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Top 10 Reasons to Become Debt-Free

debt why debt-free Feb 20, 2019

Debt is a lot like smoking or excessive drinking.  We all know both are bad for you, but often it can take years, sometimes even decades, before cigarettes and alcohol start to have a significant effect on your health.  Short term it doesn’t seem like it could be a terminal decision, but as the years tick by the cumulative effects start to surface.

In much the same way as smoking and drinking play into your long-term physical health, debt can also affect your long-term financial health.  Few credible people would argue excessive debt is helpful to your financial future.  However, this hasn’t stopped many from borrowing heavily in the early years of their educational and professional career leading to decades spent paying off debt, and for some even into retirement. 

We’ve never met anyone who set a goal to retire with debt, however, we do know many who are still working and not retired because they have debt! 

This post focuses on how to help you get started in taking proactive steps to get out of debt.  The first step for many who have found freedom from debt was figuring out why they wanted to be debt-free.  You are more likely to get out of and stay out of debt if you have a reason why you want to do it.  In this post we’ll provide 10 potential reasons you may want to consider as your "why" to start working toward debt freedom.

However, before we look at some possible why’s, let’s look at the current state of the debt problem facing many doctors.  Our goal is not to make you feel worse about your debt, but to help you see your situation is probably no worse than the average physician, and more importantly, by making some changes now you can have a dramatic positive affect on your future financial health!


You can wander into debt, but you can’t wander into wealth!

We can remember how easy it was to wander into debt.  It seemed like with just a few mouse clicks we found ourselves hundreds of thousands of dollars in debt.  Can you relate to us?  We’d guess that for you finding your way into debt didn’t take much effort either. 

The problem of debt only seems to be getting worse as education costs, one of the major contributors to excessive debt, continues to rise each year.  In a recent Medscape Resident Salary and Debt Report, more than 60% of residents reported having medical school debt in excess of $100,000.  Even more frightening is that over 20% reported debt exceeding $300,000!  Keep in mind this is just medical school debt and does not include undergraduate and consumer debt many have on top of their medical education debt.

You might argue, “well, that’s ‘normal’ because of the high cost of education, but over time they will make more money than if they did not go to school, and they will eventually pay their debt off.”  This may be true for some, but Medscape’s data also shows nearly half are still paying off student loan debt in their early forties, a decade or more after they have finished residency. 

The average physician salary has been around $250K over the last decade (source: Medscape Physician Compensation Report) so paying off the debt should not be a significant problem for most doctors.  Why are so many staying in debt after earning over $2M ($250K/year x 10 years working) in the decade after residency?  What’s holding you back?  Tell us here

The excessive debt many are carrying into their forties may also be keeping many from building wealth and becoming millionaires (having a net worth of >$1M).  Medscape reports over 70% of physicians from 35 – 49 years old have a net worth of less than $1M.  Why would someone who’s made over $2M since residency not be a millionaire?  One big reason is debt, and too much of it.


Start with why.

Simon Sinek wrote a best seller in 2011 titled, Start with Why: How great leaders inspire everyone to take action.  Although his book is focused on improving business performance, it offers a lot of insight into a path for getting out of debt.  Sinek argues average organizations start with what they do and / or produce unlike great organizations that focus on why they do it.  He goes on to suggest consumers are more likely to buy from organizations if they can find a personal connection with an organization’s why, and not just what they sell. 

You don’t need to look any further than television commercials trying to sell you a new vehicle to see how marketing to your why leads to a purchase.  What do you see when watching a car commercial?  People smiling, having fun, exploring exciting places.  There is very little to do with the vehicle talked about in most commercials, it’s all about the emotions the car companies want you to believe you will experience after you buy the car that they are marketing to you. 

“Do you want to feel happy, adventurous, more connected to your family and loved ones? If so, buy our car and you will get to experience these feelings.”

As physicians you can probably relate to how Sinek suggests his theory works.  Illustrated below is what he refers to as the Golden Circle.  At the center is why leading out to how and then what.  Next to the circle is a cross-section of the human brain.  At the center is the limbic system that regulates emotions, feelings, and behavior.  The outer portion of the brain is the neocortex responsible for rational and analytical thinking.

Sinek suggest much of our behavior is rooted in the limbic system.  We feel something that leads to doing something.  We would argue getting out of debt is the "what" many people want, but many never seem to find because they have not established their why – the mechanism that drives behaviors leading to permanently becoming free of debt.

If you simply focus on the what – getting out of debt, you may get there, but probably won’t stay there.  A better approach is starting with your why that will have far greater staying power in keeping you free from debt for the rest of your life.

There is little doubt we probably differ in our why’s for wanting to be free from debt.  Your why is likely not the same as our why, and most of us will not have just a single why, but possibly many whys.  However, some common reasons we’ve heard from those who have become debt-free include:

Why #10 – Building wealth.

Would you rather pay interest or earn it?  Getting out of debt for most is not just about stacking up money.  Money by itself has no value, but what you can do with money does.  The more money you have the more you can do.

Why #9 – Ability to take more risks.

Want to quit your job and do something else?  Maybe do some mission work or just take some time off to recharge?  This can be very difficult to do with monthly debt payments.

Why #8 – Health benefits.

Numerous studies have shown having less stress leads to better health, and more debt can often lead to more stress.  Maybe your why is to lower your stress and reduce the probability of burnout. 

Why #7 – Better prepared to face emergencies.

There are two kinds of people in this world.  Those who have experienced an emergency (i.e. health issue, job loss, car or home repairs) and those who will experience an emergency.  Having debt makes it more likely you will dig deeper into debt when an emergency comes.

Why #6 – Earlier retirement.

Being able to retire when you want to retire is another benefit of being debt-free.  In some ways money can buy you time.  More time to enjoy life with those you love instead of spending time at the office.  No one who is living in their final days says, “I wish I could have worked more.”

Why #5 – College savings for your children.

You already know how expensive college was and it’s not going to be any less expensive for your children.  Being debt-free and able to pay for your children’s education can help insure they won’t be repeating the mistakes you’ve made with getting into debt.

Why #4 – Be an example for your children to follow.

There’s a saying that “more is caught than taught”.  Your children look to you as an example to live their lives, and being able to show them it is possible to live without debt may increase their chances of doing the same.

Why #3 – Be able to give more.

Much research and study has shown giving is far more fulfilling than spending.  Take two twenty-dollar bills and spend one and give the other to someone in need.  Which one makes you feel better?  Think about how much more you could give if you had no debt and the feeling that could produce in your heart and those you give to for years to come.

Why #2 – Freedom to do what you want to do.

This is often a top reason to be debt-free.  Debt is a form of bondage to your lenders.  You may think you own many things in your possession, but stop making your monthly payments and you’ll quickly find out who truly owns them:-)  When you free yourself from debt you also free yourself from doing what you have to do to being able to do what you want to do.

Why #1 – Strengthening your marriage.

One of the top reasons for divorce in the U.S. is money problems and money fights.  Knowing the top cause for a problem should be a reason to take action to make sure it doesn’t happen to you.  When your finances are strong there is a good chance your marriage will also be strong, and what is more fulfilling than a strong happy marriage!


Determine your why.

There are many reasons to get out of debt.  We’ve suggested 10 possible reasons, but don’t try to force-fit one we’ve listed to be your reason.  Spend some time thinking about why you want to be free from debt.  If you’re married share your why’s with one another.

If you haven’t subscribed to our weekly email to notify you of a new blog post you can do so here.  Continue to read our weekly updates and we will show you the how for getting out of debt, but only you can determine your why.

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