Most personal finance blogs start with the same advice. Pay down your high-interest debt as soon as you can. The importance of being debt-free is pivotal to financial independence.

My journey to being debt-free began late last year and we finally paid off our last high-interest loan. We still have other debts but the bulk of what we had is now paid off.

As the pandemic looms and my wife is slowly going back to work there are other things that now threaten our financial well-being. My wife works for the school district. She was told a few weeks ago that they will be fully open in the fall. This is great for the students but she is in a high-risk group for having severe Covid-19 symptoms.

State-wide Mask Order in Effect

My county and state now have mandatory mask orders, so at least she will have some protection but there are several issues that we could face in the fall. Both of these are easier to plan for now that we have paid down the majority of our debt.

One scenario, if she does end up sick we have a fairly good emergency fund that we can use to pay off the hospital bills. At this point, we are putting some of the money that we were using to pay down the debt to increase the amount. We also have pretty good health insurance through my job so the costs will not be too substantial, I hope.

The second and more likely scenario, she will be furloughed as the schools shut down again with the rising cases of Covid-19. Children may not get sick but they surely can spread the virus. If there are outbreaks at several schools in the district they will probably shut down the schools and go remote learning as they did in the spring.

When they shut down schools the last time, she was able to keep her paycheck for several months. But if they shut down again it has already been indicated that she will be furloughed.

Why a Budget is Necessary

A few years ago and I would have been stressed about the situation. Unemployment would pay about 60 percent of her salary. With careful budgeting and the fact that we paid down most of our debt, we can easily live solely off of my salary.

The extra unemployment would be put into a savings account or used to continue to pay off the remaining debt. I know most people are not in my situation. Many live paycheck to paycheck and do not have the luxury to pay down debt, but whenever possible work towards being debt-free.

It took me a long time to get here. I went through a lot of financial pain earlier in my career and have learned how to overcome those issues, so I know what it is like to face an uncertain future. I worked hard each year to increase my income and build modest savings.

No one could have predicted the pandemic, well other than Bill Gates, but the last few years of building a budget and controlling my spending are paying off.

Who knows how long this pandemic will last or if we will be back to a normal economy anytime soon.

There is no harm in hoping for the best, as long as you’re prepared for the worst.

Stephen King

More Than One Reason to Be Debt-Free

Of course, this is my scenario. There are so many other things that could happen that being debt-free will enable you to conquer without anxiety. Job loss is probably the worst, but having extra money each month can help with many other situations. An unexpected bill, an accident, car repairs, etc. These all are reasons why to have an emergency account.

Having no debt allows you the freedom to do what you want with part of your income. I have started using the 50/20/30 rule for budgeting. Fifty percent of your budget is needs, thirty percent of your budget is wants, and twenty percent is savings.

This does account for having debt payments, but if you did not you can put a good portion of your income back into savings or invest. Wealth is built slowly, had I learned this rule years ago I might not have gone through financial ruin.

I read stories everyday of people that are living an incredible frugal life while making a low salary. They are still able to save for the future.