How to Live Without Debt and Be in Charge of Your Finances

Debt Free before Luxury

Of all the smart habits and rich living ideas and opinions I have shared with you in nearly 300 blog articles, how is it that I have not yet talked about the single most important habit of all, the one that enables us to live life on our terms?

A debt-free life and being in charge of your finances, of course!

This habit has been the core of what has enabled me to always be on top of my finances, and to eliminate debt if any ever appears momentarily. It is what has empowered me to live well below my means, build a nest egg and quit my lucrative job in a tanking economy and lousy stock market to pursue my dream with nothing more than a conviction that I shall succeed on my own.

Maybe one reason I have not talked about it much is due to two assumptions: First, I believed that everyone must naturally keep a close eye on their own finances and second, I found that I may be overstepping my bounds, because after all, your personal finances are your business and you would not want someone else to know about them or heavens forbid, give you advice on them.

Plus, I hold very radical views when it comes to personal wealth and financial independence and I didn’t want to start an uproar.

Not anymore. I think it is high time for me to talk about the state of your finances here, especially if you are hiding behind the curtain of debt and uncertainty without savings or emergency funds. That is the most crucial habit to change in your life if you want to succeed and pursue your dreams on your own terms.

Do I sound preachy and bossy?
I sure hope not!
Just passionate, baby, but let me switch gears and tell you my story.

Immigration, Money, and The Pursuit of Financial Freedom

I am so stubborn.
I shall have what I wanna have, regardless of the odds in my life and in fact, sometimes, despite them and no one will convince me otherwise.
Really, no one.

Persistence can take you the furthest, I believe. The refusal to give up until you have it your way and while it can be a curse if misapplied – you cannot always have it your way in that marriage or that relationship but – you can have it your way when it comes to things that are ENTIRELY in your control and I believe finances fall in this category.

Financial independence has been a serious goal in my life since I was 16 years old. I have not had any qualms about it. I love money. I love luxury. I love wealth. I even love most wealthy people. It is important to be in complete peace with the concept before you make it your life’s mission (well, not the only mission but a mission).

I used to save and account for every dollar.I would go into spending streaks at times but then pull back and never once did I carry a balance on my credit card. If I didn’t have the money to buy something outright, with the exception of my first car and my homes, I would refuse to buy anything. It was really that simple.

Ownership with debt is no ownership at all.

My first job was at a grocery store and it paid $4.25 an hour. My last job, the one I willingly quit in a down economy, tanking stock market (especially for their lousy stock), was a nice lucrative 6-figure income with stock options and bonuses and perks, and I shudder to calculate my obscene “hourly rate”, since it took so few hours to do my simple work. The main motive that enabled me to walk away from it all, besides my stubborn drive and my conviction to do what is right for my future, was the clean state of my finances, a life long project that finally afforded me my freedom.

As an immigrant to the US, I have always been on edge about the state of my finances, always careful and conservative, even if I do spend on luxury. I am starting to believe this may be a gene that some of us immigrants are born with, and it sprouts into full growth as soon as we step at the gates of freedom (and come to embrace whatever is left of capitalism ;)), in my case, in the United States of America.

Now, even though I am a proud US citizen, have an American husband, and live my version of the American life, I am far more fiscally conservative than anyone else in my circle and have lived well below my means. These are the habits that build that financial freedom. This type of fiscally conservative and financially smart life may not sound exciting to you now but the liberating feeling and the freedoms you can afford yourself may just disagree!

A Few Words – or Radical Thoughts – About Money

A few thoughts about money and spending in a tiny nutshell. I love money and believe it can be the root of all goodness in the world. Imagine what can be made possible with money. So much!

People all over the world can put money to bad use but having money, even an obscene amount, does not make one evil – that theory has got to die one of these days because it is utter rubbish – one is evil to start with and money is just a tool, an enabler, just like guns, knives and weapons are but tools that can be put to good or very bad uses. Personal accountability makes all the difference between good and evil. Period.

So if you have hang-ups about having a rich, comfortable life, having a lot of money in your bank accounts, living without debt and pursuing what I like to call obscene wealth – your goals may vary – then I’m afraid this article and the fantastic program that Adam Baker has put together ain’t for you, and I still love you as a reader.

Disagreements rock but clarification was necessary here.
Moving on.

The most successful people in the world are not born rich. The most well-off people are not the children of the rich. They are the children of either immigrants from third or second world countries or people who messed up somewhere along the way but have made it a goal to not only dig themselves out and build a healthy financial empire but also have a mission to teach others to do the same.

So, are your finances in good order?
Honesty would be a good thing here and ignoring it doesn’t make it go away.

The answer must not waver depending on how the economy or the stock market is doing. You must have a robust plan that does not go into pieces when the stock market crashes or when the economy goes bust and companies lay off employees. Who cares if your friends are blowing away their discretionary income on Chicago bears tickets or Gucci purses and luxury boats. Being in debt will bring you a misery that will wipe out all those pleasures in a quick minute.

Think debt-free.
Think savings and emergency funds.
Think a small, manageable but freeing lifestyle.
Think liberating.
Think no clutter.
Think clean and lean.
Think in charge of your life.
Think positive thoughts, think possible, think accessible!

This is one smart habit you can’t afford (no pun intended!) to live without.

9 Ways to Stay On Top of Your Finances

Some of my thoughts as I have lived a clean debt-free life and don’t see debt on the horizon anywhere.

Here are Prolific Living’s 9 quick tips from Brock household to yours:

  1. Never, ever carry a credit card balance.
  2. Do not super-size your life to keep up with friends, celebrities or some image of a happy life in the distance.
  3. Think three times before buying it, if you can’t pay for it with cash, except for a house.
  4. Have a 6-month emergency fund. If you don’t have it, put a stop to all your extra expenses until you have this.
  5. Pay your bills before they are due, a few days in advance, and use a strict system to automate the process.
  6. Call your credit card company to ask a one-time forgiveness if you slip once and end up with fees.
  7. Talk to your partner, spouse, and family about finances openly. Find agreement in your vision and goals.
  8. Know your buying impulses and while it’s ok to feed them, control them more than they control you.
  9. Give others the gift of experience rather than gifts they will not use.

So Did I create an uproar?

 Your turn, my darling readers!
What do you think?
Are your finances in excellent shape?
Do you even know?
Are you now motivated to cultivate smart habits toward creating your financial freedom?

Share your thoughts in the comments and share this with someone who can benefit from it!

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  • John Sherry

    My finances are better than they have been for a good while Farnoosh through one simple decision – I will buy and have what I feel I need but only if my body agrees. I wanted a big holiday a few weeks back but my body tightened up and said ‘No way Jose’. But treating myself to coffee and lunch in coastal cafes where I now live my body seems calm and relaxed whatever the price I pay. I think we need to trust these deeper responses which, in fact, we can ask ourselves on any given subject. There is a whole body of evidence just waiting!

    • Farnoosh

      John, I have never ever heard that but it makes just perfect sense. How genius! I am in tune with my body in many ways but never during SPENDING. Thank you for sharing this! Thank you so much. I will let you know how my body feels next time I want more makeup or another pair of pants :)! Seriously, I will try it.

  • Mitch Mitchell

    I like them all, but that first one can cause some people problems with their credit score. Believe it or not, if you always pay your credit card bills in full every month you don’t build up a credit history & your score goes down; idiocy, but true. Also, for #3, add “car” to the list. :-)

    • Farnoosh

      Mitch, I am afraid I have to disagree. I have always paid my full balance, and I have put thousands upon thousands of dollars across several credit cards. My credit score was around 800 or close to it every time I checked my score. To be honest, I don’t think this hurts the consumer. We hear so many different ideas around what affects credit score or what doesn’t. I take them all with a grain of salt. Experience is the best lesson. Thanks so much for commenting though. Lovely to see you.

      • Mitch Mitchell

        I’m not saying not to do it Farnoosh, but it’s what every other financial person will tell you. Actually it’s easy to look it up to see just how often it’s recommended not to pay cards off; supposedly it’s something about having lots of credit but not using it and it being weirdly dangerous. Truthfully I think credit scores are a sham.

        • Farnoosh

          The credit card companies naturally WANT us to be in debt so we pay those insane fees. And I am afraid I still disagree strongly here. I have had financial advisers and accountants and none of them has given me this advice. I think it’s dangerous NOT to pay the credit card and I’m afraid I am standing by this one, Mitch :)! Those guys who advise otherwise are questionable to me.

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  • Alison

    I found my way back to your blog after a blog-reading hiatus : ) and I just had to comment on this post. It’s the only financial advice I believe. Financial security really comes down to behavior more than math. I personally always tried to live by the car-loan-and-mortgage-only debt rule, but that had slipped away for a while. We recently made a tough decision to get back to zero by taking money out of investments to get rid of the CC balance. In the big picture of life and our income, it wasn’t a lot of money, but the mental shift was HUGE. Taking control of your money & not playing with the CC companies and banks can lead to positive changes in your career, personal relationships, etc. Completely worth the sacrifice of not having something right now!

    • Farnoosh

      Hi dear Alison, welcome back and what a great comment!! Behavior IS CRUCIAL – yes yes yes, thank you for bringing it up. I think of it as both behavior and attitude and you have it nailed down. Congratulations a million times – that’s not too many, trust me, you deserve it – on getting rid of your debt and building so much more wealth and space in your life and your mind. Thanks for sharing and please do share this article….. All the best and come back again!

  • Jimmy

    Hello Witty Farnoosh,

    I must come clean, my family and I aren’t in the best financial shape. We have dug ourselves into a financial mess and are trying our best to climb out of it. Many of the nine tips you advocated we have not achieved or started.

    But it is good to be able hear your take and to read your tale to financial freedom. The position you are in is enviable. Something that we hope to reach someday. Day by day we will chip at the it. Where we are at is temporary. I am already seeing better financial habits been formed and it will take something to get us somewhere.

    I do not want to blame any but myself. One thing is for certain, I will teach my kids to be financially wise before they enter high school Daddy is a poor example. Do not follow him but live a financially free life whereby they can contribute their best in everything possible.

    • Farnoosh

      Hello dear Jimmy,
      Thank you for sharing something so intimate – I believe that finances are a very personal topic and I am honored that you shared with me your situation and want to encourage you to NOT give up and slip back into the old habits because it is so hard to stay the course but so so rewarding in the end. And small progress makes things happen over time. That’s the best kind of success when it comes bit by bit and adds up over time.

      As for your kids, I am sure to them, Daddy is a hero no matter what and if you teach them what you mention here, they will be happier and more successful for it, no doubt, but don’t put yourself down, Jimmy. You are on the way out. I am cheering for you. Keep at it and thanks again for sharing your thoughts.

  • Negar

    I like that you introduced this topic to your blog! I hope you’re proud to hear – I have $0 debt, a good amount of savings (thanks to living at home!), and have never carried a credit card balance. Woo financial freedom! :)

    • Farnoosh

      Now that is impressive, so after you move out and go out on your own and with hubby, it’s a whole new life so keep up these amazing smart habits because they will serve you very well, Negar joon. I am of course very proud of you!

  • G Angela

    I enjoyed reading this post, and it’s very true – my goal is also to live a debt free life, except for the home loan which will take few more years, I make sure that I do not create major debts; I am still in the process of becoming totally debt free. While me and my husband thinks differently with regard to money and financial freedom. I allow my husband to handle finances the way he wants, but at the same time I expect him to give me the same freedom, now after 11 years of our marriage I have made a choice to take control of my finances and be responsible for my own financial health.

    I refuse to use a credit card, and I make a budget for the month, even before I spend, I have begun investing in long term saving plan, and also save for kid’s education, and every time I take my daughter out, I give her a budget so that her purchase is within the given budget. This way I am able to control on her spending without thinking.

    I liked your last statement “give the other the gift of experience, rather than gifts they will not use’ I would like to try this, thanks for sharing !

    • Farnoosh

      Hi dear Angela, home loans are not even considered a real loan. A mortgage, if that’s what you mean, is an accepted form of debt, and I think you can still be relatively debt-free and empowered financially if you do not have any other debts.
      I love your discipline around spending. It’s brilliant and simple and I bet super effective. And she – your daughter – is learning great lessons at a young age. Bravo! I love that you enjoyed this post so much and I wish you much financial freedom in your life.

  • American Debt Project

    Thank you so much for this quote “The most well-off people are not the children of the rich. They are the children of either immigrants from third or second world countries or people who messed up somewhere along the way but have made it a goal to not only dig themselves out and build a healthy financial empire but also have a mission to teach others to do the same.” Well, I have definitely made my mistakes and messed up, but since turning 28 last year, I have been focused on paying off my debt, creating savings and absolutely changing my mentality. I stopped using my credit cards and get all kinds of excited about paying down debt or contributing to savings. I even have $200 in gift cards I haven’t used because I can’t find anything I particularly want, and that’s never happened before. It took a good amount of mindfulness and admitting to myself that yes, I did try to keep up with the Joneses and it was not working out for me. Now I keep it simple and I feel happy and relaxed. I hope to be completely consumer debt free in less than 2 years and able to put 20% down on a home that I can afford!

    • Farnoosh

      $200 in gift cards that you haven’t used! You know, I can TOTALLY relate to that! I am so glad you have come to see the “light” for lack of a better word and as YOUNG as 28! My gosh, you are a baby! you have so much time to do everything you want to do, Love the new shifts you talk about, and am so glad to have you as a new reader. Come back anytime, and stay smart and frugal and HAPPY!

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  • Jamie Cunningham

    I, too, have been working feverishly over the last several years to pay down debt. My hubby and I are now down to my student loan ($28,000) only. We are getting ready to build a home and are saving for the downpayment but want to get back to the loan after that is done. Since my dad passed away, I have also been working with my mom to get her debt paid off as well. We all learned some bad spending habits growing up and are working hard to remedy that now that we have seen the light! I am also a believer that you cannot be totally ‘free’ until you are debt-free and I want to be able to choose to work at my job one day as well! Thanks for sharing.

    • Farnoosh

      Hi Jamie, feverishly: one of my favorite words! Good For You! And how exciting that you are now building your own home. I am very sorry about your Dad passing away. It’s alright you know regarding bad learning habits, we all have them, but look at you taking charge and control of your life with them. That is going to set you apart and make you extremely successful in the long term. Very impressive. Thanks for sharing!

  • Gary

    I am going to be blunt but here it is.

    I ****ing love this article and the style in which it’s written. It is exactly how I think and exactly how I explained credit card debt to a mate of mine in Australia yesterday who has a A$10,000 credit card balance. His interest rate is 20% meaning he pays A$2,000 just in interest each year. In order to pay the A$2,000 in interest he has to earn A$3,000, pay tax and THEN he has the A$2,000 to pay to Uncle Visa, Aunty MasterCard or American Distress. Absolute slavery and servitude is what you sign up for when carrying a credit card balance. Ugh!

    On credit scores:

    What do they matter if you’ve resolved never to borrow money? If you go to the bank with a 25% down payment for a house and a track record of sound fiscal discipline, they’re more than likely to try and flog you more debt – more mortgage.

    I don’t think I even know what my credit score is.

    Great article Farnoosh!


    • Farnoosh

      That good huh? :) Thank you Gary thank you so much for your honest and fabulous thoughts here on a topic not so openly discussed and so very necessary!
      And I had never thought of credit scores in the sense that you mentioned – I never will or shall borrow money but I think in the American culture, it’s sort of a measure of good standing in your finances, so it’s a number to be proud of I suppose. Another useless metric of measurement ;)!
      Thanks and come back anytime, Gary. You added so much light and wisdom to my post.

  • Gary

    No worries Farnoosh ;). Honestly, the level of cluelessness and foolishness out there when it comes to people looking after their dough is frightening.

    Talking of useless metrics, I got 3 A Levels at school in England, an A for Chemistry, and Bs for Physics and Biology. I worked so hard at school because my dear Mum, Dad & teachers convinced me it was my ticket to unlimited riches.

    How much have I earned as a result? £0.00, €0.00, $0.00 and ¥0.00.

    The most important metric in determining my income for the past ten years has been the number of cold calls I make each week. Imagine that!

    • Farnoosh

      Gary, too funny – are we comparing notes? My lovely parents, whom I adore and know were doing their best, had me go to electrical engineering school, BS and MS and a thesis, then I became a certification junkie and I have to say, I made a nice 6 figures at Cisco but it wasn’t the EE degrees, it was a combination of learning how to sell my skills and now, I think one of the most beautiful words in the English language, Gary, is SELLING, baby!!!! So You Go, Gary! :)

      • Gary

        G’day Farnoosh,

        OK, this article and discussion about debt has really unleashed the inner beast.

        Here’s another little gem on the subject:

        MasterCard is a debt free company!

        These sharks are very, very clever and have got the mathematics of debt and compound interest, as well as the marketing genius required to pedal debt to the masses 100% figured out.

        If being debt free is good enough for them then it’s absolutely good enough for me.

        If borrowing up to your eyeballs is such a clever idea then why isn’t one of the world’s most accomplished pedalers of consumer debt doing it? It beggars belief, seriously yet the vast majority have swallowed what they’re telling us. And……. (drum roll)…….. the vast majority of us aren’t rich!

        Can anyone say Cause & Effect?

        • Farnoosh

          Forget this, Gary, I just read your amazing incredible escape from East Germany in a BALLOON!!!! That’s incredible. We escaped Iran during the war with Iraq (if anyone remembers that era) and we went to Turkey for a 2 week vacation and stayed 3 years and then came to the US. Dying to write a book about it but will my parents help me? NO!! I’m on my own!! :) Lovely to meet you here, Gary, you are courageous and I am so happy you and your family made it to West Germany and to FREEDOM, something all human beings crave.

          • Gary

            Hi Farnoosh,

            I am afraid this story has nothing to do with me other than I translated it from German into English. The website belongs to a Mr. Günter Wetzel who in 1979 built a homemade hot-air balloon with a friend of his so that the two families could escape from East Germany to freedom. There were eight people in the balloon altogether (four adults and four children).

            Mr. Wetzel tells the story from his own perspective on his website. I heard about the story a couple of years ago, found his website and was so moved by it that I contacted him offering to translate it into English for free. I feel extraordinarily privileged and humbled that he took me up on the offer.

  • Ricardo

    I found this article to be extremely helpful and reassuring. I have been working consistently to reduce debt having paid off 60k in 3 yrs (but I still could be more aggressive). I have been increasing my savings through retirement vehicles and to date that is my only emergency savings. I’d sworn off of increasing debt years ago. Your article was very inspiring for me and I appreciate you overcoming your hesitancy to share.

    • Farnoosh

      Glad this was useful to you, Ricardo, and your efforts to reduce debt are REMARKABLE! Keep them up! And come back anytime :)!