Why debt free?

Someone recently asked me why I wanted to be so badly to be debt free if my debt was low cost and I could invest any extra money and make way more than I was saving right now in investments.

This is a simple answer.

Risk.

All debt I have right now is risk. I may be able to make all the payments on it without any problems... just as long as everything keeps going just fine. As long as I don't lose my job, or don't have a prolonged illness during which I can't work, or ... life happens.

Every debt I  have  is a liability IF something in life isn't just hunky dory perfect.  Now, I am very much an optimist, but I am a realistic optimist. I know that at some point in my life, I am mostly likely going to face a situation where I could possibly face a lack of income.

When that time comes, I don't want the RISK that having a car payment, college loan payments, 3 credit card payments, and a HELOC that needs to be paid on top of life's necessities, such as food, clothing and shelter.  So, but getting rid of payments quickly, I insulate myself from immediate devastation when income drops... and keep myself from being enslaved to my loans.   I've suffered from collection calls before. I've been terrified to answer my phone when my parents were visiting because I knew what the calls would be about.  And terrified that the message let on the answering machine would give it away.  And let me tell you, I NEVER want to go back there.

The other place RISK is a big factor is investments. Right now, the stock market, and therefore mutual funds, are doing extremely well,  But if someone flies a plane into the Seattle Space Needle tomorrow, my guess is the day after the stock market is going to tank... and there goes my money, and I have still have a lot of payments AND the very next day I could walk in and find I don't have a job.  WAY way to much risk for me.

Now, I believe in wise investments, and I think mutual funds are a great place for long term investing. However, not for me to invest borrowed money.  And the way I look at it, if I am not paying my car off to invest, I essentially borrowed the money on the car so I could go invest.  It just doesn't make sense to me.

I currently hold 3 actual debts.  The first is a few thousand dollars at 0% interest for college tuition.  Quite frankly, I have the money sitting in the bank and could pay that one off tomorrow, but figured I'd take advantage of the 0% interest as I earn my tuition reimbursement back, because I like looking at that money sitting in the bank. But if I lose my job tomorrow, the first thing I am doing is paying that debt off.   I also have a used car loan at 1.9% interest, and I refinanced my house for 15 years at 3% interest a couple of years ago.  I think my annual return last year on my "investments" (my retirement account ) was about 12%.  I am still paying off my debt first BEFORE I maximize my retirement savings.

Is your goal to be debt free?  Why or why not?

The picture?  That is my little Miss Molly, found quite free 13 years ago under the hood of my car. 

"The rich rule over the poor, and the borrower is slave to the lender." Proverbs 22:7 NIV 

Buy ahead alert:  Next week some menu items will call for organic lettuce mix, which is on sale for $2.50 a container at Aldi's through Saturday.   Of course, you don't need to use organic, and several places have it on sale for $1.99 for non-organic this week.  Also pick up a can (or two) of tuna fish... we will be having salad nicoise.