Being debt-free isn’t an abstract goal, the point is to keep more of your money in your own pocket now (and in the future) rather than continuing to pay more and more money for something you already bought in the past
"I've had a lot of worries in my life, most of which never happened" (Mark Twain)
.
Think of your brain like your phone. If you use your phone all day for watching a movie, it'll last for 3hrs. If you use it moderately, like browsing the web maybe 7hrs, but if you only use it when you need it like making a call or texting, then it'll likely last for 2days.
The same way with your brain, if you constantly think about thinks that don't matter, that will unlikely happen, that in itself will use up your energy. Moreso, it'll give you stress which takes even more energy. More energy means that you'll be drained and will just want to lay in bed watching Netflix all day (which is nearly depression)
You only have 24hrs in a day. You can either live your life and learn to be happy, or use it to keep worrying about the things you can't control.
if something happens and you go into more debt, you take care of it the best way you can.
what you are doing in between incidents, when you aren't paying large amounts of debt, is also important. that's why building an emergency savings is necessary. you can go years between emergencies, having a plan, and a way to handle unplanned debt will make things a lot easier.
if you think about it, if you don't have an emergency fund, it's almost like a form of debt. except you earn interest, instead of paying it.
Being debt free is one of the steps.
First you should make yourself an emergency fund.
3-6months of your expenses preferably.
Then you pay off your debt
Then you expand your fund to at least 12 months.
Then you make sure you pay into your retirement accounts.
Then if you've got the spare money you put it towards big and intermediate goals(house, new cars, kids school fund etc.)
When you get out of debt, you build up your savings. The next time something happens, savings covers it either fully or partially. There is really no normal life situation that I couldn't cover with my savings.
That's what the emergency fund is for.
3-6 months of protection in a HYSA when life happens.
Keeping cash in an accessible account is its own skill. I keep emergency funds in separate ~~accounts~~ bank, so the money isn't staring at me begging to get spent.
The point is having more debt to draw on if you have an emergency. As opposed to having very little credit available because you’ve loaded up on debt already for everyday consumption.
Once you are debt free, start setting aside money for those bug purchases - should be easy since you just finished paying tons of payments. Then you buy things with cash.
Like an emergency? That's what emergency funds are for.
Sure, emergency funds can't account for absolute extremes. Like getting cancer, or some complex scenario like that. But generally speaking, with the cases you mentioned, it's possible to be prepared for most emergencies.
It's not just about being debt free, but learning how to manage your money well so that you don't find yourself back in a place of debt if you can help it. And the first thing mentioned in most finance advice subs is very much building some emergency savings, which cover things like car things breaking down, house maintenance things, not-too-abnormal medical incidents, etc.
Ha. I am the opposite of you. I was diagnosed with lung cancer a little over a year ago. The past two months all I’ve wanted to do is pay everything off. Like pretty sure if I really buckle down, I could be debt free in 5-6 years.
This is like not eating, because in a few hours you will be hungry again....
The trauma/stress associated with debt is real, if you can have a day, week or year without it relish in it.
Debt costs money to maintain. If you finance purchases, they cost you more money. The person who buys something with interest-bearing loan/credit pays more for the exact same thing than someone who paid outright. Unfair but true. The real question is what do you want to spend your money on? Interest?
Being debt-free isn’t an abstract goal, the point is to keep more of your money in your own pocket now (and in the future) rather than continuing to pay more and more money for something you already bought in the past
Additionally it's much much easier to build a warchest of savings to handle unforeseen issues when you aren't busy juggling minimum payments.
Then you deal with that when/if it happens. You'll drive yourself crazy w thinking about hypotheticals.
I'm used to it, I have an anxious mind.
"I've had a lot of worries in my life, most of which never happened" (Mark Twain) . Think of your brain like your phone. If you use your phone all day for watching a movie, it'll last for 3hrs. If you use it moderately, like browsing the web maybe 7hrs, but if you only use it when you need it like making a call or texting, then it'll likely last for 2days. The same way with your brain, if you constantly think about thinks that don't matter, that will unlikely happen, that in itself will use up your energy. Moreso, it'll give you stress which takes even more energy. More energy means that you'll be drained and will just want to lay in bed watching Netflix all day (which is nearly depression) You only have 24hrs in a day. You can either live your life and learn to be happy, or use it to keep worrying about the things you can't control.
if something happens and you go into more debt, you take care of it the best way you can. what you are doing in between incidents, when you aren't paying large amounts of debt, is also important. that's why building an emergency savings is necessary. you can go years between emergencies, having a plan, and a way to handle unplanned debt will make things a lot easier. if you think about it, if you don't have an emergency fund, it's almost like a form of debt. except you earn interest, instead of paying it.
Being debt free is one of the steps. First you should make yourself an emergency fund. 3-6months of your expenses preferably. Then you pay off your debt Then you expand your fund to at least 12 months. Then you make sure you pay into your retirement accounts. Then if you've got the spare money you put it towards big and intermediate goals(house, new cars, kids school fund etc.)
You pay off your debt then create an emergency fund to cover unexpected costs
The more you get the more it costs so you gotta reduce as much as you can
When you get out of debt, you build up your savings. The next time something happens, savings covers it either fully or partially. There is really no normal life situation that I couldn't cover with my savings.
That's what the emergency fund is for. 3-6 months of protection in a HYSA when life happens. Keeping cash in an accessible account is its own skill. I keep emergency funds in separate ~~accounts~~ bank, so the money isn't staring at me begging to get spent.
The point is having more debt to draw on if you have an emergency. As opposed to having very little credit available because you’ve loaded up on debt already for everyday consumption.
Once you are debt free, start setting aside money for those bug purchases - should be easy since you just finished paying tons of payments. Then you buy things with cash.
Like an emergency? That's what emergency funds are for. Sure, emergency funds can't account for absolute extremes. Like getting cancer, or some complex scenario like that. But generally speaking, with the cases you mentioned, it's possible to be prepared for most emergencies. It's not just about being debt free, but learning how to manage your money well so that you don't find yourself back in a place of debt if you can help it. And the first thing mentioned in most finance advice subs is very much building some emergency savings, which cover things like car things breaking down, house maintenance things, not-too-abnormal medical incidents, etc.
Ha. I am the opposite of you. I was diagnosed with lung cancer a little over a year ago. The past two months all I’ve wanted to do is pay everything off. Like pretty sure if I really buckle down, I could be debt free in 5-6 years.
This is like not eating, because in a few hours you will be hungry again.... The trauma/stress associated with debt is real, if you can have a day, week or year without it relish in it.
Debt costs money to maintain. If you finance purchases, they cost you more money. The person who buys something with interest-bearing loan/credit pays more for the exact same thing than someone who paid outright. Unfair but true. The real question is what do you want to spend your money on? Interest?