How Do You Know if You're Financially Free

December 12, 2014

Connect Member

Personal finance expert & writer for ReadyForZero

Being on a mission to help people pay off debt (and battling my own debt struggle in the past) has caused one phrase to be uttered in my mind and my blog posts more often than anything else: financial freedom.

Financial freedom is the ultimate symbol of not having debt. It’s the light at the end of the tunnel. Since paying off debt doesn’t result in a tangible object (unlike making purchases), there’s a dire need to create the feeling that it will result in something other than a decrease in bills to pay. (If you want to stay motivated, that is.)

But the question is, what is financial freedom? And how will you know when you’re truly financially free?

The True Meaning of Financial Freedom Lies In You
First of all, it’s important to note that the definition of financial freedom will vary based on who you are. For me, it was never owing anyone money again. It was the idea that every dollar I earn will be dictated by me and me alone. I would decide where that dollar needs to be spent. I would decide how much I can save each month. I would feel empowered by financial decisions and not be beholden to some bank or credit card company.

But that’s not necessarily your true meaning of financial freedom. Perhaps it could mean having more money to build towards other goals. Perhaps it could mean taking on a different kind of debt that leads to a bigger dream, such as home ownership. Perhaps it means taking the risk to go after the career of your dreams. The list is endless. To understand your true meaning of financial freedom, just answer yourself this one question:

What would you do if you didn’t have debt?

Drawing a Line in the Sand
Finding your true meaning of financial freedom has an importance that’s hard to see when you’re in the middle of paying off debt: the need to draw a line in the sand.

The thing is, once you pay off debt, the result can feel anticlimactic. You’ve worked really hard for something but don’t have anything tangible to show for it. What’s worse, it’s really easy to think about all the other stuff you need to start doing, such as saving money. Before you know it, you can blow past your huge accomplishment and start stressing about the next goal.

Draw a line in the sand. Decide what true financial freedom means to you. If it’s debt freedom, then what will you do with that debt freedom? Look at the positive. Yes, you may feel as though you have to start from scratch to reach your new goal. But, you’re still finally reaching towards that new goal without being beholden by the beast of debt! Pretty awesome, if you ask me.

How To Know You’re Financially Free
So if you want to really understand if you’re financially free (or what it will take to get there), you need to start by asking yourself a few questions:

1. What would you do if you didn’t have debt?
2. How will you celebrate your debt freedom when you reach it?
3. What’s the one thing you really want to do that debt is keeping you from?

If you give yourself an honest answer (remember, no one sees your answer but you so don’t think about what you should say) then you can find your light at the end of the tunnel. And that will symbolize your financial freedom.

My light at the end of the tunnel was being able to make my own financial decisions without having to take high interest rate (and seemingly impossible to pay off) debt into consideration. It’s knowing that my hard-earned money is being used in the way that I want it to be used. What about you?

Shannon McNay is a member of the DailyWorth Connect program. Read more about the program here.