Debt Freedom

by Ryan Yates

Debt freedom is hard to define because it is so subjective. Each person has their own definition of it. Debt freedom generally means that a family is living without any debt. This may mean that the family has no consumer debt (credit debt, car debt, student loans, etc.). This may also mean that a family has no consumer debt and no mortgage debt. Both are way great ways to live and each has their benefits depending on your overall financial plan.

What is Debt Freedom?

Googling the definition of debt freedom doesn’t yield many concrete results.

Here is one from eHow – Definition of Financial Freedom

Debt-free financial freedom means having no debt and being able to live on very little income relative to people who do have debt and live the same lifestyle.  This enables the debt-free person to save rapidly for retirement, enjoy a few more luxuries or reduce their workload.  Being debt-free includes no credit card, loan, or mortgage debt.  Some people may consider investment debt (mortgage on a rental property, for example) to be acceptable debt, while others do not.

Here’s another take – How Do You Define Financial Freedom?

Meaning precedes money; purpose precedes planning.  It’s contradictory to believe that a given life objective can be reached by financial means.  The blind pursuit of financial freedom is often closer to slavery than it is to liberation. It’s making life a tool for money, whereas money should be made a tool for life.

I believe that financial freedom, if it exists, lies at the point at which the utility of money begins to diminish, the point at which the basic sources of physical well-being – food, shelter and clothing – have been met.  At this point, financial freedom may be had by (and defined as) the capacity to eliminate the desire for more money.  Or expressed in on word, contentment.

Really, though, the only wrong definition of financial freedom is the one that isn’t yours.  Don’t allow any financial planner, family member, friend, blogger, or anyone else to influence your definition of financial freedom!

I believe debt freedom to be a way of life that does not put any extra or undue stress on my financial plans.  Simply put, I do not want payments that will take away from the things I want to do in life.  I will probably always work; I’m a worker down to my core.  The type of work I perform may change, but the fact that I love to accomplish things with my hands and brain will not fade away.  The issue I will focus on the most is to maximize my income to provide a life that I want and like (on my terms).  Being consumer debt free will make this much easier.  I will continue to have a mortgage but that’s just fine with me.  I would rather focus on enjoying more of life than obsessing over paying off my house.

How to Achieve Debt Freedom

There are 3 simple steps required to reach the point of debt/financial freedom (using my definition).

  1. Learn to budget Understanding how money flows in and out of a household is the key to getting control of your finances.
  2. Spend less than you earn If you continue to spend more money that you bring in, you will never be able to budget correctly or save for the thing you’d like in life.
  3. Sacrifice If you are in debt, you need to understand that you something has to give.  You cannot continue to spend and live like you currently are if you desire to become debt free.

Your turn — What is your definition of debt/financial freedom?  Are you even concerned about it, or is it just something other people desire?


Jeff @ Sustainable Life Blog February 8, 2011 at

Nice work Jeff. I think that for me, I’d like to be completely debt free (I’m fine with a mortgage, but I’d like to pay off all my debt like a week before I sign the papers). Of course, I’d only look at mortgages that are 15 years (or lower). Obviously, I’m very concerned about debt freedom, as it’s a way that I’d like to live the majority of my life – I’ve only been in debt for 5 years, which is a small portion of my life, but I’d like to keep it as low as possible.
I want to make my money a tool to buy what I want (or need) but dont want to spend more than I have!

Jeffrey Kosola February 8, 2011 at

@Jeff Your plan sounds good. Why the 15 year mortgage? Are you going to live in the house long term? Just curious to your reasons, might be better spent investing at your age.

Jackie February 8, 2011 at

My definition is pretty close to the one from Get Rich Slowly, but it also includes freedom from worry and stress about debt.

Jeffrey Kosola February 8, 2011 at

@Jackie, The worry and stress where my biggest reasons to getting out of debt. I couldn’t stand another sleepless night of worry.

Nunzio Bruno February 8, 2011 at

I think the diminishing returns on the utility of money as a function of well being is a really interesting definition. It resonated pretty nicely with me actually 🙂 Great post and some serious food for thought I definitely think that my definition of financial freedom needs a little bit of updating. I liked the last 3 points too Jeff. It’s simple to talk about but not always the easiest to implement! That’s why the web needs guys like us to keep pounding these kinds of messages into people!

Jeffrey Kosola February 8, 2011 at


I agree that we are the ones who continue to preach the debt free gospel, but someone’s got to do it. I’m glad to have you as a partner.

I never thought much about defining debt freedom, but it was interesting researching peoples ideas. I really like the philosophical aspects of the Get rich slowly version.

Jenna February 8, 2011 at

My definition of “debt freedom” is pretty simple: being free from debt. And not having that burden hanging over my head.

Jeffrey Kosola February 8, 2011 at

Thanks Jenna, simple and to the point.

Donna February 8, 2011 at

To me, being out of debt enables me to spend money on things I want or mean a lot to me. Examples: buying recycled products (usually a little more expensive), giving more to my charities or other causes as they present themselves or help my kids/grandkids. That is financial freedom to me, to have a greater freedom to choose how I spend. I have about 6 years left on my mortgage then that will be all the debt. I hope to give back to others what I was blessed with. :o) Great post.

Jeffrey Kosola February 8, 2011 at

@Donna, I like the personal touches in your definition. I think your view is wonderful, good luck paying off the house over the next six years, I’m sure you know that the time will fly by.

Yaxley May 4, 2011 at

Debt Freedom: Not owing money to anyone — giving money to people/corporations/stuff that I actually want to give it to. Not being forced into it. Not having to worry about having to pay off any unwanted items anymore & finally having the money I earned for me.

That’s my opinion anyways. I feel that if I didn’t have to pay mortgage and stuff like that I would be able to use it on things I want in life. Sometimes I want something for myself and I can’t get it because of these monetary obligations. *sigh* it’s a hassle.

Still, nice post. =)

Jeff May 12, 2013 at

I feel being free from debt is the only way to live.

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