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4 Rules For Becoming Debt Free By Age 30

In 2009, only 20% of young adults ages 18-24 were unemployed or underemployed. Today, that number is hovering just above 50%. Combine this with 5 years of school to earn a 4 year degree at an average of $40,000 of debt per student, and you have a problem. 

Young adults are graduating later, starting their careers later, getting married later, having kids later, and saving later. This has put our youth's maturity at an all time low and their debt at an all time high.

One of the greatest decisions my wife and I ever made was to always remain debt free. We have worked very hard to achieve such a title at our age. We've also agreed to not even carry mortgage debt. Yes. That means if we buy a house, we pay cash for it.

While this level of financial freedom may sound crazy, it's really not. Even if you make $40,000 per year, you can have a similar life 5 years from now by following a few strict rules. I have provided them below:

1. Spend Less Than You Make. Period. Put even more simply. Act your wage. If you have to buy it on credit, you probably don't need it. Dave Ramsay famously said:

“We buy things we don't need with money we don't have to impress people we don't like.”

2. Don't Go To College Unless You Have To: Times are rapidly changing. A degree no longer equals a job, but debt. I'm not saying college is bad, but the system its built on is. As of 2014, 44% of college graduates are at jobs that don't even require a degree! I have written a more extensive post on this topic here.

3. Never Buy a New Car:  Buying a new car is like driving down the road throwing hundred dollar bills out the window. With new cars losing 70% of their value in only 4 years, it just doesn't make sense. Consequently, be the person who buys the idiot's new car four years later for 70% cheaper. That's why I drive a 2007 Toyota Camry Hybrid, and it feels good 🙂

4. Save 10% of Your Income No Matter What:  My wife and I have saved 10% or more of our income for over 5 years now. Some years it was only $300 per month while others it was $3,000. By saving we've had the freedom to travel, to give to others in need, and to live a life of pleasure. It's never to late to save, start today.

I found this infographic (below) that had some strong practical advice for getting out of debt and into a pressure free life. I recommend you take a read.

money

Are you in debt? Are you practicing any of these strategies now? How are they working? Let me know in the comments below.

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Comments

163 Responses

  1. I feel I don’t have financial role models in my life, and need to educate myself and develop the habits to get out of debt that I have been in since the age of 14 due to unattended medical bills. I need to learn and cultivate the practice of mindful spending, diligent bill paying, and finding income to attend to the financial needs I have.

  2. Love the strategies and absolutely agree with all of them. As a former Investment advisor and banker, I would see on a regular doctors, lawyers, high income earners having debt loads that were way beyond there capabilities of servicing this debt and having terrible credit. Most financial gurus teach the strategies to solve the symptons but never getting to the ‘root of the problem’. We all have the tools to manage our money, but never seem to follow through- but it goes deeper. We need to transform our relationship with money and change our limiting beliefs around money. I recently wrote a book called ‘Money Esteem’ with ideas to recognize our money story and understanding that any moment we can change our relationship and story with money. Thanks Dale.

  3. Good advice. Just one thing: please don’t ‘pay cash’ for a home. A wiser idea would be to have a mortgage and use the rest of the money in conservative and well balanced investments. You’ll make much higher interest than what you’ll pay to the bank on your house.

    1. I disagree. I have a very inexpensive mortgage (4%) but over the life of the loan ($120,000) I will pay the bank $86,243.41 in interest. That is almost double.

      1. But if you put this into an investment of some sort that gives out 5% APR you’re netting 1% and don’t have to wait until you’re 50 to buy a house with cash. You’re basically letting your investment pay your interest on the house, and with rental prices usually higher than a mortgage, you’ll save money all along.

    2. unless your investmen bottoms out and you have no money to pay your mortgage and you lose everything.

  4. Love, love, love this.

    I’ve managed to be debt-free my entire life – I “hacked” college with a mix of community college, testing out of courses, scholarships, and online classes. It took me three years to finish my BA!

    My husband came to the marriage with a little bit of debt. We’re knocking that out rapidly before buying a house. We’ll have a tiny downpayment but we’re not planning on buying a McMansion. Just something small, affordable, and perfect for starting a family.

    Living debt free might not feel glamorous at times. Budgets aren’t sexy. But there’s something really awesome about not owing people anything.

  5. Great list. I like item 1. It seems if you can’t spend less than your income – debt free living will be never be possible. Sadly, many can’t seem to do this consistently. Financial freedom has a lot to do with our attitudes around money and possessions. Changing our hearts attitude in this area will make step number 1 and other steps easier.

  6. Thanks for these tips – I’m one of those students who just graduated with about $70 grand in debt. Right now, I honestly don’t know if saving 10% of every paycheck is possible, but at least I’m working at a job in my desired field which requires a degree, and where I know I have a ton of growth potential. My hope is that within the next couple years, I’ll be able to start saving!

  7. You caught my attention in the first paragraph (after the bolded one). I’m a teenager and I’m planning on graduating at an early age and people keep underestimating me because of my age (which I find offensive, and I’m not easily offended). I’m probably at what would be considered a normal maturity level for kids back in the 20th century, but now I’d be considered some sort of Einstein of maturity here in 2014. It’s disgusting to see all of these kids growing up with zero responsibility, losing their virginity at age 12, gluing their minds to technology, and so on. Anyway, great article and thanks for the advice 🙂

  8. My husband and I are aggressively paying off our student loans and living well below our means. As soon as we get the student debt paid off, we are going to start investing and saving for a downpayment. I am interested in learning more about passive income and finite and infinite interest. Any suggestions on where to learn more?

    1. Portia – That’s great that you and your husband are taking an active role on the defense side of finances with living below your means and digging out of debt! But there is definitely some power in playing offense when it comes to finances…. And your spot on with your interest in passive income! Few people even know that passive income exists and even fewer know how to capitalize on it. 🙂 I have some information that you will be very interested in! Get in touch with me via my email: lnducham@hotmail.com
      I’ll be looking forward to connecting!

  9. Sorry but for all these articles I see there is always one thing in common I highly disagree with. This whole “don’t use your credit card” thing makes no sense. If you buy an item with cash, you get nothing in return. If you buy an item with your credit card, you get rewards based on whatever card you’re using. I have a visa that gives me points every time I use it, and the points are hooked up to my amazon account. I’ve had this visa since I was 18 so I’ve gotten hundreds of dollars worth of items for free with these points, just by using a credit card rather than cash. But the reason they are free is because I pay off my entire bill every month and on time. Now don’t get me wrong, I get the idea behind cash over credit. It forces you to actually see your money leave your hand and perhaps persuade you not to buy the item in the first place. But the thing is, I just don’t agree with that being your motivator behind not buying something. You should be able to look at the item, not whether you have the money for it, and decide whether or not you REALLY need it. Just because you have the money for it, doesn’t mean you should buy it. To me, cash over credit just seems like something for people with no self control. (sidenote, for as much as I love my credit cards, I do NOT condone using them at small little independent stores, those are what I save my cash for)

  10. I know it may be a small thing, but not having all your facts or sources correct can harm the credibility of your entire article. The quote you attributed to Dave Ramsey in the first point is actually a quote from the book Fight Club by Chuck Palahniuk. Dave Ramsey may have said it, but he did not give proper credit where it was due.

  11. I think a big problem with many people today (and in particular younger people) is that they have trouble with distinguishing the difference between wants and needs. For example, many people are stuck in the habits of smoking cigarettes, smoking pot, and/or drinking alcohol. These things can be fine in moderation, but the problem is that these things have the illusion of being needs if one becomes addicted. A person who might otherwise be very capable of paying all of their bills on time and saving money each month can end up unable to even make their monthly bill payments if they are enslaved to meeting these “needs” first. A pack of cigarettes a day adds up to $200-300 per month depending on where you live. Two beers a day with a splurge on the weekends can add up to $100-200 per month, or much more if someone is a regular clubber. Pot is probably the most expensive of these habits and although its “addictive” nature can be argued, in my experience those who use it rarely do so in strict moderation (of course exceptions do exist). The point is, I know multiple people who do all three of these things on a regular basis. For those people it is the $500+ per month going directly towards immediate gratification that provides no asset or reduction in debt which is making it so difficult for them to figure out budgeting and get on the road to financial freedom.

  12. Lol “even if you make $40,000 a year…”
    So I make much less than that, and I have a degree with student debt- does that just mean I’m screwed?

  13. This is all easier said that done when you are a single parent to 3 beautiful children living on a budget of $24,000 a year…..

      1. You dont know what circumstances put her in that situation. Maybe she was financially stable when she had them. Things change, and if you dont know the whole story before pointing fingers, then you are the moron.

      2. You shouldn’t judge others without knowing anything about them. We call that being an asshole.

    1. Exactly What I was thinking even if you follow these rules where are you getting that amount of cash???

  14. Great post Mr. Partridge, I do truly believe we can live debt free – ESPECIALLY MORTGAGE FREE. Currently my wife and I only owe on our house but we are attacking that aggressively. We have agreed that from now on we will only pay cash for future houses as well. I too have an online blog where I teach on very similar topics, so I’m glad I found your site! I’ll be checking in more.

  15. The only debt i have is my mortgage and i dont think that is bad debt to have. I am 29 years old and i have had my home for 5 years already. I was able to buy it with 40% down and no co-signer, had i continued renting for the past 5 years i would not have built the equity i currently have. So no, i dont agree with waiting to buy a house cash down.

    1. Most people don’t have 100% of the cash to buy a home. I think the way you did it is ideal for most financial situations. Having a hefty down payment is smart. Less to pay down, less interest and time, nix the PMI, etc. The fact that you have no other debt, means you can focus your debt-payoff efforts solely on the mortgage instead of a bunch of other crap. Bravo to you for being smart with your money.

  16. Don’t go to college?!? You’ve got to be kidding me! Education = higher paying jobs. If you want to be stuck at your low paying job, by all means, don’t go to college and get a degree.

    1. Education does NOT mean higher paying job. I have a degree and only LUCKILY got a job in a field CLOSE to my major. I am being paid AVERAGE at best.

      1. Agreed. Getting a degree is not a guarantee for anything but student loan debt (unless you pay cash for college). The training and experience and networking skills you use along with your degree is what will determine your success. It’s not the degree. You can get training (EXPERIENCE) and certifications that will go a much longer way than just a degree. A degree can be a training tool and networking tool, but don’t think it’s a golden ticket to success.

    2. I’m in a field only slightly related to my degree, doing work that I taught myself how to do for which none of the positions I’ve held required a degree. So I’d say college is entirely dependent on your field of interest and not a absolute necessity.

  17. Hi Tara,

    Dale is discussing, if you do not have the money to go to college do not go. This means you can still go to college but you will need to find the money through scholarships and other sources to be debt free once you graduate college. A good strategy to get an equivalent to a bachelors or master degree is to look at the college course materials and buy the books they will be studying during the year. These books and the ideas in them, will be what your study through the year. Therefore buying these books and gaining the knowledge without becoming in debt $50,000, could become a better option.:) I hope this helps and wish you success.

    Best Wishes,
    Ryan

  18. Literally paid off my first card today! Only two more to go. Definitely on a path to debt freedom. Can’t believe I haven’t gotten serious about it sooner.

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