When it comes to reducing your debt, there are a lot of good reasons to pay off debt beyond the obvious. The benefits of becoming debt free are numerous and have to potential to improve a number of areas of your life, although there are some debt free myths as well. Understanding how becoming debt free can positively influence your future can be a motivating factor to help you tackle the debts that you have. Here are ten reasons that getting out of debt is well worth the effort:
Your credit score is one of the most important pieces in your financial portfolio. It helps you apply for loans and credit cards, and effects many of the larger financial transaction you make. If you’re in debt, your credit score is probably lower than it should be and it’s probably limiting your spending habits or life decisions. Getting out of debt won’t miraculously cure your credit score, but it will allow you to works towards achieving a better score.
No matter what age you may be, saving for your retirement is crucial. Chances are that if you are in debt, you’re currently using all your spare money to pay off your debt instead of saving some of it for your retirement. by getting out of debt, you can start saving for your retirement which will help ensure that you don’t need to struggle financially later in life.
Many people in debt don’t put extra money aside to use in case of an emergency. If you’re paying down debt, you probably don’t have any saved to use for unexpected emergencies like medical expenses or home maintenance. This is unfortunate and can potentially lead to even more debt, which is something you want to avoid. Being able to have that extra money to use if you really need to is another great reason to get out of debt.
You should also take the steps needed to pull yourself out of debt because you don’t know how secure the future will be. What if you lose your job? What if the economy plummets even further? What if your house or apartment is destroyed? You need to be prepared for any possible future outcome, and swimming in debt doesn’t allow you to plan for possible crises. Once you pay off your debt, you’ll be able to start saving money and will be able to plan for a secure future.
When you’re in debt, it’s hard to plan for the future. Things like buying a car, going on vacation, or paying for college are always tentative because you don’t know if you’ll ever be able to pay for them. Debt controls your life and your choices. When you’re able to get out of debt, you’ll be able to better plan for future investments.
Most people are aware of the high interest rates that are attached to debt. Sometimes it’s hard to pay off an item or loan because you’re always chipping away at the interest instead of the principal balance. Interest payments are what send people even further into debt. Most credit cards or loans have high interest rates, especially for people who are already in debt. Interest is just more wasted money.
Once you get out of debt, you’ll have more money to spend on other important items in your life. Having more money may seem like an obvious reason for getting out of debt, but it’s still an important one to consider. Are you barely scraping by now? Just imagine what it’ll be like when you don’t have to spend hundreds or thousands of dollars each month paying off debt. You can finally consider putting money toward the other areas of your life that you are forced to put aside while you’re in debt.
Being is debt can seriously affect your mental health and is one of the hidden costs of debt. Many people in debt feel pressured, anxious, and stressed on a daily basis. The level of stress is probably worse if you have debt collectors harassing you non-stop. While getting out of debt is important for financial reasons, it’s also important for mental health reasons. Not having to pay down debt will help alleviate a lot of stress from your daily life. It will be one less thing to worry about each day.
Others Are Affected
Unfortunately, when you’re in debt, you’re not the only one suffering. Your family, friends, and other loved ones suffer with you. Debt impacts almost every aspect of your life. You might not be able to let your children join a sport of club. You might have to limit the household spending. You might not be able to go out with friends as much. Getting out of debt is not only beneficial to your wellbeing, but it’s also beneficial to those around you.
As shown throughout this list, being in debt severely limits the choices you’re able to make on a daily basis. You might not be able to move even though you desperately want to. You might hate your job, but need to keep it because it’s the only thing helping you pay down your debt. Regardless of what the issue is, your choices revolve around your debt. Once you pay off your debt, you have so much more freedom. Your choices will no longer be influenced by your debt.
(Photo courtesy of lemonjenny)