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Debt Free by 30? (Absolutely! I Did It! Here’s How!)


Is it possible to be debt free by 30? Even debt free from a mortgage? I did it. I paid off student loan debt, debt from a divorce settlement, and I paid off my house – all before my 30th birthday. So how did I do it? How could I possibly be debt free by 30? And, most importantly, what was life like then and now? Was it worth it?

Related: The Best Debt Snowball Excel Template (And It’s FREE!!)

Debt Free Meaning

What does it mean to be debt free? 

To put it simply, being debt free means you don’t owe anyone a cent. Whatever money you may have borrowed in the past (for student loans, for a car, for miscellaneous items on your credit card), you have paid it all back and you no longer have any debts to pay.

You are debt free.

And you know what? That’s an amazing place to be. (But I’ll get more into that later in the post!) 🙂

Related: 5 Things I Did to Ditch $21,000 of Debt in Just 6 Months

How Much Debt is Normal For a 30-year-old?

Let’s say you’re 30 and you’re curious about how you stand financially vs. others that are your same age. How much debt is normal for a 30 year old?

According to the Federal Reserve Bank, the average 30 year old has a total debt of $62,658.

How is this broken down?

  • Mortgage = $40,687 (it’s small since it’s an average, and not very many 30 year-olds own a house yet)
  • Student loans = $10,401
  • Car loans = $6,151
  • Credit cards = $3,303
  • Other debts = $2,116

If you don’t yet have house debt and you want to pull that out of the averages, then the average debt for a 30 year old is $21,971. 

Have less debt than $22k as a 30 year old? Then you’re doing better than the average person your age. Nice work! 

Related: Could You Get Out of Debt This Year? (w/ Free Debt Snowball Calculator!)

Debt Free by 30 - Is It Possible? YES!Average Debt in America

What if we broaden the spectrum? Maybe we should look at the average debt in America (and ignore the debts by age group).

What is the average debt amount in America? And what is it comprised of?

(Surprisingly, it’s not all that different from the average debt of a 30 year old.)

The average debt in America is $52,940. 

Below are the types of debt (and the amounts) for the average American:

  • Mortgage = $36,730
  • Student loan = $5,730
  • Car loan = $5,000
  • Credit card = $2,780
  • Other debts = $2,700

The average debt types and amounts in America are similar to the 30-year-old, but all the numbers are slightly less.

Over time, it’s apparently common to slowly work your way out of debt. Makes sense, right?

Related: Becoming Debt Free on a Low Income (It’s Possible! I Did It!)

Is It Possible to Live Without Debt?

Does anyone have absolutely no debt? Is it possible to live without debt?

Ummm, yes!

It IS absolutely possible to live without debt! In fact, it’s the preferred way to live by quite a few people (including myself!).

Want to learn how to live without debt? To be debt free by 30? Then keep reading!

What is it Like to Be Debt Free?

So what’s it like? What does it feel like to be debt free?

When I was in debt, I…

  • constantly thought about bills that were coming due,
  • about what I was spending and if it was too much,
  • and I was regularly making dumb decisions because of my debt and my lack of savings!

It’s crazy how much having debt can really hold you back in life. And it’s only when you’re free from debt that you finally understand it.

Now that I’m debt free…

  • I don’t think about my next bills ever,
  • my savings account continues to increase without even thinking about it,
  • and, we never stress about anything financial anymore. (“Oh, the water heater broke and we need to repair it? Whatever, call the service guy and have them put in a new one.”)

Being out of debt just melts the stress away. It’s healthy for you, for your relationship with your spouse, and it probably even strengthens the relationship with your kids since you won’t be frustrated about money anymore!

Related: Debt Snowball vs Avalanche Excel Spreadsheet (Free Calculator!!)

Derek Graduating With $12k in Debt. Then Became Debt Free by 30!!Debt Free by 30 – My Experience

So what’s my story? How did I become debt free by 30?

Well…it’s not a clear cut story, but then again, who’s is?

Here are the quick cliff notes to my debt free story:

(Want the longer, more in-depth story? You can find it here)

  • I graduated from college and amassed $12,000 in student debt
  • I got married – My new wife brought $6,000 of student loan debt into the relationship
  • We soon discovered that we were struggling to pay the bills and were going backward financially. So, we battled our way out of debt.
  • We then bought a house.
  • Just over 2 years into our marriage, she said she had enough. She wanted a divorce.
  • Now I was back in debt ($21,000) since I owed her half of our net worth. 
  • I paid this off in 6 months (on a $60k salary!).
  • Then, I paid off our my house in just 12 months. 
  • By age 29, I owned a car and a house and had absolutely no debt!

Like I said…not the simple “no-debt” story, but that’s what happened! And you know what? This should show you that if I can do it with all of that crap above, you can do it too!

Do you want to be debt free by 30? Then do it! I know you can! 

Are People With No Debt Happier?

I gave my own account of being debt free, but is my experience felt the same way by others? Are people with no debt happier than those that have debt? 

Are there any studies on this?

Thankfully, there are. 

Fool.com performed a survey of 1,000 people. Some of the individuals had debt, some did not. When asked about about various areas of their lives and their satisfaction levels, were there noticeably different answers from those that had debt vs. those that did not have debt?

For some areas, yes. For others, no.

When asking those that were being surveyed if they were happy…

  • 63% of people that had debt said they were happy
  • 71% of people that did not have debt said they were happy

It’s not a sizable difference, but it’s enough to get you thinking that debt freedom might just be something!

Related: Free Credit Card Payoff Spreadsheet (Get Out of Debt in 2022!!)

Get Out of Debt by 30Psychology of Being Debt Free

So what’s the psychology behind debt freedom? Why might it be best to be debt free?

There was a research study done back in 2019, written by Qiyan Ong, Walter Theseira, and Irene Y.H. Ng, that was titled, “Reducing debt improves psychological functioning and changes decision-making in the poor”.

The hypothesis of this study?

Their theory was that the impact of chronic debt on the poor was not just financial, but psychological. Chronic debt impairs psychological functioning and decision-making, contributing to the poverty trap. For those that have escaped debt, the theory is that they function better and make better decisions as a result. 

What were the findings of this case study?

Prior to any debt payoffs, all individuals took a cognitive test. Then, after some of the subjects became debt free, they were tested again.

For those that eliminated their debts…

  • their cognitive scores were better,
  • their minds functioned faster,
  • and they made fewer mistakes during the test!

It’s yet another data point that shows that debt freedom is the place to be! If you’re debt free, you’ve got less stress, you can think more clearly, and your overall quality of life will likely improve as well!

Is It Smart to Be Debt Free?

Some are still asking this question, “Is it smart to be debt free?”

It pretty much all depends on what kind of debt you’re holding. 

When Debt Isn’t Smart

Let’s say you have credit card debt, car debt, and student loan debt…but you never graduated.

Is that debt smart?

Absolutely not!

You’ve got debt, but for absolutely no purpose!

  • Your credit card debt got you stuff you didn’t really need,
  • your student loan is worth nothing since you didn’t get your degree and you’re still working your dead-end job,
  • and your car debt is on a depreciating asset!

Not smart all around!

Related: What Is The Average US Credit Score? (…And How to See Yours For FREE!!)

When is Debt SmartWhen Debt Is Smart

On the flip side, let’s say that you have a home loan at 2% interest (while the value is going up by 5-10% a year). You’ve got rental debt of $500,000, but your rental properties are worth $2 million and they produce $10,000 of income every month. And, you have a business loan for $300,000, but your business earns $5 million a year at 30% margins thanks to that start-up capital.

Is this debt smart?

Heck yes!

The house is appreciating far faster than even the interest on the loan. 

The rental debt is easily paid for by the earnings, and the assets continue to grow in value from year to year!

And finally, the $300,000 business loan enabled profits of $1.5 million! While this can sometimes be risky, if you do your homework and crunch the numbers, the risk can be largely reduced.

Sooo…is it smart to be debt free? Or not?

So, is it really smart to be debt free? Or should we all be getting loans to make investments?

For most of the population, going into debt is a bad move. 

Why?

Because the majority of the population knows very little about business, about ROIs, KPIs, P&Ls. Sure, they might think they have a good idea, but they don’t know how to properly assess the business opportunities or the risks that go along with it.

Most people should fight to get out of consumer debt, put money into their 401ks, and eventually pay off their homes before retirement.

So is it smart to be debt free?

For most people, yup!!

Related: Completely Debt Free for 6 Years – We Highly Recommend It!!

Is It Worth Being Debt Free?

What’s my take? Is it worth being debt free?

Let’s talk about my day so far…

I think walking through the last 4 hours will help you understand what debt freedom is all about. Right now, it’s 10AM on a Saturday. Here’s what has transpired thus far.

  • I opened my eyes voluntarily at about 6:00am. The house was nice and cool (we got air conditioning installed yesterday), and I felt fantastic from a good night’s sleep.
  • I took a nice hot shower and my 3-year-old son woke up soon after. He ate some yogurt for breakfast. I made myself an egg. 
  • Then he played in the backyard on our 6 acre plot (the house and property are fully paid for) while I shifted $11,000 from our savings to our checking to pay for our newly installed roof. Then we found some ant hills and laid out leaves for them to eat.
  • After that, we tackled a small father-son project – taking the dull and cracked running board pads off my truck and putting new ones on. He actually did great! We got them on and it looks like a new truck again!
  • We went inside. He’s watching shows, and I’m taking my time writing this post for all of you.

Never once this did I think about not having enough money. Never once did I feel like I needed to work to make money instead of spending time with my son. We just woke up, we ate together, we played together, and just like we do once in a while, we did a “guy” project together.

Oh, and you know what? I’m not a monster income earner. I still earn less than 6-figures at my day job, and my wife stays at home with our kids. Like I said. If we can get to this point of debt freedom bliss, so can you!

Limiting belief about money - achieving successHas it always been like this?

Absolutely not.

I first had to battle my way out of debt to get rid of all those pesky payments. Once I became debt free, my savings soared because my money stayed with ME! Every since then, my life has been carefree, simple, easy, and filled with my intentions and aspirations. Not someone else’s that held the note on me.

Want to know more about becoming debt free by 30? We’ll get into the details of how I did it in the sections below. Trust me! You’ll have all the tools you need to be debt free by 30 just like me.

Related: 10 Extreme Ways to Pay Down Debt

Does Being Debt Free Hurt Your Credit?

But doesn’t being debt free hurt your credit?

I’ve been debt free for over 7 years now. I just checked my credit score this morning. It’s 797. Still plenty good if I ever want to borrow money again (which I don’t!)

I don’t have a car payment, I don’t have a house payment, I don’t have any student loans. The only thing I do is use my credit card once in a while, and then I pay it off at the end of every month. 

That’s it!

And just by using my credit card for gas and a couple big purchases here and there, my credit score has held steady all these years. I bet yours would do the same.

Related: How Bad Is a 650 Credit Score? (The Answer May Shock You!!)

Pros and Cons of Being Debt Free

So what are the pros and cons of being debt free?

The pros — we basically talked all about these already.

The pros of debt freedom are:

  • security
  • peace
  • time (you can live on less, work less, maybe even retire early)
  • increased savings
  • increased investing (for both you AND your children’s future
  • and, increased giving! (which is almost better than all of the above)

What about the cons of being debt free by 30? Are there any?

The cons of debt freedom are:

  • Being totally unrelatable (most people are not debt free and will think you’re very weird if you have no debt)
  • You’ll make people uncomfortable (when people learned of my debt freedom, they stopped talking to me about their newly financed vehicles)
  • Life will become easy and others will be jealous of you (but don’t feel bad, you’re debt free because of your foresight and determination when you were younger!)
  • When you get super wealthy, people will think you’re scum and that you somehow cheated others out of their money

Some people can’t handle these cons. For me, I embrace them and use my learnings to teach others to become debt free by 30! That way, we can enjoy the pros together, and then relate to each other to reduce the cons list! 🙂

Why Being Debt Free is Bad

Seems like being debt free is pretty good, right? Some don’t think so. There are a couple of camps of people out there that take a stance against being debt free.

tips for financial successWhat are the main reasons why being debt free is bad?

  • Some are hardcore YOLO
  • Others love debt for investing

Debt Freedom is bad if it causes you not to live your life today

YOLO (you only live once) is a phrase that caught on a few years ago. This crowd would rather not save a million bucks in the bank for a later date. Instead, they’d rather have fun in the moment, because who knows, you could die tomorrow!

So instead, the YOLO folks often live their lives in debt, going on vacation and owning nice things. Seems like a cool idea… But what if you live till you’re 90?… Then you’re screwed!

(My preference – live a bit now, but also save some for later. It doesn’t have to be one or the other. ;))

Debt Freedom is bad if it’s reducing your purchasing power

Business men and women love leverage. They can buy into a fairly non-risky investment for only 10% of the overall cost. So, instead of buying one investment at 100%, they can buy 10 investments with a very low interest rate. 

Sure, it’s more hassle, but the potential payoff is substantially higher than that single investment.

So, if you ask a business owner if they take on debt, most will say yes, because this enables them to hold onto more cash that they can use for future investments. Makes sense, right! You just have to be sure you know what you’re doing!

Related: Should I Invest in Stocks If I Have Debt? (Maybe!)

Is It Better to Be Debt Free or Have Savings?

I hear this question a lot. Essentially, people want to know if they should just tackle their debt right away without saving up an emergency fund, or if they should put a bunch of money in savings before paying down debt. 

It’s actually a great question.

  • The Dave Ramsey approach is to save up $1,000 in an emergency fund first, and then tackle the debt with a vengeance. 
  • Other financial experts would argue that you should have 3-6 months’ worth of expenses saved up before doing anything.

Related: Is It Good to Pay Off a Credit Card in Full? (Spoiler Alert: YES!!)

Is It Better to Be Debt Free or Have Savings?I see issues with both approaches.

Let’s say your typical monthly expenses are $20,000 a month. Saving up a thousand bucks isn’t going to do much for you if an emergency happens on your usual scale.

On the flip side. Let’s say you have just $300 to your name each month and your monthly expenses are $3,000 a month. How long will it take you to save up 3 months’ worth of expenses?

….Nearly 3 years!!!

I’m just guessing you won’t be too motivated about paying off your debts once you finally get your emergency fund set up three years from now…

Related: Personal Finance Trends for 2022 (You Should Know These!!)

Debt Free or Have Savings? I propose Option C – a combination of each:

Want to tackle your debt? Are you excited to start paying it down! I agree with you, but you still need some kind of an emergency fund, just in case your car breaks down or your furnace kicks the bucket.

So how much should you stash away before you starting paying down your debt?

I propose one month’s worth of expenses.

Then, once you pay off all debts but your house, you can beef that emergency fund up to 3-6 months.

What Age Should You Be Debt Free?

The typical path to adulthood today is to complete high school, go straight into college (with no money, so you take out loans), and then you hopefully finish up a degree and join the work force by age 23 or so.

At that point, you have roughly…

  • $18,000 in student loan debt,
  • probably another $5,000 in a car loan,
  • and let’s not forget about that credit card you’ve been surviving on in college with a $3,000 balance.

So you’ve got debt, but now you have a job, so you should be able to get out of debt quickly, right??

Not so fast. 

Unless you plan to head back and live with mommy and daddy, you’re going to have to start paying for an apartment, car insurance, your phone, food, clothing, entertainment, etc. etc…

When the shock of the real world hits you, you’re going to realize that money is still tight, even with a shiny new job!

Related: Can You Pay Off a Credit Card Bill With Another Credit Card? (Yes!)

Should You Be Debt Free by 30?Is 30 a Good Target Age to Be Debt Free?

So now what? 

At what age should you be debt free? What’s reasonable?

Honestly, I think 30 years old is a fantastic target.

That gives you 7 years to…

  • figure out what budgeting is
  • save up a mini one-month emergency fund
  • learn how to make more money if possible (side hustle maybe?)
  • Start putting hundreds (maybe even thousands) of dollars toward your debts each month
  • And then becoming debt free and begin accelerating through life with ease!! 🙂

Can you achieve debt freedom by 30? 

I bet you can.

But how? 

It’s time to dive in.

Related: Will Paying Off My Credit Cards Improve My Credit Score? 

How Can I Be Debt Free by 30?

I graduated from college in 2008 with a Finance degree…during one of the greatest economic crashes in our history…which was due mainly to the financial institutions…). 

This was not a good start. 

I had $12,000 in student loan debt, I had already moved 1,400 miles away from home with a friend, and now I couldn’t find a job.

It took me 3 solid months to find work. And surprise surprise, it wasn’t in Finance! I somehow landed a job through a friend of a friend as a temp for a retail store headquarters in Boca Raton, Florida.

  • My buddy and I split rent
  • I lived on peanut butter and jelly and gross gray frozen hamburgers from Walmart
  • I bought literally nothing frivolous…and it was all I could do to just survive and live paycheck to paycheck

So how did I start changing the narrative and begin paying down those debts?

I never lost sight of what I wanted. I knew that I wanted debt freedom, and it was pretty obvious what it was going to take. 

Since I was already living on next to nothing, I knew I couldn’t save my way to debt freedom. To become debt free by 30, I needed to earn more money.

high paying side hustlesMainly, I did three things to start making more money:

  • I busted my butt at work and I landed a full-time role (a step up from the temp job I had). This bumped me up from $33,000 a year to $41,000 a year. It doesn’t seem like much, but that’s a 25% increase in pay!
  • Then, I started this website. I had a love for personal finance (so it would be fun regardless), and then I thought maybe it could actually turn into a money-maker somehow. (Long story short, it was :))
  • Finally, I realized that I could earn the same amount of money back in my hometown, and the cost of living would be far cheaper. So, I found a job near home and moved back to Michigan.

How long did it take from my promotion until my debt freedom date?

Approximately 1.5 years.

Not too shabby!!

Anyway, that’s how I became debt free (the first time anyway…Remember the divorce? That’s another story for another day.).

What about you? How can you be debt free by 30?

Related: When Do You Have to Start Paying Back Student Loans?

How Can You Be Debt Free by 30?

Your story might be a little different, but I bet you could use a similar process to get rid of your debts.

Here’s the basic steps to becoming debt free by 30 as I see it:

  1. Figure how much debt you have – write it all down, look it up on Credit Karma (a fantastic FREE credit check site) if you can’t remember it all.
  2. Look at your bank statements to see how much you earn each month, and how much you spend each month, and therefore how much you have left to put toward your emergency savings each month (or, if you already have that, then toward your debts)!
  3. The answer to #2 is probably a somber one, so look at everything you spend money on and ask yourself if you’re overpaying (Is your cell phone bill ludicrous? Do you need those 6 TV subscriptions? What if you did without cable? This should help you quickly get your monthly costs down.
  4. Download this free debt snowball calculator (it will download as an Excel file when you click the link). With the debt snowball excel tool, you’ll be able to enter in all your debts, the additional amount you’d like to pay each month, and a one-time jump-start cash payment (if you have it). You’ll then quickly see how many months it will take for you to get out of debt.
  5. What does the tool tell you? Will it take you 5 years to become debt free? Is that before your 30th birthday? If not, it’s time to try harder. Do whatever you can to earn more money, and to cut your costs further. Update the numbers in the tool and see what the new read-out is. (It’s honestly amazing how what might seem like the smallest change can make such a big difference!)
  6. Do it! Become debt free by 30!

What should you do with 1000 dollars when you have debt?How Do I Get Out of Debt With No Money?

What if you have absolutely no money? Then how do you get out of debt?

Well…unless you have a Great Aunt Polly that just wants to pay off your debts for you on a whim, you’re going to need to make some money. With no money, you simply won’t be paying off your debts. Simple as that.

Here’s what you need to do if you want to get out of debt, but have no money:

  • Find out a way to spend less if possible
  • Then, you’re going to need to earn some money!
    • Either start a business for next-to-nothing (think cleaning service, car repair, writing articles, building websites…things that cost less than $100 to start, but can start earning you money immediately!)
    • Or, get a job! There are plenty of options out there. Choose something, anything! No sense being picky when you have absolutely no money right now.

That’s it. Don’t overcomplicate it.

If you want to get out of debt, then it’s time to work your butt off and earn a bunch of money. It might feel like a big sacrifice at first, but once you start paying down the debt and you begin to see your bills melt away, you will absolutely love yourself and your new life!

Related: What Is The Snowball Debt Plan? (FREE Debt Snowball Excel Download!)

Debt Free by 30 – You Can You It Too!!

So can you actually do this? Can you become debt free by 30 like I did? 

What does the debt snowball tell you? Did you try to ramp up your monthly contributions to see if you could pay off all your debts by age 30? 

There are so many ways that you can achieve your debt goals.

All you need to do is…

  • Put the goal out there (like getting debt free by 30),
  • then figure out what you’d need to do per month, week, and per day to get there!
  • Then, ask yourself, “How could I do this?”
  • Once you figure out the “how”, then just get determined, get yourself out there, and do it!

Are you motivated to become debt free by age 30? How will YOU get there?

Get Out of Debt Money

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.



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