How financially free are you?

By debt free & wealth building

Growing up, I was taught the popular version of how money works – you work for it, you use it and you save some of it.

Along the way, student loans got added to the fold, then a credit card.

While my personal debt is not as big as a lot of other people out there, it is still a significant enough amount that’s been following me around for the past 8 years. In truth, most of my debt was in my student loan balance. Somehow, I managed to rack up a $48k debt for my degree.

I went to University without actually understanding the long term ramifications on my personal finances.

I went to University because I was expected to.

I went because I wasn’t told there was an alternative choice.

I borrowed a ton of money to make it happen.

But that’s all done now.

I went and got my degree, got a job (unrelated to my degree) and have been spending my entire professional life with an automatic 12% pay diversion into my student loans. Combined with taxes and putting money away for retirement, I get to *keep* about 50% of my final paycheck.

That paycheck then gets split again with a good portion of it going to daily life and living costs.

With only $11,324.67 of the original student loan left, I feel the impending freedom that I’m about to experience. over the past few weeks, I’ve been reflecting on my past money choices and came to the following conclusions:

Debt is fake wealth

When I was growing up, debt was considered normal. Everyone has a credit card of some sort. Everyone has a student loan. Everyone seems to have their financial lives together, living it up with nice looking things that costs a pretty penny.

But as I’ve discovered first hand, paying for things with money that’s not yours makes the things you own just a hollow reminder that someone else owns you.

Right now, the Government and my credit card company owns me.

When you get into debt to own something, you’re not wealthy. Rather, it just creates the perception of wealth for others when they peer into your life. But deep down, you know it’s not yours. Not yet. If you fail to make payments, it can all go away.

You’re not free if you owe money

There will always be ongoing bills of some sort. Electricity needs to be paid for. Having an internet connection is a necessity of modern life.

We get told that we can retire once we hit our 60s. However, what many people fail to talk about is that you still need to pay for the cost of living.

In theory, if you’ve paid off your house and have no other debt – you’re technically free.

Your daily costs can be reduced down to almost nothing if you set up your land and house to be cost-effective.

If you’re able to achieve this in your 40s, you can actually retire and do whatever you want.

Because that’s what retirement is, right? The ability to do whatever you want, whenever you want.

You don’t have to wait until your 67 (or whatever the retirement age is where you are) to stop working.

And the thing is, if you’ve got debt, you can’t stop working.

Going into surplus gives you real freedom

When you’re in debt, you’re in the negatives. Breaking even each month is much more stressful because when it comes to debt, that always find a way to get to your paycheck first.

When you’re in surplus, however, you get to decide where your money goes.

You have full power to prioritize your spending and savings. You can treat yourself without having to worry about paying it back. You can spend without it cutting into your daily costs.

Got an emergency?

It can break you if you’re in debt.

But when you’re in surplus, it becomes more like an inconvenience. Why? Because you’ve got the surplus to deal with it without worrying if you’re going to make your bills or not.

The mental freedom of having a surplus is always much better for your mental health and financial mobility.

Cut back and make more money

When you’re in debt, you always feel like you’re chasing your own tail – and perhaps you are when trying to make ends meet.

To get rid of your debt faster, there are two things you can do – spend less daily and make more money. You can do one or both.

I went with both.

Over the past few years, I’ve reduced a lot of my spending because my income shrank after the company I worked for shut down. Although there has always been the option of going back into a traditional 9 to 5, I decided to do something a little bit different and started freelancing instead.


Because I was close to reaching my wage ceiling and no amount of extra work would help me break through it.

As a result, I re-evaluated my spending and significantly reduced it. There’s now no more of the following for the past 12 months:

  • new clothes and shoes
  • eating and drinking out
  • buying too much food for the fridge
  • buying food that I don’t/never actually eat
  • subscriptions (except for 1)

Changes I made to reduce my spending:

  • bulk buy grains
  • re-evaluated my diet to include less meat
  • switching power companies to reduce my monthly bill
  • washed the dishes by hand rather than using the dishwasher
  • used the car only for essential trips

Doing these things helped reduce my expenses and allowed me to break even with my compulsory payments while figuring out a way to make more money through freelancing.

I choose the freelance life because it offered me the ability to make more and grow my income over time than a traditional day job (which wages have stagnated where I am). It also gives me the flexibility and time to pick up and create additional side hustles to generate more income streams.

While I’m technically making less than what I was before, I’m projecting that I’ll be making more than my old job in about 12 months time.

Final thoughts

Sometimes we feel paralyzed by the choices we made in the past.

Debt is the poor man’s wealth.

Real wealth is the rich man’s freedom.

Personally, I want the ability to be able to pay for things without having to worry if I have enough to cover everything.

And perhaps I will, very soon, when I finish clearing my $11k student loan debt and $1,332 credit card amount owing. Only after they’re gone can I finally start building real wealth and start my journey towards freedom and an early retirement.

Last modified: May 27, 2020

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