9 Important Reasons to Eliminate Personal Debt & Me Taking My Advice

by Brad Isaac on June 11, 2008

credit card debt I’ve posted before about how one of my goals is to become completely debt free. Like everyone who has undertaken that goal, I’ve had some stumbling blocks along the way.  As a homeowner, I experienced financial setbacks due to our heating/AC needing complete replacement last year.  We’ve had some unexpected health issues (not critical but expensive) pop up.  Through all of this, we haven’t increased our debt, but it hasn’t gone down much either.

I explained before how Dave Ramsey’s radio show made me aware that being debt free was actually a great idea.  Believe it or not, it never occurred to me that someone could be debt free in America.  Silly I know…  But that’s how insidious the credit illusion (or as I like to call it Fake Money) is.

In watching the HBO series John Adams, there’s a classic debt scene.  In one of the episodes, Adams is pleading with the Dutch to loan the future republic money.  It occurred to me that acquiring debt was an American trait before America was even a country.  And so it is..

What amazes me about the whole situation is we almost pick up debt naturally, it’s just the way things work.  So why fight it?

Why indeed?

There is so many reasons to eliminate personal debt I can scarcely list them all but here are 9 important reasons to do it:


  1. Your income becomes infinitely more productive - If you have no credit card bills, car payments or other credit bills, you pay your monthly expenses like utilities, taxes, food and health costs.  The rest is yours.  Invest, play, enjoy.

  2. Debt limits your options - Buy taking the debt option.  You no longer have the option of choosing what you can do with a major portion of your money.  Put another way, if you chose to save for a car and buy a car, then you are choosing to save each month.  If you don’t want to put money away in July and go on vacation instead, fine.  Just try doing that with a creditor.

  3. Other people control your life - In Dave Ramsey’s words, “debt makes you a slave.”  How many people work two jobs – one of which is dedicated exclusively for paying off credit?  I know I’ve done it.  And if you have too, you know how much it feels like slavery to pay for stuff you can’t even remember buying. 

  4. Could save your marriage/relationship - One of the top reasons marriages end in divorce is due to fights about money.  If you and your beloved can get on the debt free track, you aren’t adding the pressure of the bill collector to your relationship.

  5. Agile reaction to tough financial times - In uncertain economic times, when gas is $4+ a gallon, and the dollar is plummeting, unemployment is skyrocketing, and the stock market is quaking, you will be able to react more agilely to unexpected changes.  This could mean the difference between emerging on the other side of economic turmoil unscathed, or completely losing your independence.

  6. You are less apt to trade money for junk - When you’re spending REAL money, instead of fake money, you make MUCH smarter purchasing decisions.  Yes, when you see that signed 78 of the Fibber Mcgee and Molley Christmas show… it seems smart to buy with credit.  But when you have to lay cash on the line, that’s when you come to the awful realization how dumb the purchase would be.

  7. Wants vs. Needs become clear - Swiping a credit card to buy a $30 lunch is easier than paying cash for the same thing. The pain involved with credit is delayed.  When if you have to pull out your wallet and lay $30 on the counter, you become acutely aware of want vs. need.  You actually see your money going away.

  8. Real money can dig you out of a disaster - In the event of a natural disaster such as a tornado, flood like Katrina, or a Hurricane, real money can bail you out quicker than fake money.   We’ve all heard how “money talks”.  Sure credit can talk too, but in times of need, nothing speaks as loudly as cold hard cash.  If you are addicted to debt, how could you get 1, 2 or 10,000 dollars cash in an emergency or disaster?

  9. Many things like health insurance become less expensive or free - You hear a lot of talk about health insurance in the news these days.  Imagine what it would be like if you had enough liquid capital to pay for any health related problem that came along?  Or in other words, what if all the money you spent each month on health insurance was deposited into a savings or mutual fund account? 

    One of the steps we are taking as a family to becoming debt free is selling off our boat.   My wife just graduated last month – securing her second degree.  However, there are still some lingering school loans to pay off.  How to solve fast?  Sell the boat.  We’ll likely lose some money on the sale.  But it brings us closer to the debt-free mark.  Sure, it’s not pleasant to think of selling it because we enjoy it so much.  But, we decided it’s the best thing to do.  Plus, when Kim starts her new job in August we can start saving for a new boat.

    So there you have it, I am putting my money where my mouth is to become debt free.  I recommend it as a worthy goal for anyone.

    If you are debt free and would like to take a look at our runabout, here’s a link to the auction on eBay. 


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    June 14, 2008 at 11:01 am

    I’m with you man. I’m trying hard to get rid of my years of consumer debt. The last 6 months it has been falling, for the first time *ever*. Not fast enough for my liking, but I’m on my way. On my way to financial freedom.

    Brad Isaac June 14, 2008 at 12:29 pm

    William… Stick with it. You didn’t get into debt overnight, you won’t get out overnight either (unless you win the lottery or something). I’ve seen up times but MANY down. Seems like a week after we started cutting down our debt tree, our heating and AC blew for the house. :( Not that we had to acquire more debt, but we couldn’t pay down what we had for a longer time.

    Now, however, we are on a downhill slope. Stuff is getting paid off faster and faster – we’re almost there. Persistence, persistence.

    June 15, 2008 at 12:13 am

    I become debt-free by reducing my financial commitments. I spend on smaller things (less expensive) than big items (more expensive stuff). Of course, I try to limit my number of credit cards.Probably 2-3 only. The rest will be personal financial management.

    BloggerOfTheWebs last blog post..SEO & Blogging: BloggerOfTheWeb Has Its Own DoFollow & CommentLuv Directory

    June 19, 2008 at 6:11 pm

    I’ve heard of Dave Ramsey before, but never gave him much thought. I had thought of debt as a tool. I followed a link to his website a couple weeks ago, found out that my wife had his book somewhere in the house, and I’ve been paying attention to him ever since. I like to listen to the calls he takes. I can’t believe some of the questions people ask, but then again, I watched Suze Orman on CNBC for a little while, and she got asked some really crazy questions too. It’s almost like people WANT to be beaten up on the show.

    I haven’t started to read the book yet, but I will as soon as I catch up on a few other things.

    Eric S. Muellers last blog post..Deadliest Catch Websites & MySpace

    norman June 22, 2008 at 1:38 pm

    we all want clear our debts, and when i finally did i felt great… No more stress n pressure

    normans last blog post..Curing Liverocks

    Brad Isaac June 22, 2008 at 2:54 pm

    Norman, congratulations. how long did it take you and how much did you pay off?

    July 2, 2008 at 10:31 am

    Everyone that I know anticipate to succeed in their enterprise and one of the limitations to that desire is PERSONAL DEBT. Thanks for sharing this timeless nuggets on Reasons to Eliminate Personal Debt.

    Richard Onebamois last blog post..Creating a Prosperity Mindset: By Randy Gage

    July 24, 2008 at 9:41 am

    Firstly, I’d like to say thank you for avery informative post.

    We’ve found that a great way to rid yourself of debt is to apply the
    snow-ball method to any bad debt.

    The idea is simply, yet really effective…

    You need to start of by compiling a list of all your debts with the least amount owed on top. You then put any spare cash you have available at the end of the month into paying back the SMALLEST DEBT FIST.

    Once this has bee paid in full, you then move onto the next debt on the list, and so on until all your debts have been settled.

    It’s called the snow-ball method because once the smallest debt has been paid, the extra money you will then have, gets added onto the next balance. The effect is like a snow-ball.

    Really simple and yet anyone in debt can easily apply it.

    Good Luck!


    August 5, 2008 at 1:57 am

    I wish I was reading blogs like this a few years ago. I wouldnt be in the shit I am now, owing more than $1,200,000 to friends, family and banks. I would know all the right steps, I would get motivated and inspired… Now all I have left is a site called http://www.savemefromshit.com, which is more an example of what to avoid in life, rather than a cry for help…

    March 13, 2009 at 5:42 am

    This is a really interesting article.. Becoming debt free is not an easy task, especially with the amount of average unsecred debt increasing year on year.
    Tips like this can really help people, keep up the good work with your blog.

    Hesster December 6, 2009 at 11:06 pm

    Really good advice, except for the last one. I would seriously think twice about going without health insurance, no matter how much you have in liquid assets.

    A former co-worker of mine broke his leg while uninsured, and the bone pierced the skin. Between the break and the infection that set in afterward, his hospital bills ended up costing over $50,000. The guy ended up having to declare bankruptcy and nearly ended up living on the street.

    Health insurance might cost you, but not having health insurance might cost you a lot more.

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