This is a contributed post from Mark at Financial Pilgrimage. We found his site and fell in love with his Debt Free Interview Series. We are a family that retired young. If there is one thing I’ve noticed since, it is that there is an endless amount of “advice” on the internet about how to retire young, from people that haven’t.
Mark’s site is different. He is doing something I haven’t seen since reading The Millionaire Next Door as a teenager. Mark is compiling success stories. I asked him to share the common themes and differences he has noticed in his interviews.
The most beautiful thing is there is no reason to listen to any one person’s advice on how to gain financial independence. But you can digest what has worked for others and turn it into your own plan. The trick is to just learn bits and pieces from different people and then do your own thing.
The below contribution is completely from Mark. We hope you enjoy it as much as we do.
In 2019, we started an interview series highlighting the stories of young debt-free families. Since then, we’ve had the privilege of posting the stories of 25 families to our blog at Financial Pilgrimage.
These stories include people from all walks of life. Many were parents with children under the age of 10 years old.
Others were newly married couples with aspirations of starting a family someday. They share their successes, failures, and things they would have done differently.
In an age where markets have gone crazy over the past few years, I’ve found it refreshing to know that some still anchor their financial plan on becoming debt-free.
As you can imagine, each debt-free interview was unique in its own way. We interviewed people all across the world, as far as New Zealand. The stories provided insight into what it’s like to live a life free from the chains of debt.
Though the stories have been unique, several themes have emerged over the 25 interviews. This post will highlight some of the themes from our young debt-free families interview series on Financial Pilgrimage.
Themes From 25 Young Debt-Free Family Interviews
Debt Can Help Build the Life You Want
Debt isn’t necessarily a bad thing. It can be essential early on to build the lives that we want. It can be challenging to get a college degree, buy a home, or even purchase your first car without using debt.
Others have used debt to start investing in real estate or another business.
However, it’s also essential to know your limits. We all know people that have gone way too far with debt—buried in credit card debt, facing bankruptcy, or other dire situations. So it’s important not to go too far with using debt and overextend ourselves.
One of my sayings has been, “it’s okay to be in debt but not okay to stay in debt.” Once you get your adult life on the right path, I think it’s important to focus on paying down debt as fast as possible.
Otherwise, you may find yourself in a downward spiral that is difficult to reverse. Many interviewed families talked about the importance of growing income, reducing expenses, and using that gap to build a debt-free life.
The Importance of Budgeting
Almost all interviewees mentioned some form of budgeting or tracking expenses, especially at the beginning of their financial journey. Some families were adamant about having a zero-based budget every single month.
Others took a more casual approach, tracked expenses for a few months to set a baseline, and then used a “pay yourself first” model.
The smaller your gap between income and expenses, the more critical budgeting is for a family. As you grow that gap, you’ll have room for error in your budget and aren’t as rigid.
Plenty of budgeting tools these days can automate the process if you primarily use debit or credit cards.
The Dave Ramsey Effect
Dave Ramsey is a polarizing figure in the personal finance space. People either love him or hate him; there isn’t much in between. However, for our young debt-free families, it was clear that Dave Ramsey’s programs served as an entry point into the personal finance space.
As someone that has gone through Dave’s signature course, Financial Peace University, I can vouch that there is benefit from his approach. However, once you become more knowledgeable in the personal finance space, you’ll also start to notice some issues with his content.
My opinion is that Dave Ramsey does an excellent job getting people not interested in personal finance to begin paying attention. It’s hard to argue with his track record to help people get out of debt.
But, once you dig out of debt, it’s time to start looking to other experts to help grow your wealth.
Higher Income Earners with Various Backgrounds
There was a relatively even split of traditional corporate jobs and entrepreneurs with our young debt-free families. However, the one similarity between most families is they were typically higher-income earners.
We’re not talking families that made millions of dollars per year, but most had a family income in the low six-figures.
The reality is, to build wealth and have the money to pay down large sums of debt, you need to make a decent income. This is, of course, only one part of the puzzle. We all know families that make a higher income yet are still drowning in debt.
Yet, the combination of having a high income with the discipline to reduce expenses is what sets families on a path to financial freedom.
The criteria for our debt-free interview series is to be free from consumer debt minus the mortgage. We know that paying off a mortgage is a personal decision and one that may not make sense for all families, given the lower interest rates.
However, a significant number of families still decided to go all-in to pay off their mortgage.
The decision to pay off a mortgage can be controversial in the personal finance space. Some argue that paying off a two or three percent interest loan is crazy when the stock market typically has higher returns.
Our family decided to pay off our mortgage because doing so provided more immediate benefits.
Sure, that money may have compounded into much more down the line, but we are living a life free from any debt right now. Many others have chosen a similar path.
The Importance of Discipline and Being Different
Once you get the income and expenses side figured out, personal finance is a behavioral game. After you have the basics of personal finance down, the hardest part is sticking with a plan. In my opinion, this especially becomes more difficult when you have children.
There is constant pressure to make purchases to provide the best for your kids. We constantly ask if we are truly doing what’s best for our kids or trying to keep up with other parents.
Being different in the personal finance space doesn’t have to be drastic. It can simply mean driving cars for a little longer or living in a home that is well below your means.
Many of our interviewees focused on making smart money decisions with their largest purchases, not necessarily the small things such as the occasional $5 cup of coffee.
Our budget’s most significant line items are typically housing, transportation, food, and entertainment. If you can live within your means in those areas, you should be in good shape.
Many Families Had a Defined “Why”
Building on the last topic, one way to stay disciplined during a debt-free journey is to have an apparent reason for pursuing your goals. That “why” will be your anchor when temptation or pressure to keep up with other families shows up.
The personal finance space is all about intentionality. It’s not about depriving yourself of things that you want. It’s about knowing what makes you happy and then setting appropriate goals.
The “why” for many of our debt-free interviewees was related to either family or jobs. Many had financial goals that would allow them to spend more time with their children. For some, this meant quitting a high-stress job for something more flexible.
For others, this meant having one parent stay at home with their young children. Regardless, reading through the interviews, it’s clear that most families had a specific reason that drove their financial goals.
The Incredible Feeling of Being Debt-Free
Almost every one of our interviewees commented about the general feeling of being debt-free. Not owing any money to anyone else is powerful. Think about the people who work jobs they hate and can’t leave because they can’t take that risk with so much debt to pay.
Even families that still work corporate jobs can live with the freedom that likely wouldn’t cost them their home if they lost their job if they have low amounts of debt overall.
Debt freedom is the first step of many along the way to financial freedom. If a family has the discipline to pay off all their debt, they usually don’t stop there. It likely means they also have some emergency savings, investments, and passive income.
When treading water against large amounts of debt, finding the means to invest in other areas can be challenging. In the end, I believe that debt does have some level of control over us, even when people don’t necessarily realize it.
The more debt you’re able to shed, the more financial freedom you’ll have in your life.
Themes from 25 Debt-Free Families
Interviewing these 25 families has been one of the highlights of my blogging journey. The individuals we have interviewed went against the grain and found the means to rid their families of debt.
Not a single interviewee said they regretted paying down their debt, even low-interest debt such as a mortgage.
I appreciate being able to share these themes here on Cha Ching Queen. If anyone has questions about our young debt-free families’ interview series or would have interest in participating, please send me an email at firstname.lastname@example.org.
Greg is a Chartered Financial Analyst (CFA) with 22+ years experience in Financial Services. He has held numerous FINRA Securities licenses (series 7, 63, 65, and 66), and is an expert on Investment Products and Financial Planning. Greg has 22+ years experience as a real estate investor and degrees in Psychology and Philosophy.
Greg has been quoted/interviewed in Yahoo Money, Yahoo Finance, USA Today, Authority Magazine, Realtor.com, Business Insider, and others.
Greg is an avid runner, and the father to identical twin girls and their awesome brother. His love of budgeting and his kids led him to join The Great Resignation in 2021.
Disclaimer: Any Financial Tips on ChaChingQueen are general and informational. Speak with a professional about your specific situation.