Before becoming a DN did you pay off all/most of your debt to make it easier to travel or just treat it like changing jobs?!?!?!?

Question

Accepted Answer

i suggest adopting a lifestyle without the need for debt nor credit. Minimalism helps a lot too.   Very few will ever taste the liberty I'm describing.

Answer

There are only two ways to make money:* With your time* With your moneya) You can work a certain number of hours a week for a certain income.b) You can invest a certain amount for a certain rate of return.There are ways to optimize A so that you earn a higher hourly income or earn passive income or earn business profits or get paid per project rather than getting paid per hour.But the ultimate goal should be optimizing for B so that you don’t have to work at all.The goal should be to accumulate enough savings that your money can earn enough money for you to live on so you no longer have to trade any of your time for money. That’s when you’re essentially able to retire.The goal should be to optimize getting from A -> B.The only ways to do that are to increase your earnings, decrease your cost of living, or increase your investment returns, and that last one is often difficult, even for finance professionals.Holding onto debt at high interest rates works against your goal of getting to point B. In fact, the interest you pay someone else for your debt is what helps them get to point B at your expense. The exception is if you’re able to borrow at low rates and invest at a higher rate of return, but that’s not the case for most credit card debt and possibly not even student loans. It often is the case, however, with mortgages.So to your original question: should you pay off your debt before traveling? Your goal should be to pay off your debt as soon as possible, because going from negative to positive net worth is what allows your money to start earning for you so you can have the rest of your life to do the things you care about most.So which will allow you to pay it off sooner? Staying put or moving somewhere else? Whichever results in the combination of highest income and lowest cost of living is optimal.Paying off over $20,000 of credit card debt changed my life. It saves me around $4,000 a year in interest. That reduced my cost of living and allowed me to increase my rate of saving. Once I paid it off, I started putting the same amount into savings. Now I earn interest on it rather than paying interest. Now I get to watch my net worth grow each month instead of staying even.As my balance gets higher, it starts earning more and more interest, which means the amount I save each month has less impact on its overall growth. That means in the next several years I can start reducing my rate of saving and increasing my standard of living, even before I have enough saved to fully retire. But by paying off my debt and starting to save first, I get to do so while pursuing that ultimate goal rather than at the expense of that goal.The easiest way to save for the long term is to invest your savings in a reputable, low fee, target retirement fund or an index fund that tracks to something like the S&P 500. An S&P 500 fund is higher risk but also potentially higher return. Personally, I have my long term savings invested in a Vanguard 2050 Target Retirement Fund.The sooner you can pay off debt, the sooner you can start saving, and the sooner you can start saving and investing, the sooner you can start living the life you really want.

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Starting your journey with zero debt should be a priority. We paid off everything, then still saved aggressively for three years. Everyone has a different situation, but for us, truly being free was the only choice.

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Self employed, masters in finance here. I grew up extremely poor, took on student loans, paid them down somewhat and went into being a digital nomad with about $15k in student loan debt. I’ve taken on a $10k business loan in the pandemic as well. No regrets at all. That level of debt is fully manageable, it all depends on whether you’re making the minimum payments and what the interest rate is, SBA and student loans “can” be low. Each person has a different situation. For me I’ve used credit cards since I was 15 and have always paid the balance each month, or with an interest free initial year I pay the balance before the year is up. Hence I’ve been getting perks my whole life and haven’t paid credit companies a dime. Be careful but don’t be afraid of debt. Anyone here saying 100% no/yes is not being helpful. It’s about nuances like interest rate, terms, minimum payments, what you’re buying and what your other options are. Borrowing $10k on high interest so you can buy the glossy versions of things? Maybe not. Borrowing $10k with low interest to get your basic no frills mobile home on the road a year earlier? Maybe yes. We all have the option to finance a better life. I recommend talking to someone who can give you one on one advice.

Answer

Sell as much of your stuff as possibleThe more you DN, the more you realize you don’t need the hoards of stuff you accumulated over the years

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