It can feel like you’re dragging a big anchor around when you have a large amount of debt. Debt comes with stress and that can weigh on you mentally and get to the point where it even starts to affect you physically.
Here are the 5 huge benefits to being Debt Free:
Financial Freedom
As a society, we’re working more just to pay for the “stuff” that we’ve accumulated. Often, this “stuff” is comprised of items we wanted but didn’t necessarily need. If you focus on wanting to retire early, all the other “stuff” becomes less important. Without debt now, you have more free money to allocate to things such as an emergency fund or your retire-early plan. Going into retirement with zero debt and maintaining a debt free retirement is optimum. You will have more money to fund the things you want such as travel and hobbies and still be able to afford the things you need.
No More Financial Stress
Ask most couples what they fight about, and money is usually right up there at the top. Pull back the layers even more and typically that financial argument will involve debt. It’s hard to find someone that has been carrying around debt for years that is not stressed and depressed about it. This can quickly turn into a physical problem because stress can lead to high blood pressure, obesity, alcoholism and general health deterioration. Having no debt whatsoever (or even just a small amount) offers you a clean slate feeling. If you’ve been stressed about your debt for years, you will now feel like you have a new lease on life.
More Savings
An extra $500 – $1500+ a month that used to go out to pay bills, now firmly sits in your bank account each month. You can build that emergency fund that you always needed. You can save for that vacation you always wanted. You can now fast track the college savings accounts for the kids, your Roth IRA or do home improvements without going into debt again.
Improve your Credit Score
By paying down all of your revolving debt, your credit score is going to improve. Keep in mind, you want to pay off your credit cards, but you don’t want to close your cards. Paying off your credit card will give you a nice boost to your credit score. Closing your credit card can have a negative effect because your credit score takes into consideration how much credit you have, how many accounts you have in good standing, your balances and credit history.
You Own Your Assets and they don’t Own You
You own your own home when you don’t have a mortgage. No longer does a bank have its claws stuck into you. When you own your car, it’s still going to depreciate in value over time but at least you’re not paying interest on a depreciating asset. That 60” curved screen mega TV that you didn’t buy with a credit card is now owned by you and not Citibank. You’re indebted to a bank when you make monthly payments so who really owns the asset during this time? The bank owns it until you pay it off. Once paid off, now you’re the owner. Add up the interest you’ve paid and now you own your assets at a higher cost than the original price tag.
Being debt free is what we all strive to be. If we could all go back and speak to our 20-year old selves, I’m sure staying out of debt would be one of the first conversations we’d have. Our society has trapped us in so many different ways with the allure of having what we want right now and offering us a way to have it right now through lines of credit.
The key is to not listen to the pull of society and for us to stay disciplined in our approach to money. If we can, the benefits of having our financial freedom greatly out ways all of that stuff we “had to have.”
In the weight loss world, there is a saying that goes “No food tastes as good as skinny feels.”
Perhaps we should say “A new car with payments does not feel as good as being financially free.”
Debt is not your friend. Get rid of it as soon as you can. Your spouse will thank you. Your bank account will reward you and your mind will be more at peace.
Live free my friends,
Eric Gaddy
