Is It Practical to Live Life Without Debt?

One of the consequences of the recession is that more people are considering their finances, and, in many cases, deciding that it is a good idea to get out of debt. And to never use debt again. Living a life completely without might be a noble idea, but is it practical? In a lot of ways, living so that you never have debt at all is impractical.

Making Big Purchases

One of the biggest reasons that it is difficult to live a life that is completely debt free has to do with large purchases. There is a compelling argument as to why you can pay for a car entirely with cash, and no need to get a loan. After all, it is possible to find cars for less than $10,000. Even cards more expensive than that can be saved up for within a couple of years. Some purchases, though, are just too big.

Consider a home. How many people have $180,000 just sitting around? Saving up to buy a home with cash is likely to take decades, rather than mere years. Of course, if you prefer renting (and many people do), there is no need to go into debt for your housing. If you aren’t planning on buying a home, and you can save up for a car or use public transportation, living a debt free live really does become more practical.

Another issue is education. The cost of a college education continues to rise to almost prohibitive. Scholarships are scarce, and it can be difficult for students to hold down the kind of job that will pay their college costs. Of course, starting early and saving for college can help with this problem, creating a situation in which it is possible for college expenses to be covered by what has been saved up. The situation, though, can become complicated if you have more than one child. Saving up for three children may not as feasible as saving up for only one.

It is possible, with a great deal of planning, to live completely debt free. However, it may means giving some things up. For many people, it is worth the trade off to pay interest if it allows them to buy a home, get a car a little sooner, or send their kids to college.

What About Your Credit Score?

The other issue, of course, is that of building credit. Our society has become quite dependent on credit scoring and credit history. Without debt, it is very difficult to build up a credit history. But, if you plan to live completely debt free, never borrowing, does it matter if you can’t get a loan or a good rate on a loan? While it may not matter in terms of borrowing, it is important to realize that your credit history influences insurance rates, security deposits, whether or not a landlord will rent to you, and can even affect whether or not you get a job.

There are alternative measures of credit worthiness that include rent payments and utility payments, but you usually have to convince someone to report those positive actions, and the insurance company may not actually use the alternative scoring model when making its decision.

In the end, it’s all about what works best in your situation. Many find, though, that it is more practical to obtain debt they can handle, and then pay it off as quickly as possible, in order to allow them a little more flexibility in today’s financial world.

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Date published: February 14, 2011.

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Miranda is a journalistically trained freelance writer and professional blogger working from home. She is a contributor for, Personal Dividends and several other sites.


  1. says

    You make a lot of good points in this post. Buying a house and paying for college are what many people call “good debt”, and they indeed are two of the best investments you can make. With student loans, I feel that paying them off as soon as possible is always the best course of action, as they are both unsecured and unable to be eliminated (even in bankruptcy court), but with a house, obviously, best case scenario is outright ownership, but the tax advantages and building equity are good arguments for buying once you are in a financial position to do so.

  2. ROBIN says

    Yes it is practical to live without debt. Lets start with education – attending a junior college first for your general Ed and then transferring to a university will save a person 50% off attending a university from beginning (per ClarkHoward.Com). This is exactly what our son is doing. In May he’ll graduate with an AS degree first with no debt and money in savings for transferring. LL general Ed will be done at the junior college level. Paying off or reducing debt is a must today. This is what’s gotten our country is this mess in the first place.

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