I Am Completely Debt Free And Here's How I Did It

I hate owing anything to anyone. I’ve spent most of my life trying to make sure that I don’t have any red in my ledger, so to speak. I don’t want to owe you a couple bucks, a phone call, or a stick of gum for that matter. I for damn sure don’t want to owe a bank a single dime.

As it stands today, I am completely 100% debt free by design. In my 36 years on earth, I have dodged debt like Keanu Reeves dodges bullets. That path hasn’t always been an easy one to follow. It’s required planning, discipline, stress, and more discipline.

I’m assuming if you’re here, that you want to know how I did it, and I’m happy to fill you in. However, if you’re looking for a shortcut, hack, or cheat code—sorry, you won’t find it here. But if you’re looking for my story about common sense personal finance, keep reading.

I didn’t take out student loans

Getting through college took me a long, long time because I chose to take the scenic route in order to avoid debt. When I say that I went “the scenic route”, I mean that I started out at a community college while working a full time job. Since most of my classes were at night, the availability and selection wasn’t as open as it was for the students who could attend during the day.

It took me several years before I could transfer to a state university and by that time I was over 25 years old and I had some solid options in the way of financial aid and scholarships since my income was so low. Between my job and the financial aid, I was able to graduate with a Bachelors degree without having to borrow a dime.

I try not to live with any regrets, but I would probably do this differently if I had a chance to do it over again. I was living really lean for a long time. I had to have multiple roommates, I definitely missed a few meals, I had to forego medical care, and between the working and the studying, my social life suffered considerably.

In retrospect, I may have been better served to quit my job, or at least scale my hours back, and take out the loans so that I could decrease the amount of time that it took to graduate. That may have increased my earning potential since I would have been entering a more lucrative career at a younger age. But I also think that the real world experience I accrued while working through school was a major asset for me when I finally did graduate. In any event, I am happy with where I ended up, and although I took a different path than most people, I feel like I’m in a respectable position career wise.

I bought a used car with cash

At this point I’m sure that you’re aware that cars depreciate rapidly the moment that they are driven off the lot, and they continue to depreciate every year and every mile after that. So with that in mind, I don’t think I’ll ever purchase a “new” car again.

The car I did buy most recently was used, but it’s new to me! Not having a car payment allows me to put extra money away each month into my investments, emergency fund, vacation budget, etc.

The way I look at it, the average car payment is in the ballpark of $400, right? That’s $4,800 a year. If you purchase a sturdy used car with relatively low miles, it’s not very likely that it’s going to cost you $4,800 a year in maintenance.

It may even shock you to know that the car I bought is a luxury car. I am not an advocate for a joyless life of penny pinching. But I am an advocate for being strategic with every dollar I spend.

I budget religiously

Every dollar I make, and every dollar I spend is accounted for. As I get paid, I channel my funds to different accounts or “buckets” as I refer to them. One bucket is for recurrent monthly expenses like rent, insurance, cell phone, groceries, etc. The next bucket is for savings and investments. And the final bucket is for fun, leisure, vacations, etc.

This tip might sound a little too simple, but you would be surprised at how many people I talk to that are having money troubles and have no clue what their monthly burn looks like. If you need some help getting a budget together, tools like You Need a Budget are a great place to start.

I’m a renter

“Aw what? This guy is telling us about being debt free and he doesn’t even own a house?!”

I don’t own a house—but hear me out. I’m a single guy and my rent right now is about $1k per month. The money I’m saving on a mortgage and maintenance/repairs on a home are all getting put directly into index funds that historically have returns of about 8%-10%. So I am putting that money to work, and the hope is that at some point in the near future, I’ll either be able to buy a house with cash, or I’ll at least be able to put down a big enough chunk for a down payment that I can pay off the balance fairly quickly.

The real estate market continues to be white hot in spite of rising interest rates, inflation, and a looming recession, but by continuing to accrue capital, I will be in a good position to strike when the dip in the real estate market ultimately hits.

I’m a side hustler

In addition to my 9-5, I make a concerted effort to find side hustle gigs that revolve around my interests. For instance, you may have noticed by now that I’m a writer! I enjoy writing, and there are a number of ways to make a few extra bucks freelancing.

I’m also skilled at digital marketing, and there are opportunities for consulting and contract roles all across LinkedIn. Whenever this topic comes up, people are usually shocked that I have found income streams outside of my fulltime job, but it’s really not as difficult as you might think.

If you need some help with ideas, check out our guide to the best side hustle apps.

I mentioned earlier that I budget for leisure, vacations, and luxury items. The majority of that account is funded directly from my side hustles. I actively enjoy the writing and consulting I do, and it means that I can enjoy a few luxuries.

A final word on being debt free

I fully understand that I took a unique path that isn’t right for everyone. I don’t hold any judgment for those of you who are struggling with debt or are bogged down by a mortgage.

If you’re looking for resources to get out of debt, our friends over at Zero Debt put together an intensive guide for getting out of debt on low income.

The opinions expressed in this article are for general information purposes only and are not intended to provide specific advice or recommendations about any investment product or security. This information is provided strictly as a means of education regarding the financial industry.