Why We Choose Debt Freedom Over Investing, For Now

There are many philosophies on money out there and just as many philosophies on debt payoff. We choose debt freedom over investing because it works for the lifestyle we aspire to have.  As we wrapped up 2020, we spent time reflecting on the year we had and planning where we want to go. It’s time to hone in on our goals so we set a good pace for ourselves in 2021.

Debt Freedom is True Freedom

Some use debt as leverage to amass more wealth. Think of the real estate investor who has lots of debt in the form of mortgages but even more equity in the properties. There are certainly ways to become wealthy using debt. 

Others prefer to use their disposable income to invest in the market and grow their nest egg first, then deal with the debt later. Investing well and with the market on your side, you could potentially make even more money than you owe and be able to pay off the debt, if that’s what you desire.

Then there are those who work on both simultaneously. They split their focus and set money aside to invest and pay the debt. While others think that debt just comes with adulthood and something they will always have.

We choose debt freedom over investing right now. 

Our 401k is still active and we contribute just enough to get the company match. But we’ve stopped everything else. We know the market has been soaring, and we are missing out on gains at the moment. But the market goes up and down, that’s the cycle of investing. There will be another wave and when debt-free, we will have the expendable income to take full advantage.

We talked a little about wanting a simpler life. Essentially, we want to be well-diversified financial minimalists. But let’s take a deeper dive into why we are pursuing debt freedom over investing. 

1. Interest sucks

If we hold on to these loans for the life of them, we will almost double the original loan amount in repayment to the lending institutions. This very literally makes us nauseous. Interest feels like flushing money down the toilet.  Interest is flushing money down the toilet! 

2. True freedom awaits us

We can’t be free if we still owe people money. Honestly, we don’t even like paying monthly bills and when we can pay ahead a few months at a time we do it. We know we will always have some type of bills. Even if we live off the grid we’d have cell phones and other modern conveniences that require a monthly payment. But we only want the kind of bills that don’t rob us of our future (i.e. interest). 

3. Options! We want options!

We want the option to reduce work hours ultimately reducing stress, the option to take time off when needed without worrying about how we will pay the debt. The option to really invest in ourselves and chase our passions.

Jenni over at TicTocLife recently wrote about her transition from full-time pharmacy manager to part-time pharmacist, and it really spoke to me. She went into detail about her reduced workload and reduced stress. Boy, could I use less work stress!

We’ve dreamed of refurbishing an airstream, RV-ing cross country, possibly living abroad. While these things are certainly possible with debt, they become much easier and less of a burden without it. 

4. Life is unpredictable

No one has a crystal ball and we don’t know what tomorrow brings. What we do know is if we are debt-free, we can better handle those hiccups that are guaranteed to come. Hello roof repairs! 

5. Do as I say and as I do

We want our kids to be financially literate and responsible with money. We are going to teach them to give, save, and enjoy money all while avoiding debt. The best form of teaching is by example. 

However you choose to manage your finances and debt, ensure it is in a way that works for you and your long-term goals. We want financial peace and feel that debt freedom is a great way to get us there. 

What are your debt vs. investing philosophies?

With Intention,

Sean and Simone

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