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How smart is it to really be 100% debt free?
The day I paid my last student loan payment and my last car payment was (January 4, 2000) a very happy day for me, being then 100% debt free.  It is a very good feeling, especially since I was saving cash as well.  It's a great thing to know that no-one "owns" you. Many others here have provided useful information about debt, and I know that paying off your existing loans will improve your credit rating, in case you want to go back into debt (which I did later in 2000, by buying a house). For most people, borrowing money to invest it is complicated (make sure you're not paying more on your borrowed $ than you make on your investment) due to the fact that most investments have risk involved. I would say that being debt-free is a very good goal, and there's a level of freedom it gives you.  Just make sure you have your "rainy day" fund building while you're on your way to getting there.