What Is Debt Free?

It's having credit available, using it wisely, saving religiously, and planning accordingly.

This a term thrown about all over the place. It's also a very misunderstood concept.

Definitions run the range from not being in debt ever again to using money management to control debt and learning how use credit to your advantage.

What Is It Exactly?

Financial gurus who endorse the strictest definition say it is exactly that, no debt at all, ever. Get it paid off and never use it again. In today's world, however, I find that a concept I can't, and won't, live by. It's just too extreme for the majority of people, including me.

If you followed their definition, you would likely retire well but never:

• make purchases on the Internet
• buy a home
• buy a new car
• go on a luxury vacation
• pay for your children to go to college
• own your own business

As with anything in life, moderation and control are the keys to a better life. A better definition, in my opinion, is having credit available, using it wisely, saving religiously, planning accordingly.

With this definition, you would be able to:

• make purchases on the Internet
• buy a home
• buy a new car
• go on a luxury vacation
• send your children to college
• own your own business

and you would still be able to retire well, travel with more safety and security, among other things.

So I Can Use Credit & Still Live Free Of Debt?

Absolutely, just remember moderation and control. There are financial advantages to having credit available and using it wisely. In particular, home mortgage interest is a tax deductible expense.

Other advantages to debt free living (defined as moderation and control) include the convenience of credit. It would be much less likely you would be caught short in an emergency, or a once-in-a-lifetime deal.

Highly Recommended Resources

YNAB budgeting software can help you track your spending and make better decisions so you can get out of debt. Easy to use software with a free trial. Get the free trial here.









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