15 Great Things You Could Do If You Just Got Rid of Your Debt
"The average US household credit card debt stands at $15,191," according to the Federal Reserve and other government data. Given the statistics, debt is definitely a part of our society; but this doesn't suggest that it's okay to finance our entire lives.
I understand that if it weren't for loans, many wouldn't be able to purchase a home, a car, or go to college. But even if we accumulate some debt to achieve our goals, getting out of debt should always be a priority.
There are justifiable reasons for debt, but there are even more reasons to eliminate debt. Here's a look at 15 inspiring reasons to pay off your balances.
1. You'll Enjoy Less Stress
Acquiring more debt than you can afford can increase your stress level and cause other mental anguish. This is especially true if you're unable to pay your minimums and you've got creditors on your back. But with your debts paid off, you don't have to worry about creditors harrassing you, nor will you lose sleep due to fear that a creditor will sue or place a lien against your property.
2. You'll Have Money to Do What You Like
Having mortgage, auto, and student loans might be the norm today. However, these expenses can cut into your paycheck. If a greater portion of your income goes toward debt repayment, there's probably little room in your budget for extras, such as hobbies, vacations, home improvements, and even shopping.
3. You Won't Be Trapped at Your Job
Some people enjoy their work, whereas others would love to say goodbye to their employer. The truth is, if you don't have a lot of debt, it's easier to take risks with your career. You can leave your job or accept a lower paying position that you'll enjoy, and there's the opportunity to explore entrepreneurship. Unfortunately, debt can trap you and make it harder to walk away from a paycheck.
4. You Can Afford to Give Back
When was the last time you donated to a charity or a local organization? If you have debt and most of your income goes to creditors, you may never have the opportunity to give charitable donations. However, with a doable debt repayment plan and fewer monthly obligations, there's more opportunities to give back.
5. You Can Build a Cash Reserve
A three- to six-month cash reserve is helpful if you need a home repair or if you lose your job. But if almost every cent of your paycheck goes to debt, there's a chance that you'll have little, if anything, in your savings account. Getting out of debt frees up cash; and rather than give creditors all your money, you can feed your savings account and build a sizable emergency fund.
6. You'll Improve Your Relationships
A study found that the "more frequently couples argued over finances, the more likely they were to get divorced." It's sad that money can negatively impact a relationship. But given this knowledge, getting out of debt might be one way to reduce tension in your relationship. If you and your partner constantly argue about credit card bills, student loans, and other debts, coming up with a debt repayment plan or exploring other solutions might get the issue under control.
7. You Can Secure a Better Retirement Future
Even if retirement is 20 or 30 years off, paying off your debt can open the door to a comfortable, secure future. With little or no debt you can contribute more to your retirement funds while younger. And if you're able to stay debt-free, you'll have few bills to pay when you retire, which helps stretch your retirement dollars. (See also: 14 Ways to Retire Early)
8. You Will Set a Good Example for Children
Children are observant, and they imitate the example set by their parents. If you always use a credit card and have a lot of debt, your children might follow in your footsteps. But if you provide them with a good foundation by teaching smart debt management skills, they're less likely to become a slave to debt.
9. You Will Simplify Your Finances
Receiving several credit card and loan statements in the mail each month can complicate your finances. With so many accounts, you might overlook a bill and forget to pay by its due date. This can result in late fees and even a negative mark on your credit report.
10. You Will Stop Burdening Your Family
If debt makes it difficult to pay bills, you might rely on financial help from family. This help might keep your lights on and put food on the table, but it can also become a heavy burden for your loved ones, and ultimately strain their household finances.
11. You Will Be Ready to Buy a House
Homeownership is an excellent goal to work towards. Unfortunately, the amount you owe creditors has a big impact on how much you can spend on a home, and whether you qualify for financing. However, paying off debt makes you a better candidate for mortgage loans and increases your buying power.
12. You Will Boost Your Credit Score
Did you know that the amount you owe creditors also makes up 30% of your credit score? So, even if you pay your bills on time each month, the fact that you have maxed out credit cards and other high balances can drive down your score. And with a low credit score, it's harder to get loans for things like cars and homes, and you might pay more for insurance.
13. You Will Enjoy a Sense of Accomplishment
Owning your assets outright is something to be proud of — when I think back to the first time I paid off my car, receiving that title in the mail was one of the best feelings. I feel a huge sense of accomplishment when I hear others complain about their massive credit card debt or problems with creditors. I'm grateful that I'm not in the same situation.
14. You Will Increase Your Stability
If you don't owe a lot, there's a greater sense of stability. Although you may need income, losing your job is easier to stomach if you don't have a house payment, a car loan, and other massive debts hanging over your head. It'll be easier to maintain your lifestyle after a financial shake-up or if you decide to shake things up on your own with a career change or a fantastic trip abroad.
15. You Can Save for Your Kid's Future
Whether you want to save for your daughter's wedding or help cover the cost of your kid's college tuition, paying off your debt can help you accomplish these goals.
Do you have other inspiring reasons to get out of debt that you'd like to add? Let me know in the comments below.