble you may have gotten into with credit in the past, it’s hard to forget how simple it is to plop a credit card down on a counter and walk out of a store with something you really want but can’t afford to buy with cash.

This is why you need to make the decision of whether or not “debt free” is going to be a permanent condition, or if you simply consider it a new starting point for a more responsible financial standing.  If your plan is to never get into debt again then you need to close all your credit accounts and never open up another account again.  Why have credit cards if you have sworn to never use them again? It makes no sense.  You might tell yourself that you want to have at least one credit card available for emergencies, but if you are debt free then you can probably build up an impressive emergency fund in a savings account quite quickly.  Why have a credit card for emergencies if you have a sufficient emergency fund in the bank?

Keep your credit accounts open and you’re playing with fire.  This is certainly not to say that everyone who pays off their debts should immediately obliterate their credit cards, but if you truly want to adopt a debt-free lifestyle then you’re going to have to get rid of these accounts.  Otherwise you’re keeping the potential open to start building debt right back up and perhaps wind up where you started: with debt and wanting to get it all paid off.

Debt free is not a permanent condition unless you make it so.