Life After Debt: Is It Easier On The Other Side?

In a recent post I reported that the Frugal family was nearly debt free. Well, we’ve crossed that pinnacle point, and are now enjoying life after debt. A comment from that post, and my initial experiences, have me wondering if life really is any easier after crossing over from being in debt to enjoying a life without it.

The first thing we did after reaching debt freedom was realign our financial goals. The first, of course, was to secure a fully-funded emergency fund, one that represented about six months of expenses. Admittedly, it was tough to keep up the same intensity towards saving money as we had for paying off debt. That brings me back to the thought-provoking comment left by Rob from Here’s a portion of that comment that struck me:

If your experience is like mine, it won’t be all smooth sailing from this point forward. I say this not to be discouraging, but to point out what might be a basic reality of human life — it is a journey of ups and downs no matter how skilled one becomes at handling one’s money issues.

What I believe today is that accomplishing a big money goal like paying off one’s debt does not so much solve all your problems as open you up to a higher class of problems. The old problems truly are solved. But solving them provokes you into taking on new adventures, which lead to new problems. You will continue to find yourself frustrated and stuck and in pain and in fear in days to come.

My initial reaction? Yeah right! What could possibly be any more painful, financially, than going through the motions of paying off debt? What money struggles could we face that are even close to the struggles faced in the past? I suspect most people still deep in debt probably had that same reaction. But as I thought more about Rob’s comment, and began to experience life after debt, I understand his point.

Yes, we no longer have to contend with debt, but that doesn’t mean more daunting financial challenges aren’t ahead. My oldest child will soon be ten years old, which apart from terrifying me as a father, also serves as a wake-up call to get her college savings in order. Because we spent so many years toiling with debt and trying to get on solid footing, her college savings have suffered. The good news? Without debt we can afford larger contributions to her 529 plan, which should help us make up ground.

It’s a similar story for our own retirement plan. I diverted money we could have, and probably should have, used for retirement savings to pay down debt. Unfortunately, this means we missed a great opportunity to invest in our 20’s and let that money compound for a few decades. Are you reading 20-somethings? Make long-term savings a priority now!

In the final analysis, I would have to admit that yes, life is easier after debt. Paydays are now an exciting event because it means making more contributions to savings, rather than distributing most of your income to credit card and auto finance companies. But life after debt is not without challenges. And those challenges can conjure up the familiar fears and anxiety felt when looking at a pile of debt.

How will I even save enough to retire? How much will my kids need for college? Will I ever be able to save in taxable investments to chart a course to early retirement? I’ll approach these new challenges the same way I approached, and overcame, the ones related to debt. We’ll tackle them head on, and remain disciplined through the same frugal approach we take towards nearly all of life’s ups and downs.


  1. You’re so right. Not only is it hard to get your savings on track after focusing on paying off debt but many people struggle to fight the same temptations that got them into debt in the first place. The balance between wants, needs and resources is delicate and requires constant effort.

  2. Yes, this is very true; Just after we finished paying off past debts and started aggressively saving for retirement, the orthodontist recommended braces for 2 of my 3 children at the same time (the 3rd will need them in a year). Then, I hit a deer and totaled my minivan…I had planned to keep paid off, trusty van for at least 4 more years and had just started a ‘nused’ car fund. Now I have a car payment (financing $9000 @ 3.75%). Then my 14 y.o. was accepted into a travel vb club…cost: $1100 . All this has happened within the last month. So, getting out of debt has started all over again. Even ‘after debt’, many things can change and Sh&# will happen…some planned and some not. So, if you have young children, remember to save as soon as you can and as much as possible!

  3. Congratulations on reaching your debt-free goal. I look forward to the day I can say we reached that goal also. Good post, a lot to think about when we get to that point.

  4. I have a friend that has been broke twice and he always talks about how liberating it was to lose it all. I’m intrigued by the idea, but I like the idea of “liberation via no debt,” which is more what you’re talking about.

    I’ve been debt free my whole life, so I don’t know what it’s like, but I do know I’m incredibly lucky!

  5. One other big thing is fear, now that you have something you have someting to lose, I worry more now that I’m on good footing then when I didn’t have anything and was in debt, what you don’t have can’t be taken away.

  6. @Dave: Well put – I hadn’t thought of it that way, but it makes perfect sense. That’s why I am so fearful of investing in anything other than cash-based investments outside of retirement. It’s something I’ll need to get over to win long-term.

  7. Congrats! It is very freeing to be debt free, but I truly understand that attendant anxiety that comes with it. On a monthly basis we put as much money into savings as possible & then at the end of the month, any funds which have not been spent or used, are also moved to savings. This effort covers the emergency fund, vacation, etc. However, when life’s rollercoaster takes a dip & an expensive car repair comes along…well, it is with great anxiety that we pull that money out of savings & use it. I know, I know…I should be GRATEFUL to have the $$ to pay for the repairs & other unexpected emergencies, but it is hard to break that mindset of “spending” when you have trained yourself to “not” spend.

    But again, I would keep this anxiety & trepidation anyday over the anxiety associated with debt!!

  8. Being free of installment debt is one of the biggest stress busters in the world. It’s a worth goal for everyone. First rule towards it is to control buying on credit.

    john DeFlumeri Jr

  9. Congratulations on making it to being debt free! I hear what you’re saying — sometimes it’s easier to focus on something if there’s a fire under you to tackle it. But because you’re obviously able to self-motivate, I’m sure you’ll have no problem tackling these other goals. Good luck with it!

  10. Congratulations on being debt free! My wife and I have been debt free for nearly four years and have loved the freedom…meaning now we have choices of what to do with our money whereas before we knew where it went: to the creditors.

    Perhaps the responsibility of having those choices can weigh on some people, but we haven’t experienced it. We’ll take choices and accompanying responsibility any day over debt.

  11. Some times “debt free” can be a sort of idol for some people, as if getting to that point will bring ultimate happiness.

    Like Tom Brady said in an interview one time after winning his third Super Bowl – “is this all there is?”

    This is why I think it’s so important to align your money goals with your life’s passions and once you are debt free invest or give your money to those passions.

    If all we care about is debt freedom we will quickly realize it’s great, but not as glossy as we’d hoped.

    Pour yourself into others – invest into the quality of your relationships, serve others, give of your time – that will ultimately bring a greater joy.

  12. We were fortunate enough to reach this point not long ago too. I started an automatic deposit into our savings that WAS going to our mortgage and it feels very cool.

    I feel about 10 years younger. It’s a beautiful ride my friend….a beautiful ride.

  13. When we finally ditched our consumer loan, well… I felt lost. I wasn’t ecstatic like I thought I would be. Yeah, I was happy. But all I could think of was, “Well, now what?”

    I ended up getting a car loan again, and we just spent most of our savings on an engine swap for that car when I was going to pay it off. Instead, I’ll be working on paying it off AND replenishing the savings that was killed by doing the swap. I hope it’ll be worth it in the end (I’m sure it will be), but right now it’s just been one huge mess of stress. I can’t wait to get back to where we were and have the car as she will be!

    The important thing is to have goals and not get too crazy with all of the “extra” money. The last few weeks have been stressful, but I think they were necessary to show just how wasteful we’ve been with our money lately.

  14. Wow – Someone who I can relate to! You and Sherry above have described my feelings spot on. My wife and I have been out of CC debt for about 2 years now (a really hard task going from DINK status to 2 kids in a year and a half) but that aside – I’m ANXIOUS!

    I constantly struggle with the question – am I making the right moves with my money? Prior to this point, it was easy, simple, obvious and a NO BRAINER to say ‘Pay down the debt!’

    Now, with the cc’s paid off, with a 0% car note, and a low mortgage rate, the places the money can go seem unending! Retirement deferral is already a staggering 28% with 401 match (that’s on top of a pension – so is that possibly too much? I would wish we all had this problem). Pay mortgage early or fund 529 accounts? What if the kids go to state school? – I will be contributing WAY too much at this rate! Save more in liquid savings accounts (returns stink), lock it up in CD’s (not much better than savings), or plow it into taxable accounts (dont get me into the myriad of options here!)?

    Now, I realize this situation is really really really (ad infinitum) desirable (even for me) but now instead of climbing out of a hole and only looking up to the day that we are out of debt, I’m standing on top of a small but growing mountain doing nothing but looking down (should a mishap occur – which they always do – I’ll have further and further to fall). Like they say when climbing a mountain “Dont look down!” But that’s not always easy to do…

    On the flipside of that, now that I’m in such great shape, I’m thinking… what about these or those ‘Joneses’ who actually look like they’re enjoying their money, why cant I be like that? Why cant I just enjoy being where I am at the pace I’m excelling at?

    Sorry for the rambling rant, but Congrats, and more close to home THANK YOU for finally addressing something that has been bothering me for a couple years already!

    So could we have a couple more ideas on where to go from here?


  15. Welcome to the club and congratulations!!!

    I can say for some time after paying off all our debt I too continued to live in fear. After making such great progress it was frustrating to know that we were just one Murphy’s Law violation away from falling back into the pit.

    However, over time our savings grew and we found the more you have the faster it grows. Eventually one day you wake up and realize that you can afford virtually any challenge that comes your way.

    We are still far from being “financially independent”. I am and will continue to be just another working stiff for many years to come but the freedom from worry and stress are transformational for one’s attitude.

    Continued good luck and good health to you and the FrugalDad family… enjoy the ride!

  16. Whenever I read about college funds, I think how lucky we are here in Germany. For our older son, we paid about 150 € (then 200$) tuition fees per semester, now for our younger son it is about 800$. And when the parents´income is below a certain level, students get scholarships from the government as long as they pass their exams somehow, they don´t have to be excellent. And now the students are out in the street protesting against those fees and demanding “free education for everyone”!

  17. Good to know it’s easier FD! I’ve always used debt as a motivator for me to do better at work and make more money.

    I wonder if I will stop lacking motivation if there’s nothing for me to really support? Do you think that’s possible?

  18. Since credit cards can boost your interest rate to as much as 30% for a late payment, would you suggest emergency funds from payday loans to avoid making a late payment and causing your entire credit card balance being changed to 30%? The APR on these loans is high, but paying $30 to borrow $200 to avoid a late payment has to be preferable to a 30% interest rate on a revolving balance that may be $5000 or higher.

  19. My boyfriend just finished paying off our debt this week—a combined $100,000 of credit cards and student loans. Suddenly everyone’s encouraging us to buy a house, but I think I just want to enjoy this freedom for a little while. Our new goals will probably be:

    1) Increase our charitable contributions
    2) Rebuild our emergency fund (we dipped into it at the end to pay off our last loan)
    3) Increase our retirement contributions
    4) Save up some money for my boyfriend to get his master’s degree

    So exciting!

  20. Being completely debt free is overrated. I’m NOT saying going out charge up that big screen TV you want.. Assets that increase in value for the long haul (10 years, like real estate) and with inflation it makes sense to have low fixed rate debt.

    Something you alluded to in this post is opportunity cost. By paying off your debt and not investing in other higher return investments you’ve missed out on some capital gains.

    It’s different strokes for different folks. Some feel safer with no debt, for me personally I feel the reverse.

  21. I agree with the commenters who feel a little bit lost after paying off the CC, cars, etc. At first my wife and I felt wonderful elation (and certainly blessed), but over time those feelings waned and now we spend a lot of time wondering what’s next.

    We’ve continued to live reasonably frugally relative to our peers, but despite what we tell ourselves, we really don’t get tremendous gratification from foregoing luxuries that our friends enjoy. More importantly, we see the mountain of college costs (4 kids) bearing down on us as well as the escalating cost of retirement. It leaves me feeling almost helpless about the amount of money we’ll need to ensure our children don’t graduate with a financial anchor (student loans) or a familial anchor (supporting us in our elder years).

    I earn a good income (6 figures) but I truly don’t understand how people can build enough wealth to manage life’s obligations (eg, children’s education) and prepare for retirement. The numbers are just ridiculous. In-state college with room and board is $20-30k per year in real numbers, not what the admissions office tells you. Retirement, incl. medical expenses, is ridiculous. And that’s assuming social security doesn’t start means testing.

    Almost all financial blogs focus 99% of the commentary on just getting out of debt, but few, if any, spend meaningful time discussing life after debt. In fact, the blog writers who have achieved debt-free / look-at-me status seem to lose a lot of purpose and motivation in their writing. I for one would certainly appreciate a more meaningful discussion from people about what they’ve done after crossing the “I’m Debt Free” hurdle and how they’re managing the real costs of life.

    Any thoughts appreciated.