7 Things That Can Happen When You Live Debt-Free

Your health and future will thank you after you’ve paid off the last of your debt.

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Updated May 13, 2024
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Those who have struggled to get out of debt know all too well the plethora of negative side effects that come with it. It’s always in the back of your mind, rearing its ugly head each and every time you have to spend money.

There’s no doubt that debt weighs you down, and it can sometimes be downright debilitating. Both psychological and physical health can be affected by debt, according to a research article by Elina Turunen of the Social Insurance Institution of Finland and Professor Heikki Hiilamo of the University of Helsinki. 

“The ratio of credit card debt to total family income was significantly associated with worse physical health and worse self-reported health,” they wrote, adding that “credit card debt had a stronger effect than income on health.”

It makes sense. Credit helps pay current bills at the cost of future consumption. If you’re spending money you don’t yet have, this poses a risk to your long-term financial situation.

If this feels all too familiar, you’re not alone. According to the Federal Reserve's most recent survey (2019) of U.S. family finances, 77% of U.S. families carry debt of some type. In the first quarter of 2022 alone, the total household debt increased by $266 billion to $15.84 trillion.

It may seem like the cards are stacked against you, but there’s a vast amount of resources to help and motivate you on your journey to living debt-free.

7 major benefits of living debt-free

It’s quite the feeling living life without debt, but it doesn’t come easy; at least, not as easy as it is to fall into debt in the first place.

You’ll likely have to make some cuts in your spending, but life without debt could be worth it. Here are some perks to living life debt-free.

1. Less stress — and maybe better health

It doesn’t feel good to owe someone money, and research shows it can affect your day-to-day emotional and physical health.

“Stress from debt is related to health conditions such as ulcers, heart attacks, and migraine headaches,” according to a research paper by Professors Lucia F. Dunn and Ida A. Mirzaie from The Ohio State University. They continue by stating that further studies link “credit card debt in particular to negative health outcomes.”

Without that debt hanging over your head, you can hopefully side-step these symptoms.

2. It’s easier to save for other goals

Once you no longer have to pay creditors, you can focus your efforts on saving for other goals that enrich your life.

Maybe you’ve been dreaming of a trip to Greece or need to make some repairs to your house. Or maybe you’re renting and want to save for a house altogether! You can reach these goals easier and quicker without the added burden of debt holding you down.

You can also build an emergency fund if you haven’t already, which could keep you from having to resort to credit cards in the event of an unexpected expense.

3. You can invest more in your future

Since your money is no longer going towards your debts, you can use that cash to invest in your future retirement — or maybe even save enough to retire early.

Whichever investment vehicle you choose, investing your money puts you in the position for potential returns. By not investing, you’re simply missing out on the opportunity to increase your financial worth.

4. You could work less

If you took on extra hours at work or even got a second job to pay off your debt, now’s the time to consider walking away from it. Once you reach your goal, all that overtime may no longer be a primary concern.

However, you might also decide to hold onto that second job to keep bringing in extra money. It’s entirely up to you. But the extra work may be more bearable since you won’t feel like you’re forced to do it — you call the shots now.

5. You have more options

Your expenses probably aren’t as demanding now that you’ve freed up extra money that once went towards debt. That means you have more things you can do with your time and money.

Maybe now you can afford to take a pay cut to pursue a passion of yours. Or perhaps you’re ready to go back to school and further your education. Whatever you choose to do with your newfound freedom, create a plan that allows you to pursue these things while you continue living debt-free.

6. What you have is yours to keep

No one can repossess your car, and the bank can’t foreclose on your house. You can rest easy knowing your property is now truly yours. It can be comforting to know your things belong to no one other than you.

7. You might be more inclined to avoid debt in the future

Now that you know what it feels like to be on both sides — in debt and debt-free — you may be more motivated to retain the new habits you developed and avoid falling back into debt in the future.

There’s a community of people living without debt with stories that are always inspiring, but if you need something truly motivating, simply remember how you felt living under the weight of debt.

Whether you’re already working toward a debt-free life or are just starting to learn how to pay off debt, living debt-free is not only much more enjoyable — it can also open doors to opportunities you may have only dreamed of before now.

Cut your ties to the habits of the past, and work toward building yourself a financial future that is rewarding — and, most importantly, under your control.

National Debt Relief Benefits

  • No upfront fees1
  • One-on-one evaluation with a debt counseling expert
  • For people with $30,000 in unsecured debts and up

Author Details

Matt Miczulski

Matt Miczulski is a personal finance writer specializing in financial news, budget travel, banking, and debt. His interest in personal finance took off after eliminating $30,000 in debt in just over a year, and his goal is to help others learn how to get ahead with better money management strategies. A lover of history, Matt hopes to use his passion for storytelling to shine a new light on how people think about money. His work has also been featured on MoneyDoneRight and Recruiter.com.