5 Reasons to Become Debt-Free

Last week, I wrote a post called, “The Consequences of Debt,” which dealt with the outcomes of having a burdensome national debt, using the examples of Greece, Ireland, and now Portugal.  Today, I want to trumpet several reasons to be debt-free, both personally, and as a nation.  I’ll give five reasons for both (and they look eerily similar):

Personal Debt – Why should you be debt-free?

A caveat before I give you these reasons: I’m a big fan of Dave Ramsey’s program for debt-free living, and I encourage you to check out his program on his website, DaveRamsey.com.

  1. You eliminate risk – when you are debt-free, you don’t run the risk of bankruptcy, foreclosure, credit card default, etc.  Some people say that you can leverage your income if you use debt carefully, but I believe that you only increase your risk.  Most people don’t have the know-how or the income to use the “leverage” argument for taking on debt.
  2. You can give more, and give generously – Many people I know say that they want to give more—to their church, to charities, to help out friends in need, etc.  Becoming debt-free can enable you to have the excess cash to do this.
  3. You can live more – When you are debt-free, you can do things that you could never have done when you were burdened by debt (or at least do them without feeling guilty about adding to your debt).  You can take a vacation without being burdened with the price tag for months or years after taking it.  You can have a hobby in which you invest time and money.  You can send your kids to college without forcing them to take out loans.  All while living within your means.
  4. You can plan for your future – You have the ability to save more effectively for retirement, for your kids’ college educations, for vacations, and other things that you’ve always wanted to do.  When you learn to live within your means, you often find yourself doing things that you’ve always wanted to do, instead of living in fear of a collector’s call.
  5. You simplify your life, and give yourself more options – When you’re debt-free, you don’t have to think about all the bills and upcoming payments you have to make—when was that balloon payment due?  When is my car payment coming?  When does my mortgage payment adjust?  Do I go for the 0% financing for 60 months, or $1,500 cash back at signing?  When you’re debt- free, you’re not shackled to your dead-end job; you have the freedom to do something you actually enjoy.  When you’re debt-free, your wife can be a stay-at-home mom, if that’s her desire.

National Debt – Why should our country be debt-free?

  1. We eliminate risk, and increase national security – We currently are indebted to countries that could potentially be our enemies at the drop of a hat.  The countries that hold our debt have the ability to do extreme harm to our economy and our currency, especially if they stop buying our debt.  If countries stop buying our debt, either the cost to borrow increases or our risk for default increases (if we cannot find another buyer for our debt).
  2. We can give more, and give generously – Right now, we borrow to finance many things: our international aid, our social programs (Social Security, Medicare, Medicaid, etc.), our defense programs… just about everything is partially financed by debt.
  3. We can live more – If we eliminated our debt, we could actually increase the amount that we spend on social programs.  Currently, our debt amounts to about 10% of our annual spending ($220 billion), and is only expected to rise.  If we had no debt, that money could be put to a much better use.  If we didn’t have any national debt, we could actually build up a rainy day fund as a nation, which would help us better weather economic downturns.  If we didn’t have any national debt, we could lower our corporate and individual tax rates, which would cause our economy to put on its afterburners.  It would keep our country at the forefront of the worldwide economy.
  4. We can plan for our future – If we eliminated our national debt, we could have a more stable tax structure, which would allow our government to plan more effectively for the future; it would help companies to plan more effectively for their future; it would help individuals to be more confident that Social Security and Medicare would be there for them when they retire.
  5. We simplify our collective life, and it gives us more options – first, eliminating our national debt would get rid of the frequent debt ceiling fight… every year there’s at least one.  We’re coming up on one now, and it’s going to be a doozy.  Secondly, if we were to eliminate the national debt, that would be a sign that Washington (at least some of it) had begun to be responsible.  There are other things we could do that we’ve never done before as a nation.  Here’s one… we could be a creditor nation.  We could have a sovereign wealth fund, instead of a sovereign debt crisis.  We could lend money to other nations that weren’t as smart as we were.  We could actually make a profit from other nations, as other nations are now doing to us.  Imagine that….

Living without debt is a worthy goal, both personally and nationally.  The budget that Paul Ryan, the House Budget Committee chairman, introduced last week is a step in that direction.  Let the debate begin.

Are you debt-free?  How’s it working for you?  Should our country be debt-free?

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  • Barrett
    • Bob

      Stewart really didn’t have criticisms of Ryan’s actual plan in the clip; he was more pointing out the supposed hypocritical nature of Republicans. It was a funny clip. Here were the points that I saw in the clip:
      1. Medicaid cuts will amount to $750 billion over 10 years–I suppose this is a criticism, but he didn’t offer a reason WHY this is a bad thing.
      2. The Republicans are now supposedly saying to our seniors “You can no longer afford medicine.” Partisan, but not really a criticism.
      3. Juxtaposing comments about ObamaCare to comments about the Ryan plan. Interesting, but from where I sit, I thought that the Republicans were against ObamaCare because it was going to increase government spending and debt, and now they’ve proposed a budget plan that will decrease government spending and debt, which to me is consistent.
      4. Literally a deathtrap for seniors… that was funny.

      Bottom line… people are going to have to spend more in the future for their own healthcare. The government can’t pay for everything. If the government tries to control healthcare costs by lowering the amount paid to doctors, doctors will stop giving care (we’re already seeing this happening). The Ryan plan proposes another way to control costs… stop shielding people from the cost of their care. If someone must either pay more for the care that they currently get, or go somewhere else where they get care cheaper, then healthcare costs will go down.

      I’m planning a post soon on healthcare, where I’ll address this in more depth. But I hope that gives you an idea…

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  • http://billhutchison.org/ billhutchison

    Great article about personal and national debt. I wrote a similar article last week about the consequences having debt has in missions, http://billhutchison.org/debt-and-missions-a-toxic-mix/. I’ve seen too many people not be able to enter missions, or have to leave the mission field because of debt.

  • http://billhutchison.org/ billhutchison

    Great article about personal and national debt. I wrote a similar article last week about the consequences having debt has in missions, http://billhutchison.org/debt-and-missions-a-toxic-mix/. I’ve seen too many people not be able to enter missions, or have to leave the mission field because of debt.

    • http://bobewoldt.com Robert Ewoldt

      Yes, and the Bible says that we shouldn’t be a slave to lenders.

      • http://billhutchison.org/ billhutchison

        Yep, absolutely, I quote that one in the article.

        • http://bobewoldt.com Robert Ewoldt

          Very good article. Thanks for pointing it out.

    • http://bobewoldt.com Robert Ewoldt

      Yes, and the Bible says that we shouldn’t be a slave to lenders.

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