While discussing finances with my dad (i'm 26, he's 57), I started talking about living debt free, about how I never want to have another car loan again EVER, about how much money i have wasted in interest on loans/credit cards, ect. ect. My parents have always seemed financially stable, and my dad usually has good advice on lots of things.

My dad's response were variations of: "well maybe if your income was very high", "some debt is a good thing", "it's impossible to live debt free", and then spiraled down into him telling me "well yeah, you could live debt free if nothing ever goes wrong, nothing ever unexpectedly comes up, you never go on any trips, you never expand your family, and so on." I said well if you had a large enough cash reserve you wouldn't have to worry about the unexpected. "well then you would be sitting around for years trying to save up that much money" was his response.

I'm feeling pretty down in the dumps now. Is it really possible to live debt free? Or do I need to be making 100,000/year or more to really do it? I've been putting a lot of things off (getting married, buying a home, upgrading a car) while trying to destroy my debt and create a large emergency savings/down payment/wedding fund. Am I wasting time trying? I'm starting to feel like I'll be 40 before I have the money to accomplish what I want do do

Any advice would be appreciated!

Wow, long first post!

Well...I think it's possible for some people.

I truly believe that many people people can live without any debt (aside from their mortgage). That's not to say it's something that just magically happens in this day and age. It could take years of work and sacrifice, but I do think it's entirely possible by diligent planning.

I also believe that some of these people (mentioned above) can eventually be totally debt free by paying for their home outright or paying an early payoff on their home loan. I honestly don't feel that's quite *as* possible for as many people unless you are upper-middle class income.

But I also think that there are people in this country for whom debt is the only thing putting food on the table, if there is a table at all, and I just don't know how feasible the American dream of being debt-free is for them, no matter how diligent they are in tackling debt and saving.

You may have mortgage debt for a while but it’s NEVER good to have debt. I don't want to back talk your dad because outside of this he may be a wise guy but his response is based on the following.

1) You will always have a steady income. I think our current economic state proves that this is not true. Also, if you have any outstanding debt that is not paid then you forfeit the possessions (house, car, etc.) you owe money on. The only way to guarantee that repossession doesn't happen is by paying the debt off.

My parents failed to pay off their meager mortgage ($24,000 home) because they felt they needed a tax write off. Eventually, they expressed a desire to have my brothers new suburban home. My brother offered it up and they bit but the old house was still not paid off. My brother moved into the old house but lost his job. He missed a few mortgage payments and the house was still in my parent’s name. If my parents had paid off the home when they had the money then there credit would not have been dinged.

2) Auto debt is good. AUTO DEBT IS NEVER GOOD. Automobiles are the absolute worse drain on your income. I am from Michigan and auto sales have helped put food on my table but the thought of a car note costing $500 makes me sick. If you add the cost of gas, maintenance, registration (Mine was $107 this year), and insurance then you will want to projectile vomit. My car is paid off and the thing still costs me $300+ a month to maintain; all this money just to get from point A to B. Furthermore, my wife and I only own one vehicle and her job is less than 10 miles from the house. I work from home and only travel to the office two-three days a week. I can't imagine what those who have two cars along with driving a long distance to work pay.

A side point: Consumer debt is the worse from a behavioral standpoint. I felt horrible even putting $1,000 on my credit card even though I KNOW that I will pay it off and have to pay no interest. Why? I don't want to get into the HABIT of buying now and paying later. Delayed gratification always makes your purchases and economic progress feel better. Also, delayed gratification is the key between living debt free as opposed to having debt. Unfortunately, once the habit of instant gratification is established then debt snowballs.

A huge post to conclude that debt is bad. You don't want to owe anyone. Planning, patience, and delayed gratification will help you to live debt free. Add long term investing into the mix and I believe you have a formula for getting rich slowly.

Oh...yeah, I should clarify, I DO NOT think that "some debt" is a "good thing."

Even if it is inevitable in a lot of ways, I will always view it as a negative. In fact I view it as endentured servitude!

IMHO, most debt (with the exception of a mortgage or student loans) is just a way to live a lifestyle that you can't afford. Don't have the money to pay for that vacation without a credit card? Then you can't afford that vacation. Don't have the cash in your account to go out to eat or drink this weekend? Then you can't afford to go. Same thing for a new gadget or even a car. You don't need to have a $20,000 car when a $3k or $4k car will perform the same function for you. Living with debt vs. debt-free is a mind set. Keep in mind that even 50 years ago people saved up and paid cash for almost everything. Financing and consumer debt are very recent developments. Our society existed for a very long time before debt became a dominant feature in most people's lives.

Just for background, I'm 24 and don't make a ton of money, but I save 50% of my take home pay because I've discovered that I can live quite comfortably on about $1500 per month, here in Seattle (not the cheapest area) and therefore have a debt-free lifestyle. In the end it's about priorities. If you really want to have a nice car or a lavish wedding then you have to sacrifice in other areas to get there. Just putting it off to pay for in the future won't solve the problem because in the future you'll have other things you want to do, but you're still stuck paying for the things you'd done in the past.

Debt-free is certainly achievable for most people, but not if you're constantly trying to keep up with the Joneses. Remember that the Joneses are probably sitting on a pile of debt too. And just because your parents SEEM financially stable doesn't mean that they actually are.

I just wanted to add that I am 27, a full-time PhD student and pay my tuition in full.

Also, I have no debt with the exception of a medical bill and the $1,000 recently charged (Will be paid off, no interest in a week). My medical bill will be paid off at the middle of next year and I am not charged interest.

Another point about debt not being a good thing; I had all of my medical tests in October/November of last year. I am still paying in June for a service I am no longer receiving. I am paying but getting nothing in return!

You are not getting anything in return for car and consumer debt (after the purchase). You do get a return on your house (equity) but that is not always a given. Ask anyone whose house value has plummeted whether they like knowing their house is worse less than the amount owed on it.

Great questions, princess. Your feelings about living a debt-free lifestyle are echoed by many people trying to decide if they want/can live below their means. Like the above posters have cogently stated, it all comes down to living a responsible life, both financially and personally. When I started the lifestyle a year and half ago, I was full of "wants" and desires for nice "things". Unfortunately, I could not afford most of the things I wanted. Now, after saving a good emergency fund and living on a good monthly cash budget for the last year and a half, I've come to truely realize the value of money. My 1999 Camry is now "good enough" for me to drive. My $50/month "blow money" seems to be accumulating each month instead of being carelessly spent because I don't purchase all the crap I use to. I now know those thing won't make happy...a lesson that has to be experienced first-hand. Don't get me wrong, I love having fun, but our last $3,500 ski trip was so much more fun, because we paid for it with OUR money, not a credit card. I have plenty of money in the bank, saving a ridiculous amount for retirement each month, and it's ALL because I have no car payments, no student loan payments, no credit card payments, no HELOC's, no NOTHING!! Like you, I am saving for a home and will put down a huge amount, so I can keep my payment well below my means. It bothers me to even take out a home loan, but it is worth it to me because it is an appreciating asset.

To answer your question, no, you don't have to make a ton of money to live a debt-free lifestyle. It is all about proportion. If you make very little money, you probably won't be able to afford a super-nice car or live in a 4,000 sqft. home. But, you will be able to live a HAPPY life of no debt and very little stress related to your finances....IF you stay within and preferably below your means. First, you have to find satisfaction in something besides money. Money will NEVER make you happy. If used right, and spent in proportion to what you earn, it can provide you with a very low-stress life. True, if you don't make a lot of money you may have to save longer for that nice emergency fund and you may only be able to afford $5,000 cars. It is either this or you find a way to make more money. Personally, I did a little of both.

Your dad's comment about only being able to live debt-free if "nothing goes wrong" is completely false. People who are debt-free are in the best shape when problems happen!! That is what the emergency fund is all about. I could go on and on. Hang in there. Get on a budget, save for the bad times, and learn that "stuff" is over-rated (and significantly over-priced in relation to the "happiness" it provides us). If you choose right, you will wake up one day in retirement, enjoying the golden years in style!!

Problem with consumer debt is that if you can't afford to pay for it now, why on earth do you really think you'll want to pay twice as much for it in the future.

It's exceedingly difficult to own a home without taking on any debt. In the UK I'd say it was almost impossible. The credible alternative is paying rent. Positives and negatives to both scenarios.

I wouldn't borrow money for a car. But then, I don't because I don't own one.

I have student loan debt, when I was at uni in the UK it would have been almost impossible not to have either (1) taken out student loans or (2) had large cash handouts from my parents. This may not be the same for some/most/all others.

It is more difficult to live without access to credit, than with access to credit, but this is marginal and there are plenty of discussions about how you can live without a credit card or a credit rating.

There is the distinct possibility that your dad doesn't want to think that you can live without debt because it makes him feel better about his own financial situation. That doesn't make it true, but you don't need to feel bad - after all, he's only human.

As I became a young adult I from watching others go into debt for houses and other things decided I did not want to pay for 20 or 30 years on a house so I bought my first land at 20 and over the coming months saved money and as I collected enough I poured a foundation and stopped and saved and slowly built a house [small brick on seven acres] over a three year period and in Nov 1965 my wife and I moved in to a paid for house with Central Heat [ a big step forward for a country boy] I was 23 at the time, now in Texas at that time there was little government interference in the building business . I build in the country so there were no building permits and I was allowed to do the work myself. People would ask me from time to time what my payment was and I could tell they often did not believe me when I told them I had no payment.Over the years not having a house payment allowed me to invest more aggressively. That was a different time and today it would be much harder to do what I did because of government regulations and codes that back then did not exist in this area.All this said to say yes you can live debt free but debt after you achieve a certain level of financial progress can be good if used to make money and further your net worth . But debt to just buy stuff in my opinion is not good . For example over the years if my wife needed a new washer I often would take on extra work and make the money to pay for it or whatever it was that was needed.
Sadly over the years the times such as the sixties that I described above when the practice of free enterprise was more open and less controlled and today when I see the price of houses that simply are not that impressive looking to me set at $400,000 or $500,000 that 25 years or so ago here in this area were selling for $35,000 to $45,000 I just shake my head because a great deal of that cost has been added by government controls.

I think that the mentality of debt is so ingrained in people that they don't think it is possible to live without it.

One of the people who works with my husband was shocked to hear that we had no car or credit card debt. He didn't understand how it was possible with what we make. I'm always amused by people like this. Debt is not a need. Sure, unforseen things happen, and might require debt (like if huge medical bills not covered by insurance happen, for example). But these aren't guarantees of life, they are hypothetical situations that you can plan for as best you're able and then move on and avoid the debt that is avoidable.

Many people have a sunk cost mentality. "Oh, well, everyone is in debt, and I'm already a little in debt, so it can't be that big a deal, right?"

Don't let your dad be a downer. It is fully possible to live free of debt. It just takes planning and some hard work. Be mindful, you'll be okay.

That's a really interesting story Bearcat fan - one that wouldn't have been possible here in the 60s, let alone today. But there are always creative ways to get around having a mortgage if you really, really don't want to have one. Houseboats start at £15k which is not an unreasonable amount of money to save up.

It is a neat story, but actually, where I grew up (in the country in the 1980s and 1990s) that happened with a few younger families I knew growing up (building as they went, doing what they could afford.) It was really cool to see it happen, too. In one instance, I think, perhaps, that the land had been given to them (a few acres on the family land), and they continued to live with parents/in-laws while building. In another instance, the family lived in a small mobile home while slowly building the house of their dreams (modest, not a McMansion that sometimes appears out in the country). It's not feasible for some people to live with in-laws, and I don't know that I'd want to live within hollering distance of them if I had the same opprtunity. Us country people say we like our privacy, but we are quite the busybodies!

Plonkee , I see you live in England and your society has been more controlled? For many years in Texas at least where I live it was more rural and land was cheaper . As the area grows and many more people move in ,it becomes more crowded and perhaps the need for more control is needed, I know here water for example is becoming more and more scarce and the price thereof is rising so there are controls coming there. And society is not as independent as my parents generation was, at least that is the way it seems to me.

Bluebell , the land I bought at the time was 7 acres on a dirt road about five miles out in the country and I gave $1700 dollars for the land, it had a well existing on it but the pump the gentleman had on it I had to pay for ,of course today seven acres in this area would cost you many thousand of dollars [$50 -60 thousand ? } so I know times have changed.

By the way the road now is paved and at the time there were only a house here and there and now they line the road .

Great story, Bearcat fan! I know that where I grew up, 7 acres would cost a lot less than $50-$60K, but I'm sure there parts of the county where it might still cost half that, at least.

And I'm sorry houses line the road. I hate to see that happen in the country!