I Decided to Live Without Debt

In the image above you'll see a pile of old credit cards I had accumulated during years of buying what I wanted (or thought I needed) and worrying about the consequences later. During that time—in addition to the credit card spending—I bought vehicles with nothing-down financing, and I bought a home I absolutely could not afford. I was out of control.

Embarrassingly, through my formal education I knew a fair amount of money theory—but I had to learn the hard way that, in personal finance, my behavior was what mattered most. And my behavior had been foolish. I had created a deep hole of debt that caused worry, shame, and often a feeling of hopelessness. I knew I had too much potential to live like that, so I decided I was going to climb out of that hole and never go back.

As I tend to do with things I care about, I became obsessed with reading every tip, trick, and hack I could find from any-and-every source on personal finance. Eventually I realized there are no hacks, and most theories are completely worthless. Instead, I had to have a total behavioral shift in the way I interacted with money. I had to figure out what I valued most...and I knew it wasn't all the stuff I had purchased.

I got married right around the time I decided to get out of debt. Mrs. Budke and I developed Governing Financial Principles for our household, including, we will never use debt for any reason. And I mean never. And I mean any reason. We have faithfully lived that out.

We worked together to pay off the debt I had incurred, and since June of 2010 we have had no car loans, no student loans, and no credit card balances. Nothing. We don't even have a credit card, because we don't need one.

Some people may be thinking...

"Everyone needs a credit card for emergencies." No, we have sufficient savings in the bank to cover that.

"You're always going to have a car payment if you want a reliable car." No, we have paid cash for our last five vehicles, and I assure you Mrs. Budke isn't getting stranded on the side of the road.

"It's important to have some debt to build your credit score." No thanks. A great credit score is primarily useful to...obtain more debt. Since we don't ever borrow money, we don't need to play the credit score game.

You see, when we stopped using debt, we very quickly started to have money. Money that covers emergencies, vehicle purchases, home improvements, vacations, paying off the mortgage early, and whatever else Mrs. Budke and I decide on. Rather than obligatory debt payments, we can now use our income for anything we want.

At first, it's not easy to make the shift away from debt. For a while you won't have all the stuff you wish you had. And friends may start to wonder if you're doing okay. It's a grind.

I promise you, though, if you play it all the way through, there is no better feeling. And eventually you'll be able to have whatever you want once again, but this time it will be purchased without debt. You will truly own everything...because you'll owe nothing.

Today, I don't remember why I kept all those expired credit cards. Knowing myself, I probably wanted a reminder of where I had been...to ensure I would never go back. But I'll never forget how I felt then compared to how I feel now, and I don't need any physical reminder.

The cards did, however, turn out to be a great prop for the personal finance workshops I've done over the years, wherein my message to anyone wanting to do better has been—and still is—you can do it.

-FB