Five Reasons Why it’s Great to be Debt Free


When Mrs. Groovy and I got married in 2002, we were up to our eyeballs in debt. She brought student loan debt to the marriage. I brought credit card debt, mortgage debt, and a car loan. And while technically not debt, we had a few other claims on our income that were just as onerous. Our 600-square-foot, one-bedroom, one-bath condo was five blocks from the beach. So in addition to regular homeowners insurance, we needed flood insurance. That was an extra $100 a month. The property taxes on our condo were roughly $300 a month. And, of course, our condo had a homeowners’ association. Monthly HOA fees were another $280. Long Island, to put it mildly, was not an easy place to live. But because Mrs. Groovy and I were financial nitwits, we were oblivious to the ruin we were inflicting upon ourselves. To us, debt and ridiculously high bills were normal, as natural to life on earth as the sun rising in the east.

Our work-to-pay-debt-and-bills mentality continued without challenge for the next year or so. But then in the last half of 2003, three fateful things occurred. First, Mrs. Groovy discovered Dave Ramsey. For the first time in our lives we heard someone suggest that debt wasn’t normal and that it should be removed from one’s life with extreme prejudice. Second, the bill for years of delayed maintenance on our building finally came due. The HOA had no choice but to slap the homeowners with a five-year capital improvement assessment. Our monthly HOA fee went from $280 to $467. And finally, third, we got our tax bill for the upcoming year. Our property taxes were jumping from $3,700 a year to $5,400 a year. It was the final straw. As soon as I saw that new tax bill, I turned to Mrs. Groovy and said, “Why the hell are we staying in New York?”

So by the end of 2003, inspired by a new-found disgust for debt and the New York rat race, Mrs. Groovy and I came up with our “three year plan.” In 2006, we would quit our jobs and move to North Carolina (why 2006 and why North Carolina are grist for another post). The time between the plan’s launch and the move to the Tar Heel state would be used to pay off the car loan and credit cards and build up as large a “transition fund” as we could manage. Finally, we would use the profit from our condo sale to wipe out Mrs. Groovy’s student loan debt and buy a house outright in North Carolina.

Mike Tyson famously quipped that “[e]veryone has a plan ‘till they get punched in the mouth.” Fortunately for Mrs. Groovy and me, we never suffered a mouth punch while executing our plan. In fact, we never even suffered a dirty look. Every move in our quest to radically transform our financial lives went incredibly well. By the end of May in 2006, we were residents of Charlotte, North Carolina, and we were completely debt free.

For nine plus years now we’ve been living without debt. And it’s been awesome. Debt-free living is much more preferable to debt-servitude living. Here are five reasons why.

Less Stress

The day we sold our New York condo was the last day we worried about money. Mrs. Groovy kept her New York job (and salary) and began telecommuting. I got a job paying two-thirds of my New York salary. So our income took a modest hit by relocating to Charlotte. But our expenses took a drastic hit. No mortgage. No car loan. No credit card debt. And utilities, HOA fees, and property taxes cost one-quarter to one-third of what they cost in New York.

When you remove money from your list of concerns, life becomes incredibly less stressful. Perhaps the best illustration of this is that soon after I began my new job, I became oblivious to the pay schedule. Only through co-worker comments would it dawn on me that a particular Friday was a payday. “Hey, it’s payday. Let’s do lunch.” “Thank God it’s payday. The rent is due next week.” Absent these clues, I wouldn’t have known. Payday had simply lost its significance. 

Less Arguing

Mrs. Groovy and I rarely argue. And when we do argue, it’s never about money. We’ll argue about where our next vacation will be, or how large our next home should be (I’m a minimalist and she’s a partial minimalist), or how much personal information we should divulge on this blog. In New York, on the other hand, we argued a lot. And nine times out of ten, those arguments were about money.

More Money for Security

In New York, our monthly expenses, less the cost of fun (movies, dining out, weekend getaways, etc.), totaled around $4,500. In North Carolina, it currently totals around $1,500. Establishing a six-month emergency fund in New York, while doable, would have been a daunting task. Getting it done down here was easy. In fact, we currently have a two-year emergency fund on hand. Overkill? Yes. But keep in mind, a two-year emergency fund in North Carolina is not much more than a six-month emergency fund in New York ($36,000 vs. $27,000). And, more importantly, a large emergency fund allows us to sleep at night.

More Money for Risk Taking

Mrs. Groovy and I consider ourselves Bogleheads. We invest almost exclusively in low-cost index funds and ETFs. But every once in a while we’ll take a chance on an individual stock. Case in point. In 2012, I happened upon an article about 3D printing in the MIT Technology Review. The technology blew me away. I was convinced it would revolutionize the manufacturing sector in the not too distant future. So I searched the internet for 3D printing companies and found a company called 3D Systems.

At the time, 3D Systems was trading for $16 a share. I showed Mrs. Groovy the MIT article and asked her if she wanted to invest in 3D Systems. She said yes. I then asked her how much she was willing to lose. She said $5,000.

Investing $5,000 in a company we knew nothing about was an incredibly foolish thing to do. And we knew it. But we were willing to take a chance because years of debt-free living allowed us to build a large emergency fund and a sizable portfolio. In other words, a solid emergency fund and portfolio gave us courage. Losing $5,000 would have been no big deal.

Luckily for us, things worked out amazingly well. 3D printing had a nice run as the “it” technology. In a little over a year, we sold 3D Systems for $80 a share.

The point, however, is not my stock-picking prowess. I have no such prowess. (3D printing is no longer the “it” technology and 3D Systems is currently trading around $10 a share.) The point is that our debt-free circumstances allowed us to gamble. Had we been living in New York, there’s no way we would have risked $5,000. Our debt would have been too large for us to ever build a courage-inducing emergency fund and portfolio. Losing $5,000, while not exactly devastating, would have hurt a lot.

More Money to Buy Freedom

Mrs. Groovy and I currently contribute $5,320 a month to our tax-advantaged retirement accounts (Roth IRAs, 401(k), 403(b), and HSA). Our employers contribute an additional $625 each month to our workplace accounts. All told, we spend $5,925 a month on freedom. That’s pretty freakin groovy. And there’s no way we would be able to buy that much freedom every month if we had a mortgage, a car loan, and credit card debt.

Final Thoughts

First, I’m not relaying the benefits of debt-free living to show how awesome Mrs. Groovy and I are. We’re not awesome. We both know that our good fortune is largely the result of luck. We sold our New York condo at the height of the real estate boom. We have no kids. Mrs. Groovy kept her New York job and salary. We lived in a high-cost state and were able to drastically lower our expenses through geoarbitrage. But we needed every bit of this good fortune given our advanced age. We were in our early forties when we woke up financially. Becoming debt-free with plenty of years to enjoy it would have been impossible without the financial gods smiling upon us. And this leads to my final thought.

Debt-free living is very, very, very groovy. Don’t rely on luck to get there. The financial gods probably won’t be as kind to you as they were to Mrs. Groovy and me. View debt as a curse now, especially if you’re young. Don’t wait. The earlier you declare war on debt-servitude, the less luck you’ll need to secure the blessings of a debt-free life.

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  1. These are great reasons and very well written to boot Mr. Groovy. I am always more pleasantly surprised at the thought process behind your blog even though I’ve read these “why it’s good to be debt free” topics a million times before. The biggest pro to a personal finance blog vs something you would read off Market Insider etc. are the personal stories you can reference and relate to. My husband and I fought about what to do with our money until we read up on Jack Bogle and became Bogleheads ourselves. Now it’s groovy good times in the bat cave!

    • Mr. Groovy

      Thanks, Lily. It’s always great hearing from a fellow Boglehead. And I totally agree with you about mainstream financial outlets. They’re boring and hackneyed. I use them now mainly as an appetizer. The real meat and potatoes of my financial diet are bloggers. Hope things remain groovy in the bat cave. Always a pleasure hearing from you. Cheers.

  2. This is such a great post! So relevant to me right now since I work in NYC. Housing prices are so crazy here though that it would take me years and years to even be able to afford a down payment on a tiny condo. I love how you break down the huge differences in costs between the two states. Have you noticed a difference in quality of living since moving? I love the NYC vibe, but I don’t know if it’s worth the constant financial stress I’m under.

    • Mr. Groovy

      Hey, Jane. Thanks for stopping by. Great question. I’ll start with a weasel answer. It depends. Mrs. G and I haven’t noticed a difference in the quality of life. But we moved down to Charlotte when we were in our mid-40s, and our tastes are much less adventurous than, say, the tastes of a twenty-something. In other words, we don’t need a lot to make us happy. A walk along a greenway, a minor-league baseball game, a stroll through a museum, a Blizzard at the Dairy Queen–these are the things that bring joy to our lives. We also like to take weekend getaways and explore different places. And Charlotte is perfectly located for this. Since we moved down here in 2006, we’ve visited Asheville, Atlanta, Athens, Charleston, Chattanooga, Columbia, Greenville, Knoxville, Nashville, Raleigh, and Wilmington. In short, Charlotte has everything NYC has, but on a much, much, much smaller scale. Again, it works for Mrs. G and me. But now we’re in our mid-50s. It probably wouldn’t work for someone who is in his or her 20s or 30s and really loves the NYC vibe. A young person, however, who is open to the pace and relative homogeneity of small- or mid-sized America, would more than likely love Charlotte. The people are super nice, the weather is great, and the cost-of-living is very reasonable. I hope this helps, Jane. If you have anymore questions, don’t hesitate to ask. Cheers.

  3. Great, fun article… and you’re so right on 2 points. Marriage is the ultimate team sport. You can either learn how to accomplish you’re dreams together, or learn how to hate each other. Drop the pride, and learn how to work and love with each other. Also, love your comment on luck. The secret is in how we manage luck. We all get lucky. It you buy jet skis with your lucky money, you probably won’t feel as blessed and lucky in five years than if you would have bought more time and more debt free living. Be blessed.

    • Mr. Groovy

      Whoa, Bill. Great comment. “Learn how to accomplish your dreams together or learn how to hate each other.” Truer words have never been spoken. When Mrs. G and I finally teamed up to improve our finances, not only did our finances improve, but our marriage improved as well. Love the way our mind works, Bill. Thanks for stopping by, my friend.

  4. Hey, Cindy. Thank you for your kind words. Mrs. Groovy and I know we were incredibly lucky. But we are proud of how we managed that luck. We could have gone on a spending spree and bought a McMansion and a BMW when we moved to Charlotte. But we decided to live modestly and save instead. And because of that, we’re two months away from retirement. And I’d rather own my time than McMansion any day. Congratulations on being debt-free except the mortgage. I look forward to reading how you slay that beast! Thanks for stopping by, Cindy. I really appreciate it.

  5. Very inspiring post! I recently moved out of Manhattan and live in the Midwest. I was able to keep my current job, but it’s TBD how long that will last. But I’m enjoying the geoarbitrage while it does!

    • Mr. Groovy

      Haven’t worried about money since Mrs. Groovy and I left New York. Ten years of stress-free living. Amazing. I had no idea how taxing debt is mentally until it was gone. So, yes, enjoy geoarbitrage for all its worth.

  6. I’m 25 and I’m loving the debt free life. The only debt I’ve had was for my first car. I hated having to make that payment every month, so I swore to avoid debt as much as possible. I bought my second car outright and got a full-ride scholarship for college to avoid student loan debt. Your debt free life is a big inspiration to me! Right now as a single lady I save roughly $2600 a month. Doesn’t seem like much compared to you two, but I have a bit more time for it to grow before I need it 🙂

    • Hey, Gwen. Thank you so much for your kind words. And, no, Mrs. Groovy and I aren’t the inspiration around here. You are. Twenty-five years old with a college degree and no debt! Saving $2,600 a month! Very, very impressive. Thanks for stopping by and sharing. I love hearing from millennials–especially millennials who are financial rock stars. Cheers.

    • Mr. Groovy

      Mrs. Groovy and I are very lucky. We lived the debt-up-to-your-eyeballs life and the debt-free life. And in our humble opinion, the debt-free life is much easier. We really don’t think about bills and paydays anymore. And I’m not saying that in a pound-my-chest way. It’s just one of the wonderful benefits of being debt free. I just wish we discovered this personal finance stuff earlier. We didn’t wake up financially until our early 40s. Thanks for stopping by, ZJ. And thank you for your kind words. I really appreciate it.

    • Mr. Groovy

      Hey, DM. You’re absolutely right. I wasn’t able to really save until I got married at age 40. Mrs. Groovy helped on the spending front, of course. Adding a new pair of eyes to the household is a great way to discover where money is leaking. But Mrs. Groovy’s biggest help was on the income front. With her added income, and sensible spending habits, my monthly savings went from nothing to over $2K in pretty short order.

      Living life and achieving a financial goal–be it getting out of debt, saving for a house, putting kids through college, or becoming financial independent–is the ultimate team sport. So in that sense, I’m a big proponent of marriage. Find the right teammate, and it’s amazing what you can accomplish. Thanks for stopping by DM. Cheers.

  7. Excellent article Groovy. Shows you were not scared to make changes to better your future. So many people are scared to death to make changes and stuck in their ways even though they know it’s not good for them. Congratulations on your progress!


    • Mr. Groovy

      Hey, Chad. Mrs. Groovy and I were incredibly lucky, so we don’t go around beating our chests and proclaiming how awesome we are. The one thing we are proud of, though, is our willingness to change. If something doesn’t work, we check our egos at the door and do what we have to do to fix things. Debt and New York state didn’t work for us. So we rectified that situation by moving to NC. Best move we ever made. And I love your observation about human nature. Why do we prefer familiar misery over unfamiliar ease? Thanks for your kind words and thanks for stopping by.

  8. It sounds like you and Mrs. Groovy woke up in time. And wow to go from $4500 to $1500. That’s really, really good! Great job. I’m actually really happy for you because when my parents retired they found out that some of their retiree neighbors relied entirely on social security and other government programs.

    Some people even gambled away their retirement pensions. That’s scary! Definitely motivates me to save for my own retirement.

    • Mr. Groovy

      Hey Jaime. Things are definitely cheaper in NC and not having a mortgage makes a huge difference. In retirement we’re planning on spending closer to $3K a month; maybe a little more during years we do overseas travel.