Debt-Free Living

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How much do you know about debt-free living? If you’re like most Americans, not much. We unfortunately live in a culture where debt is celebrated. However, we’ve been personally practicing debt-free living, following the principles of the Dave Ramsey plan for about two and a half years now. We’re not completely debt-free yet, but a lot of our decisions (financial and otherwise) are geared towards getting out of debt, and we have made significant progress. We believe it is important to be good stewards with God’s resources, to use our money wisely. If you are not familiar with Dave Ramsey, you can view his website for more information. It is similar in Biblical principles to Crown Financial Ministries, if you are familiar with that.

It Hasn’t Been Easy

Being debt-free wasn’t easy for us initially. We started out with student loans (both of us), a mortgage, and credit card debt. When we first married we didn’t make much money but we already owned a house, and we simply didn’t make enough to pay our basic expenses. We relied on credit cards – as do a lot of others – to pay for our necessities, like groceries. We didn’t even attempt to make a budget for the first 10 months of our marriage, and we would randomly spend money on things to treat ourselves – new clothes, games, going out to eat.

When we first sat down to make a budget, we were frustrated because at that time we literally did not make enough money to pay our basic expenses. Two months later, though, Ben got a new job and a raise and we began to get serious about making a real budget and paying off debt.

Since that time, we’ve paid off over $55,000 in debt, including most on our student loans and all of our credit card debt. We haven’t made a sizable dent in our mortgage yet, but we’ll turn our focus there after we pay off the last student loan. We cut up all our credit cards and we longer use them, or any form of credit. We have also saved up money to buy a used van with cash during this time (yes, you CAN buy a car without a loan!) and a few other small projects. One we’re currently working on is a hydroponic garden, which I’ll discuss in future posts.

Why Bother Being Debt Free?

So why should you be debt free? It seems like debt allows you to have great things, right now. First of all, we don’t believe in the “right now” culture. Delayed gratification is better, because you appreciate more what you have worked hard for. Also, if you use debt to buy things, you will always have debt and you will always have choices to make. But, if you get out of debt and use your money wisely, someday you will have a lot of extra money (that isn’t going to interest and loan payments) that you can use to buy some much-desired items. Money can be fun – if spent wisely.

Using the Lord’s resources wisely is also important. God gave us our money so that we could use it for good – for ourselves and for others less fortunate. He expects us to use that money well, to buy what we need and provide for our family, and also to tithe to the church to do His work. There is no aspect of our lives that the Lord doesn’t touch, including money. There are many scriptures that speak to how we are to handle our money, including:

Proverbs 22:7, “The rich rule over the poor, and the borrower is slave to the lender.” (aka don’t borrow money)
Luke 14:28, “Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it? For if he lays the foundation and is not able to finish it, everyone who sees it will ridicule him,
saying, ‘This fellow began to build and was not able to finish.'” (aka do a monthly budget)

In fact there are 1,196 verses in the Bible about money. Do you think maybe God was trying to tell us something?

A major reason to be debt free, even if you don’t believe in delayed gratification or using the Lord’s resources wisely is the sheer money facts (I know some of you want to see the math!). If, instead of spending money freely and getting into debt, you invest your money from a young age, you will someday have a large amount of wealth amassed and you will not have to worry about your future, or expect the government to take care of you. Check out this chart below showing two different investing strategies and the net results:


(click image for a larger version)


So we see that investing only from 20-25 will net you almost the exact same amount at retirement that investing from 26-65. Which would you rather do, invest for 6 years ($45,000) or invest for 39 years ($300,000)? If you make the sacrifices early in life, things will go a lot easier.

Compelling, huh?

For an example of typical money management, suppose you are an average couple – making $50,000 a year. You buy a house, you have two car payments, and you still have some student loans. On average, 60% of your take-home pay will be going towards debt, 40% to your mortgage alone. It’s easy to look at the debt and say “but student loans are only 3% interest. And we have to have cars, so we have to have car payments. And the house will increase in value, so overall, we’ll come out ahead.” Sound familiar?

But if that was your situation two years ago, with the housing market crashing, your house is now worth 30% less, your cars are worth less, and your hours (and pay) are cut at work. You have no equity at all in your purchases, and in fact would lose money now if you sold them. If you lost your job, you would lose everything, because you would either not pay for your belongings (possibly having to declare bankruptcy) or sell your items at a loss. This is the uncertainty you live with when you live with debt.

Contrast this example with a couple who is mostly debt-free. They have a 15-year mortgage, but the mortgage payment comprises only about 25% of their take home pay, and will be paid off in only a few years. They also paid 20% down on their home to decrease the overall amount of the loan. Their student loans are paid off. Their cars were purchased used and paid for completely. They also have a 6-month emergency fund.

When the market crashes, it doesn’t really affect the debt-free couple. Their mortgage is easily affordable even if pay is cut. Their cars are owned outright. Should they lose their jobs, they know they have six months to find another. There is no fear, no loss. Certainly life could be a little tight as the budget could change if they lost their jobs…but they know they can make it.

When you are debt-free, you must plan and save very carefully for future purchases. This reduces impulse purchases and ensures that you will purchase carefully and that you will be able to pay for your purchase in full. How wonderful it is to walk away with a major purchase – a car, a vacation, a new piece of furniture – knowing it is yours and no one can take it away, nor do you ever have to worry about it again. If you are using debt for the purchase, it’s easier to get sucked In by seemingly good deals, and end up in trouble if something happens down the road that limits your ability to pay back your debt.

A lot of my posts will refer to saving money, even if they don’t specifically refer to debt-free living. There are many things we do to save money as well as for other purposes (like buying food in bulk, also for health). I will note these ideas in case you are trying to reduce your spending. Look for posts in the future specifically about ways to save money, ways to cut your spending, and special deals to take advantage of.

Are you debt-free? Would you like to be? Does it seem like it is feasible for your family, or would you like to learn more?




  1. says

    Debt free…I'll be there within 2 years, I think. We're well below $40k on our two loans (at 1% interest) at this point, and I love having a budget. We were able to get major maintenance done on both cars that cost over $1000 without having to panic – we had the money without even having to touch the emergency fund.

    Honestly, our plan is to not even have to take out a mortgage – if we can save the $2k a month we spend on debt repayment, we'll be able to buy a $150k house in cash within 7 years, not even including the pay raises that I know will come between now and then.

    Also, I'm totally interested in your hydroponic gardening info, as well as ideas for moms with young kids for getting exercise – especially since living in Ohio makes the weather a factor. I have several friends who are asking me for ideas, so I thought maybe I could refer them to your blog if you talked about that?

  2. says

    Hi Emma,

    That's great that you are so close to being out of debt, and plan to pay cash for a house! We are not *that* far along yet, but are hoping to pay ours off by 30.

    I'll be discussing hydroponic gardening in November and December, as we work on the project. We only have the beginning of the system now and are waiting on a few other parts before we can get started.

    As for exercise, I'll have that up in a couple of weeks. I do take suggestions. :)

  3. says

    My husband and I are REALLY interested in doing this. Any tips on the mortgage side of it would be helpful. We were thinking about getting a super cheap (super tiny) place that we could pay off almost instantly, but we have a growing family (2 kiddos so far, and we believe the full quiver bit, if not in the quiverfull movement). Any advice? I have a student loan, but right now, his job will pay for him to get a degree. So we just have to pay off mine, and a mortgage. Ideas on which one should be a priority?

    • Kate Tietje says

      Hi Carla, do the student loan first. I’m sure it’s a smaller amount than your mortgage (so you can get it done faster and feel awesome that you accomplished it!) plus it’s probably at a higher interest rate. The mortgage takes longer…we are still working on that ourselves! Make sure to save up an emergency fund too so you’re not caught off guard when “life happens!” Is it possible that you could live in a tiny place temporarily? Just for a year until you have your other debt paid off and you’ve saved up a little money? Then maybe you can get a larger apartment or a small house and keep working on it. It’s HARD to make those kinds of sacrifices! But it may be worth it to you. That’s for you and your husband to decide! Pray about it and go with what you feel is the best way to save up the money you need. :)

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