Life After Debt: What’s Different?

Last week, I decided to start a series of posts about what life is like after debt. I introduced the topic by outlining some of the resources that helped me get out of debt in the first place. After chipping away at it for two years, I made my final debt repayment on May 21st. Obviously, I’m proud of what I did and am happy to be debt-free, but I’d be lying if I said that adjusting to life after debt has been easy. Now, it’s time to talk about what it’s like to have an extra $800+ a month in my budget.

Doesn’t it feel great to not have any debt!?

This is the #1 question that people ask me now and I don’t think anyone expects my answer. Being debt-free feels good, I guess. I’m obviously thankful that I don’t owe anyone money. And it’s pretty cool that when I get paid that money is all mine – but it still has places to go! For starters, on payday, the first thing I do (as per usual) is log into my online banking and pay any bills I have. Then I set aside half of my rent, half of my savings goals for the month, and then make a list of what I’m going to do over the next 15 days. More often than not, that includes a roundtrip to Victoria and back (which is $134) for some kind of event. This summer has been filled with weddings, birthdays, concerts, etc. And other than the few hundred dollars I finally put into my Emergency Fund last month, my paycheques have seemingly come and gone.

But what can you do now that you couldn’t do before?

This question is easy to answer: I can do whatever I want to – within reason, of course. But if I want to go for dinner, I go. If I want to buy myself a book, I buy it. If I want to travel, I do. However, in having a little more freedom and flexibility in my budget, it seems I’ve actually become more obsessed with my finances. In fact, I would guess I now check the balances of my accounts daily. Why? My good friend Carrie Smith said it best: “Even normal purchases scare me into wondering if I’ve overextended myself.” When I was in debt, I was lucky if I had $30 left in my chequing account before payday. Now, I usually have $300 in there at all times. But I’m not used to that! In my adult life, I’ve never (until now) finished a month without having a massive amount of debt hanging over me. Even though it’s gone, the memory of that weight still sits heavy on my mind and affects the way I handle my finances (which isn’t necessarily a bad thing).

Do you feel the need to be frugal still? Or do you have more urges to spend?

Those are interesting questions. I won’t lie – for the first few weeks, I wanted to spend money. And it’s easy to see why. After two years of restricting myself from doing and buying so many things, it was hard not to feel free. Capable, even. (Plus I was just sick of waiting for the things I still wanted.) With that being said, I learned so many things about budgeting, finding ways to save, etc. that I think a part of me will always be a little bit frugal. I’m not going to stop myself from buying something I want at the grocery store (yes, I used to do that) but I’ll probably never pay full price for something again. So, yes, sometimes I have the urges to spend. If it’s in my budget to do so, then I do. But I’ll always be conscious of prices. As Kathleen said, “Once you wake up and decide [to live life on a budget], you can never go back to a blissful life of ignorance.”

So, what’s next?

We’ll get to that on Thursday.

For those of you who once had debt and are now debt-free, what was the first month like for you? How would you answer some of these questions?

  • “Once you wake up and decide [to live life on a budget], you can never go back to a blissful life of ignorance.”

    This is so true and exactly how I would describe it.

    I feel that even if I were rich and taking home $5000 a week I would still have a budget and track my spending. It’s a way of life now!


  • This post is really interesting to me because I have no idea what I’m going to do after I become debt free. There are so many options, so many things I could do with my money, that I’m a little paralyzed by the choices. I’m also afraid I’m going to go on a consumption binge, just because I’ve been depriving myself for so long.

    • I’m sure you’ll want to spend a little – and you should let yourself, within reason. You work really hard but you need to have a little fun in life – if only to stay sane! Thursday’s post (inspired by you) explains my savings strategies moving forward and how I decided on them, so maybe that will help.

  • I’m not yet debt free – one more year to go! But I actually have thought about what I would do, because it helps keep me on the path. Since I had accumulated a fairly healthy emergency fund, I decided to stop contributing to it and divert the money to my debt payment. So that money will go back to building up my fund even more. Then I will get more serious about retirement saving. And that doesn’t leave a lot of that “extra” money leftover! But, I will be able to save for fun things like a vacation, so I’m looking forward to that. Overall, I don’t think life will change all that much – I’ll just be able to save so much more than I’m currently doing.

    • This summer was expensive for me, so I didn’t save much… but I am sooo looking forward to seeing my balances go up this fall. PS – It’s great that you have an emergency fund started! It must feel so good to have it there.

  • Now that my student loans are gone, I feel great! This is the first full month where I haven’t had them and I wouldn’t have it any other way :)

  • I agree. I remember it being kind of anti-climatic when I made my last debt payment. And now – over a year later – not much has changed with my finances. My budget is almost exactly the same as it was when I was paying off debt because I adjusted to that level of consumption for two years. Once I was out of debt, it was like, “Okay… Now what?” I did buy some clothes (finally!) after wearing my 50-pounds-heavier clothing for months, and when we moved into this house, I had the freedom to switch from saving to buying furniture and decor. Other than that, my life is a lot like it was during debt repayment – just without the money stress!

    • Yea, I don’t see any of the categories in my regular budget changing much – other than savings – because I’ve adjusted to a certain level of consumption. But it was nice to have the flexibility to have some fun and not have to worry about it this summer.

  • I’m not quite there yet but I do find in really interesting to see how you’ve been managing post-debt.

    I don’t think too much will change for me/us since we seem to be functioning with life without 25% of our combined net income every month so I think that cash flow will just go directly towards savings/retirement savings/emergency fun once the student loans are paid off.

    Great post Cait!

    • Those are my three upcoming savings goals as well! It’ll be nice to put all the extra cash into them, this fall.

  • Thanks for the link, Cait! I’m in a similar boat, and I have to say, there is MUCH more money for me now than there ever was before. I feel my raise. I feel extra money. Is it different? Not so much, but I recently bought a new couch and chair for my living room… and paid retail. I would NEVER have been able to do that before (unless on credit!).

  • “When I was in debt, I was lucky if I had $30 left in my chequing account before payday” – This is pretty much my life right now. I know it could be more but I’m not as strict with my imaginary budget. ;) This was such a lovely read Cait!

  • Although I only had a little student loan to pay off it felt so good once it was gone. But ever since then I’ve always been afraid of getting back into debt which is why I want to buy a place but I’m also afraid of being in debt for like 25 years!

    • I know! I’m not prepared to have a mortgage yet. I need a hefty emergency fund, before I’ll even think about taking on that amount of debt.

  • I suppose my post is a bit of a downer, but I’ll be honest.

    We’ve been debt free for more than 6 months now. But I still feel like we’re struggling uphill. We are working on finishing our emergency fund (almost done, should be finished in September) and THEN we have to start saving for a down payment on a house. So I feel like we’re still fairly restrictive in our spending. We allocate 5% of our joint income to “fun” and 5% of our individual paychecks to our own personal spending. But that’s about it.

    We really, really try to allocate a full 30% of our take home pay to savings now (it used to go toward our debt – to pay it off – our actual payments we owed were something like 10% of our take home pay).

    I feel like once we finally get into a house – hopefully next year – I still won’t feel like we have leftover money. Because we’ll have less disposable income because of taxes, and insurance, and maintenance. Houses are not cheap, and our mortgage will be more than our current rent. I am really trying to think conservatively on a house purchase, but it will still be expensive. And we’ll want to really kick our retirement into high gear. So pretty much all of our take home pay will be allocated somewhere. Nowhere fun!

    Frankly, I feel like our extra money will never be ours to spend. It will always have to go somewhere. Savings, retirement…IF either of us got a boost in income, that would really help. I feel like we make just enough to cover all of our bases. I do feel lucky that we aren’t living day-to-day, but at the same time I do feel like we are living paycheck-to-paycheck. Does that make sense?

    • Yep. I think I will always feel like I live paycheque-to-paycheque… because I do! I don’t have enough money in savings to survive more than a month of unemployment. I need to work in order to live. And your comment wasn’t a downer at all. I’ve enjoyed the freedom of having some flexibility in my budget this summer, but I have some serious savings goals for September onwards that will likely put an end to having $300 in my chequing account at all times. Saving now feels even more important than getting out of debt did. And it won’t be easy to accomplish what I want to. Thanks for your honesty and for always sharing your experiences with readers, A! xo

  • Like yourself, Cait, we’ve all been in debt (or are still in debt to some degree). That said, however, none of us are really free from some debt. It might be short term debt, long term debt, intentional debt, discretionary debt, or even frivolous debt – but debt nonetheless. In your case, you finally got out of long term debt. However, should you in the future decide for example to buy a house and take on a mortgage then you will then again have some long term debt. This time though it will be intentional debt, not frivolous debt – see the difference? And that is fine, in itself. We all have goals and projects and future plans and much of it incurs some form of short and/or long term debt. How we manage it efficiently is the key. When going to university, getting married, buying a house, having kids, I too incurred various short / long term debt over the years. All managed carefully and non-emotionally and eventually all paid off in full. And yet, even today, with home renovation projectss currently in progress, buying a new car, etc etc, I still incur debt stretching over time but it is planned debt and a comfortable repayment schedule is in place. So no worries. Don’t ever fear debt, just ensure that you have control over it rather than it have control over you.

    • I think I’ll be able to get to that point one day (where I won’t fear debt) but it’ll take a while for me to forget how awful it felt to be maxed out – that’s what sticks with me.

  • Thanks for being so honest about what it feels like to be debt free. I honestly don’t know what that feels like yet, but I can definitely see where you are coming from. I agree with what you say about paying your bills as soon as you get paid. I think that this is really important because it helps me realize that I don’t have as much money as I may think when my first paycheck comes in.

    • Yep! Paying my bills and setting aside money for rent have always been the first two things I’ve done on payday. That’s why, even though I maxed myself out, I never missed any payments and have good credit (I’m very thankful for that).

  • The first month out of debt…the money just kept flowing through my fingers. I had put so many things off in the process of paying debt off that once the debt was actually gone I had to play catch up on things that most people wouldn’t think twice about – like getting a haircut. Even now I still feel to an extent like I’m playing catch up, but that’s probably because my house still isn’t finished. I probably won’t feel like I’m done playing catch up with my money until it’s actually done, because I put it off for years while I paid off my debt. Partial flooring and missing baseboards are a physical reminder of my past money issues. It’s not fun.

    Does it feel great to not have debt? Yes and No. I still have a mortgage, so technically I’m still in debt. It feels good to not be living paycheque to paycheque, and it feels good to have a little bit of money in savings, but I think I would have to leave the feeling of great for a time where I’ve achieve financial independence.

    What can I do now that I couldn’t do before? Say yes to myself every once in a while. Replace my worn out jeans with a new pair, buy a purse to replace the one that’s seen years of heavy abuse, or hop on a plane to meet some online friends in real life? I can do that now. I can’t do it all on one paycheque, but spread out a little I can do it. I can also designate money to retirement, savings and investing (all 3 separate, not lumped together), whereas before everything I had was thrown at debt. I can build my personal nest egg rather than just continually paying other people back.

    The urge to spend is always there. Being frugal allows me to spend on the areas that are meaningful to me. By packing my lunch, I can afford to buy organic produce. By cutting back on my wardrobe purchases, I can spend a little more on one or two fantastic pieces that garner me tons of compliments. By buying and paying off a used car, I’m able to save for vacations rather than pay a monthly payment for a quickly depreciating new car. As long as the urge to spend exists, the need to be frugal will also exist.

  • When I was almost done paying off my debts, I began to research where I could invest the money I used to earmark for debt payment. So when I was down to my last Php20,000 ($500 or so), I opened an account with a mutual fund company and deposited the same amount every month to take advantage of cost averaging. The transition was pretty seamless and now the challenge is to grow my money, which is pretty exciting stuff.

  • I can’t WAIT to be able to ask myself this same question! The thing for us is that we have this “kids in college” thing looming large in just a few short years. Obviously this isn’t something we’re required to do (chip in for our kids’ college education) but we really want to. I graduated from college debt free and it was awesome to start my adult life debt free (even though i quickly chucked that out the window) – and I’d love to be able to give that same gift to my kids.

    • It doesn’t need to be said, but you’re a great dad, Travis. My parents are trying to do the same for my siblings, as well.

  • What a great read! I struggled the exact same way when I got out of debt back in March. Once I was out of debt the BF and I started to look at houses and we eventually purchased one soon after. While I do feel I have a bit more money to spend I also find I check my bank account every day to ensure I have not over extended myself. They say some amount of stress in your life is a positive thing so I’m going to try and think positively and that tiny bit of stress I feel about not going back into debt will hopefully keep me accountable for my spending :)

  • Yep it’s true! I’ve developed a money complex since being debt-free. Not having debt payments does something to you — both financially and emotionally. It’s nice to have the freedom, but sometimes too much freedom is a bad thing. I’m glad you’re working through this — take it one day at a time! :)

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