What a Year of Being Debt-Free Has Taught Me

May 21, 2014


One year ago today, I made my final debt repayment. I had just gotten back from a weekend in Tofino and was in Victoria, when I checked my online banking and realized how little I still owed: $495 to be exact. Knowing my next paycheque would wipe it out, I announced “10 days ’til $0!” on Facebook. While family and friends liked my status update, I started to wonder if I should just pull $500 out of savings to make the final payment. I imagined how good it would feel to see “$0”, and to have the weight that had held me back for years finally be lifted. With no hesitation, I put my shoes on, got in the car, drove to the bank and made the final payment – and I’ve been debt-free ever since.

I’ll never forget the grin that was glued to my face for the rest of that day. Seriously, you would’ve thought I’d won the lottery. In a way, I did – but the prize was simply a fresh start. I was at “debt zero” and the only direction my net worth could go was up. Unfortunately, a number of circumstances have made this past year one of my most expensive yet, and the fact that I’m debt-free has simply filled me with gratitude rather than joy. While I know I’m on the right track with my finances, I’d be lying if I said staying out of debt has been easy. In fact, it’s been a bigger challenge than I ever could’ve imagined. But that’s just one of the lessons I’ve learned since making my final payment. Here’s what a year of being debt-free has taught me:

Saving Money is a Skill You Must Practice 

You would think that after two years of budgeting for huge debt repayments, I would’ve allocated those same amounts to savings and just watched my balances grow. Well, it hasn’t worked out like that. Something I’ve recently realized is that saving money is just not as much fun as paying down debt. (Yes, there was a certain high that came from knocking the total amount due down with huge payments.) Beyond the fact that the motivation to save isn’t as great as the motivation to pay down debt, saving is simply a skill I have yet to master. For starters, I’ve made it a lower priority than some other life events, when it should always be at the top of my list. But I also need to put “pay yourself first” into practice every payday, which I haven’t been.

Saving Your Savings is Even More Important

Looking back, I’m actually not proud of the fact that I took money out of savings to make that last payment. Sure, I replenished the account 10 days later, but that type of behaviour – e.g. being the type of person who always takes money out of savings – is something I’ve struggled with for as long as I can remember. Truthfully, I still do. There have been at least a handful of times where I’ve taken money out of savings to pay for one thing or another. It’s never a lot – $25 here, $50 there – but it’s enough to take a small dent out of my tiny savings account, which only pushes back my goals even further. Proper budgeting helps you avoid the temptation or need to pull from savings. Although, as I’ve learned, life can still get in the way…

Life Happens – and it’s Expensive

The past 12 months have been a serious test of my budgeting skills. For starters, I had to move twice, which wiped out everything I had saved in my Emergency Fund, so I had to start back at $0 in October. And in July, just days after I got back from my celebratory “I’m debt-free!” trip to San Francisco, I was driving in my car when I was hit by another driver. (Another thing I’ve learned: Even if you’re not at fault, car accidents are not cheap.) I’ve been pretty hush hush about how the accident has affected my budgets, but here it is in simplest terms: I have to pay for all my treatments upfront, then submit receipts so I can be reimbursed. Do you know how quickly that adds up? Fast. Apparently life happens when you’re trying to learn how to save.

It Would Be So Easy to Go Back into Debt

I’ve mentioned a few times before that I still find myself fighting the urge to swipe, from time-to-time. For example, I’ve been in need of a new bed for a long time, but I still haven’t made saving for one a priority. One day, I walked into a store and tested some out, so I could figure out how much I’d potentially need to save, and I nearly let the sales guy talk me into buying one at half price. Did I have the cash? Nope. But I ran the numbers to see how many months it would take me to pay off if I swiped for it. (The answer: 2.) I walked out with a fact sheet on the bed, instead, and still have yet to buy it. But this is just one example of how easy it is to get sucked into taking on debt we don’t need just to purchase something we want.

Being Debt-Free is a Gift

Even though it probably sounds like my first year of being debt-free hasn’t been as incredible as I would’ve hoped, I’m always conscious of the fact that I’d be so much worse off if I were still in debt. How much more stressful would moving so many times have been if I’d had payment due dates in the back of my mind? What if I’d been maxed out at the time of my car accident? How would I have paid for my treatments? Where would I be in my recovery right now, if I couldn’t afford to do everything my doctors told me to? I don’t even want to think about it. I may feel the urge to swipe sometimes, but the decision to get out and stay out of debt gives me more freedom than I could’ve asked for. Being debt-free is a gift… and I’m grateful for it every day.

What have you learned throughout and/or since completing your debt repayment journey?

  • Jordann May 21, 2014 at 4:15 am

    Great post Cait! I’ve definitely learned a few of the same things in the months since I’ve become debt free. For one, that gazelle intensity doesn’t work nearly as well with saving as it does with debt repayment. It’s more about the slow and steady. In a way though, it’s good, because it let’s me focus on something other than money for once.

    Another thing is that my life is so much less stressful now that I’m out of debt. I dropped my car of at the mechanic’s this morning because the engine light came on last night, and I’m truly not anxious about the cost, because I know I’ll have the money to pay for it! That feeling is priceless.

    • Cait Flanders May 22, 2014 at 4:33 pm

      What are you talking about? You’ve saved sooo much money since paying off your debt! :P

  • Sara Hamil @ They Call it Gumption May 21, 2014 at 4:38 am

    Wow, has it really been a year already?

    I often say that I feel inspired by you and your debt repayment journey and your life-after-debt wisdom will be no different. Even still carrying debt there’s a lot on your list that already rings true to me, especially the bits about needing to develop the skill to save, not falling back into the ease of swiping (which I’ve already fallen victim too…) and the frustrating fact that, yes, life happens.

    There’s a part of me that thinks that it’s probably never going to be easy – that these sorts of issues and temptations will always bet there – but it probably will get easier as time goes by. Just stay firm and keep looking forward; you’ve already built an excellent foundation for yourself!

    • Cait Flanders May 23, 2014 at 6:09 am

      I can say that it does get easier as time goes by… but the odd “pang” of wanting spend comes up, usually after a couple months of living on a super tight budget. That’s why it’s so important to find balance!

  • Trista May 21, 2014 at 5:26 am

    I wish I could say I was still consumer debt free. I made the last payment on my credit card on November 6th, 2013. But by sometime in February I was maxed out again on my small limit card. Right now I’m carrying about $850 worth of debt. I know it’s no where near the $10200 I had two years ago but it bothers me. Also, the fact that I have yet to really get my savings off the ground is troubling. It’s just proof that I still have a lack of discipline with my money.

    It was easy to pay off my closed credit cards as I didn’t have available credit to be tempted by. This last few months and the next few ones too I am prioritizing a trip to Ontario with my Mom. While I know it’s not the best idea while I still hold a balance on my credit card and I still have an outstanding tax bill. But it is something I have to do for her. I will clean up my small financial mess once we get back.

    If I hadn’t hurt my back in February I would not have had to give up my second job and the income I’ve lost would have covered my credit card balance no problem. I am still getting used to the loss of that income.

    Reading your posts inspires me to keep working at it. I know I will get better. Thanks Cait.

    • Cait Flanders May 23, 2014 at 6:11 am

      It still sounds like you’re conscious of your financial situation, Trista, which is a lot more than some other people can say! The fact that you know how much debt you have means you’ve probably run some numbers to figure out when you might be able to pay it off. Don’t beat yourself up. Just go after it :)

  • Travis @debtchronicles May 21, 2014 at 5:28 am

    It would be SO EASY to go back into debt…after paying off SO MUCH debt, charging a little would be OK and easy to pay off, right???? Oh, the temptations….I have to constantly remind myself the consequences of that mindset….

    • Cait Flanders May 23, 2014 at 6:12 am

      It’s a tough pattern to get ourselves out of, eh friend?

  • L May 21, 2014 at 5:33 am

    Wow one year sure does fly by doesn’t it? Congratulations again on being debt free, it truly is an amazing feeling :)

    I agree, saving is an art and so is budgeting. It is very easy to “borrow” money from your savings and pay it back the next week, I’ve done it but I try not to and then make adjustments to my budget or save up for the new shoes I want :) I think it will always be a struggle between saving and wanting..hopefully you find a nice balance that works for you, I know there are some weeks I struggle.

    Enjoy the nice weather that BC has been having!!!

    • Cait Flanders May 23, 2014 at 6:14 am

      Yea, I think I’ve just been doing a poor job of planning for big expenses… often pushing the entire amount into one month, versus spreading it out. Something to improve! Thanks, L :)

  • Alicia @ Financial Diffraction May 21, 2014 at 5:59 am

    This is something I am mighty concerned about myself – mind you I have about a year to figure it out before I get to the “hardcore saving” side of things instead of debt demolishing. I’ve been concerned that although I am a natural money accumulator (funny, I know!) it will be difficult for me to switch gears when that time comes.

    Since my only monthly savings right now are for planned spending and now retirement through work, I hope that I can just bump up the amounts roughly equivalent to my debt repayment (with a little relaxation back on the tightness) and just watch it go. I’d be naive if I thought it would really be that easy.

    • Cait Flanders May 23, 2014 at 6:19 am

      No, I think you can do it! So it’s not naive. I would’ve had a lot more money to put in the bank, had I not been in this accident. And then been in a wedding, lol. Anyway, so long as no major life events come up, I think you’ll be able to easily stick to the same budget and just put your debt repayment amounts into savings.

  • Rob May 21, 2014 at 6:00 am

    ” I’m actually not proud of the fact that I took money out of savings to make that last payment.”

    Now, ya see Cait, I disagree with this statement. The best advice that I read in another PF blog, and which I agree, was this:
    Savings is for two things: to pay off future debt and to invest.
    Otherwise, what purpose would savings achieve – just to throw money into an account so as to watch the bank balance grow?

    And which actually just to provide more money to the bank’s profits (as they in turn use your money for their investments). By all means stay out of debt, avoid like the plague in paying interest charges, and pay yourself first.

    Now, as to wants vs needs – I would think that, given your health issues (due to your past accident) that getting a new bed might well be considered a need (to help your body heal better while at rest), rather than just a passing want. So, rather than swiping a card to go buy it, instead save for 2 months (if that’s what it takes) and then go out and get that bed – make it your savings priority #1. See, savings has to have goals on what that savings will be used for.

    After we paid off our mortgage (years ago) and then other debts (which I never allowed to get too large), I set goals for our future savings – like eventual car replacement / repairs, house mtce, furniture, vacations, etc. In other words, establish a “savings budget” – where to allocate portions of your ongoing monthly savings.

    • Cait Flanders May 23, 2014 at 6:21 am

      Yea, maybe I’m being hard on myself. I mean the numbers all equal out – I know that. It’s just that the mental thought process of “it’s ok to take money out of savings” hasn’t really left me. It’s never for large sums, but it still happens.

      As for the bed, I would agree, but then that would mean ignoring all my other savings goals for the next 2 months. *That’s* why it’s not a good idea for me to “swipe” for one – because it would set me back. I’ll use this example in Monday’s post!

      • Rob May 23, 2014 at 6:58 am

        Yeah, I take your point about the bed but, to my way of thinking, “if” getting a new bed adds to any kind of improvement to your health and “if” you consider improving your heath to be one of your highest priority goals waiting to be achieved, then ignoring the other “lesser priority” savings goals for only 2 months may be quite acceptable in this case. However, if those “ifs” of mine don’t apply then of course your course of action is the better approach and you should proceed as you feel is best. It all boils down to what precisely are your savings priorities. If those are clear in your mind then obviously there is no doubt as to the direction to take. The point to remember of course is not to spread yourself too thin and have too many savings goals of equal priority.

  • Dayle May 21, 2014 at 6:31 am

    Good morning Cait, and Happy Wednesday! Sorry I haven’t had a chance to comment on your last few blogs… here & other voices… I’ve been a busy girl but I have been reading!

    Congrats again on a year debt free!

    I think the best learning/realization post-consumer debted life, is that when your pay cheque hits the bank, it’s ALL yours! I spent a good deal of time being ignorant of the fact that I’d get paid, dump a pile onto my credit cards/LOC, feel good about it, and then continue on spending in the same manner, being no farther ahead by the time the next pay cheque rolled around. Smartening up and getting the debt gone was best decision ever! Now when I get paid, I pay myself first, I contribute to my RRSP, and I pay extra on my mortgage, and all of these things are increasing my net worth so they’re ALL mine. It’s such a liberating feeling. And as Gail always says, when you have money, you have options.

    PS So glad you’re back to the blog!! :-)


    • Cait Flanders May 23, 2014 at 6:22 am

      “When you have money, you have options.” Ain’t that the truth!

  • Michelle May 21, 2014 at 7:44 am

    Congrats on being one year debt free! We did the same thing to pay off the last of our credit card debt this month, and we haven’t looked back since. Now we are in the midst of paying off our student loans, and it’s an entirely new journey.

    You are also so right about how easy it would be to get back in to debt. We’ve been so tempted to use our cards here and there.

    • Cait Flanders May 23, 2014 at 6:23 am

      It’s hard not to want to spend, spend, spend when you cut sooo far back, eh? Balance, balance, balance. (Sorry, I felt the need to repeat myself here, haha.)

  • FI Pilgrim May 21, 2014 at 7:59 am

    Those are valuable things to remember, and I think that it’s great that you’re able to look back and really remember what it took to get you that far.

    I’m on pace to pay off our mortgage later this year, after working on it for the last 7 years. It will be an awesome feeling to make it there, but we’re not there quite yet!

    • Cait Flanders May 23, 2014 at 6:24 am

      That’s incredible! What an accomplishment :)

  • Morgaine May 21, 2014 at 9:12 am

    Its definitely not as easy to save and stay out of debt as it would seem to be. I’ve been struggling big time and feel like I’m constantly treading water to make sure I’m breathing and not floating back down to debt. I’ve decided to ease up on my savings goals for now and live a bit, being in debt for so long and feeling like I couldn’t have the life I wanted is taking its toll now but at least I’m paying with cash not credit. And although your life has been expensive this year, and you’ve knocked down your savings a few times, you should be super proud that you didn’t fall back into the trap. Keep moving forward :)

    • Cait Flanders May 23, 2014 at 6:25 am

      Thanks, Morgaine! And same to you. (Why is it so difficult to take our own advice?)

  • Shoeaholicnomore May 21, 2014 at 9:28 am

    Great post, can’t wait to write one of my own someday. This is exactly what I needed to hear today, what if I’m in debt and something HUGE happens? I need to get these debts gone, but I am struggling right now. Things keep popping up with car and house repairs, plus it is hard to fight off the urge to eat out and splurge on new clothes and other things I don’t need. My old habits are ingrained and they take lots of willpower to fight off! One day at a time is something I have to remind myself of everyday.

    • Cait Flanders May 23, 2014 at 6:26 am

      Can I make a weird suggestion? Write a little note that says WHY you want to be debt-free and stick it in your wallet. Sounds weird, but it used to stop me from making a few unnecessary purchases.

  • Danielle May 21, 2014 at 10:04 am

    I’m just starting to breathe after paying off my student loan in March and my credit card in April. May is the first real month for me and it’s WEIRD. I’m trying to refill my TFSA as fast as possible and I’ve made some minimum goals but I’m not sure what direction my saving is going… yet.

    • Cait Flanders May 23, 2014 at 6:27 am

      Ahhh, yea it’s hard to save for something, if you don’t have a goal! Got any ideas of what your goals *might* be? ;)

  • Rebecca @ Stapler Confessions May 21, 2014 at 11:42 am

    Great work! I wonder if I’ll ever be debt free? What I’ve learned in this process is that I just can’t predict the future, and saving for all the little “what ifs” doesn’t feel nearly as freeing financially as paying off all the “for sure” debt that I’m carrying.

    • Cait Flanders May 23, 2014 at 6:29 am

      Nope, it sure doesn’t. But I will say that, even though it’s not a good idea to take money out of savings, I’m always grateful to have it there. My Emergency Fund isn’t even 50% funded yet, but I still sleep a lot better at night, knowing I have a little something there… just in case.

  • Shannon May 21, 2014 at 1:17 pm

    These are incredibly important tips – easy to forget that debt-free is a new journey and not an ending! That means the diligence it took to pay off debt must be applied to savings as well. Congratulations on reaching such an important anniversary :).

    • Cait Flanders May 23, 2014 at 6:29 am

      “The diligence it took to pay off debt must be applied to savings as well.” You said it. Thank you, friend!

  • Lisa E. @ Lisa vs. the Loans May 21, 2014 at 1:23 pm

    I remember reading that post. Can’t believe it’s been a year already! I can’t wait until I can write a similar one!

    • Cait Flanders May 23, 2014 at 6:30 am

      When’s your debt-free date, Lisa? :)

  • Elizabeth May 21, 2014 at 3:37 pm

    Congrats on the year of being debt free!

    I’m not sure if this will help anyone, but I find it motivates me to think of myself as being in debt when I’m not. I’m saving up to replace my vehicle and for a downpayment on a home. I’m making “payments” to my savings account using the same tactics I employed when I was getting out of debt.

    • Cait Flanders May 23, 2014 at 6:32 am

      I like that idea, Elizabeth! Well, maybe not the “feeling” like you’re in debt… I hated that. But making yourself see that you just have “payments” to make into your savings accounts sounds ok!

  • Kassandra May 21, 2014 at 4:00 pm

    I have been debt free since Dec 21, 2012. Since that time I’ve been able to accomplish several things that were not possible beforehand. Having a healthy E-fund, starting to seriously invest, being able to afford to relocate to another country, transition to self-employment and helping my DH to establish a new life for ourselves are all signs of my money working positively for me. I don’t ever want to be saddled with debt again so that motivates me to continue managing my money responsibly. Happy Debt-Free Anniversary :)

    • Cait Flanders May 23, 2014 at 6:33 am

      Thanks, Kassandra! And thanks for reminding me how much freedom a debt-free life can truly bring you.

  • Melanie@Dear Debt May 21, 2014 at 5:50 pm

    Congrats on being debt free for a year! That is awesome. I love your insights — I am trying to prepare myself for this once I am debt free in several years. I got my first credit card last year and I’ve already seen the temptation. I always pay it off but my spending has gone up. You need to be careful for sure! Somehow saving money doesn’t feel as sexy as paying off debt, but it is!

    • Cait Flanders May 23, 2014 at 6:34 am

      Haha, it sure doesn’t… but it definitely is! I keep saying to myself, “think of how amazing it’ll feel to see $10,000 in the bank!” I’d aimed for a $0 balance before – why not use that same tactic as motivation? :)

  • Kathy May 22, 2014 at 6:48 am

    When my son was in college we bought him a car which he kept even after graduation and getting a really good job. When he took over the loan payments …yes, we financed it ….he paid us, and we made the payment since the loan was in our name. He had 2-3 payments left and at one of our visits asked exactly how much we had left to go. After I told him, he presented us with a check for the full balance and declared “got that creditor off my back!” He was so proud and we were so proud of him. Plus, he was smart enough not to rush out and get a new car. He kept on driving that car for quite a few more years. I raised a smart kid!

    • Cait Flanders May 23, 2014 at 6:36 am

      Oh, I remember that feeling, Kathy – that your parents are your creditors. Mine loaned me a little bit for tuition once, and I absolutely hated the feeling of owing them money. I wiped that debt out in less than 3 months and never asked for a dime again. Good story!

  • David Cain May 22, 2014 at 7:27 am

    The greatest thing I learned about getting out of debt happened when I started to accumulate savings on top of my “zero mark.” Just having any kind of emergency fund made every single day easier and lowered my stress levels immediately, because I knew I could handle a problem if it came up. This was fascinating to me — that I was getting this tremendous daily value out of simply having the money. That value didn’t cost me anything. It’s a dividend. Debt gives you the opposite feeling. You’ve already spent the money, and it takes a bit from your well-being every day.

    • Dayle May 22, 2014 at 9:21 am

      I like this perspective and I agree! Every extra dollar you have in the bank makes you feel that tiny bit better and every extra dollar you tack onto you debt makes you feel that little bit worse.

    • Cait Flanders May 23, 2014 at 7:04 am

      I agree with Dayle – you have a great perspective, David. :)

  • Bridget May 31, 2014 at 9:22 am

    I’m late and even thought there’s already 59274197542 comments on this post I just want to add that I totally feel paying off debt was way easier than than saving. There was just way more of a sense of urgency and way more sense of satisfaction. Saving is totally boring.

    • Cait Flanders May 31, 2014 at 11:16 pm

      YEP! It’s boring because we’re just accumulating money we don’t plan on using anytime soon, and at a slower pace than we were paying down debt! I think I’ll get a little more excited about it, once my pension is added to my RRSP though. ;)

  • Aleksandra Sagan June 29, 2014 at 7:04 pm

    I’m about $2,500 away from paying off my +$25,000 student loans – you can read my story on my website! – and I’m terrified of how much harder it will be to save when it’s not for debt repayment.

    My boyfriend always tells me how great I am with money, but I feel like it’s so much easier when you’re paying something off. I can’t even imagine being in the clear and the kind of willpower that it will take to save then.

  • Megan Wise April 29, 2015 at 8:34 pm

    I can’t wait for this time for us! I was wondering about how we would fair with our budget after being debt free… I can imagine it’s hard to stick to it. But, we’re planning to save rigorously for a house, so maybe that will motivate us?

    • Cait Flanders April 29, 2015 at 10:20 pm

      Yep, you need a goal! I didn’t have a strict goal, when I became debt-free, and I let some serious lifestyle inflation creep in – not good. Now, my goal isn’t so much about what to save for… it’s just that I want to live on 50% of my income and save as much as possible. Since setting that one, it’s become almost a fun game again. (Not that paying off debt was fun… but making progress was motivating!) Anyway, I think your goal to save for a house will keep you motivated.