Just paid off $25K in debt! It feels amazing to finally be debt-free, but now I’m down to only $300 in my bank account. I know it’s a huge accomplishment, but I can’t help but feel a little broke right now. Anyone else go through this? How did you handle that post-debt but low-balance feeling?
Congrats! Think about it this way: you owed that money anyway, and you only really had $300 in your bank account as is. Now, any money you add to your account from here on out is yours to save, invest, and make good decisions with without debt looming overhead!
@Samuel3
I have the Rocket app, and they show “net cash,” which is cash in my bank account minus all my credit card balances. This number helps me when making any purchasing decisions.
@Samuel3
Until they go into debt again.
That’s because you are broke, but you’re no longer in the hole. When you get paid, you get to keep all of it! Every month you don’t have payments to make, your bank balance will grow exponentially.
You haven’t received your new pay raise! Next month, you will have less debt to pay on. That’s how I stayed motivated while paying off debt. You’re basically giving yourself a raise by removing debt.
Take the same payments you were making and put them into savings.
You were broke before; it just hadn’t been realized yet. Now you’re broke minus the 25-30% interest hitting you each month.
You are richer now than you were with debt. Your net worth is in the positives.
Taran said:
You are richer now than you were with debt. Your net worth is in the positives.
That’s not how net worth works. You have the same net worth as before.
Taran said:
You are richer now than you were with debt. Your net worth is in the positives.
That’s not how net worth works. You have the same net worth as before.
But he’s not losing hundreds of dollars per month in interest payments.
Taran said:
You are richer now than you were with debt. Your net worth is in the positives.
That’s not how net worth works. You have the same net worth as before.
Net worth is just assets minus liabilities, isn’t it? He had $25k worth of liabilities.
@Kyle
I think the logic is he had $25K (assets) to pay off the $25K (liabilities), so he’d be zero in both situations.
@Kyle
Correct, but liabilities are what you owe, regardless of what kind of debt. So if someone had $100k cash and $25k debt, their net worth is $75k. If they paid it off, they would be left with $75k cash, which is their net worth.
@Campbell
I see. I doubt he had $25,300 cash and paid it off in one lump sum. I assumed he paid it over time and accumulated enough to have $300 left. Up until today, he was at negative net worth. I could be wrong, though—I’m making the same assumptions.
@Kyle
Could be, I don’t know. Theoretically, every day you delay paying your debts, it increases. So it’s better to do it sooner rather than later. If you’re not accumulating assets faster than your debt increase, you’re going backward.
@Kyle
It was $17,588 in credit card debt across four cards, and the rest was my auto loan. I managed to save $19K during that time by being super disciplined and saving every penny I could. I also decided to cash out some money I had in crypto, which helped me wipe out the rest of the debt in one go.
@Caden
I stand corrected. Good job and congrats on being broke! Better than being in debt and broke!
@Caden
You were putting that money in savings instead of paying off the credit cards ASAP? The earlier you put the $ toward the debt, the less interest you would have paid.
@Kyle
Technically sure. But you don’t have the financial stress that comes with it, and you don’t have interest accruing debt.