Best Reasons to Pay Off Your Debt
There is a very common saying that used to work as the golden words back in the old days, ‘always spend a penny less than what you earn’, which was why the world economy flourished and people did better with time. It was all about saving a little and always having your own money in the bank to fall back upon.
However, these days, in the 21st century, the dynamics are changing. Individuals are looking to live a more luxurious life, willing to take loans from banks to finance various short-term plans which ultimately keeps your account empty at all times. Credits to the low-interest rates and poor financial planning of the modern-day youth, debt has become a common phenomenon in households. But, before you go fishing into the world of debt, it is vital that you understand how amazing a debt-free life would be. Read ahead to know the five benefits of being debt-free, trust me, it is a big deal:
1) Maintains good financial health
Just like your physical health determines your fitness, your financial health defines your ability to deal with finances. There are various ratios and scores that function as a factor in your financial fitness, like debt to income score, credit rating, credit score, and similar others.
A lesser amount of debt not only gives you a good score but improves your financial health, says experts at cedar financial. This way, when any externals stakeholders take a look at your financial background before entering into a transaction with you, you have a positive track record. Say, your insurance deal, your new business partnership or your new car purchase, everything works out better.
2) The accounts have the money
A lower amount of debt or no debt especially means no interest payments, no EMIs and no dues to cover. This automatically means that there is no portion of your income that goes away due to liabilities. Hence, in addition to your daily expenses and fixed payments, you get to save more money in your accounts, generate higher interests and be more financially stable. In fact, with time, the more you earn, the more you can save. In times of crisis, you can always use these savings instead of relying on any debt or external help.
3) Keeps the stress at bay
Any form of debt, be it short-term or long-term, personal or professional – it always comes along with a clock, ticking in your head. You have a fixed liability to pay, a burden to wind off and possibly monthly instalments like interest dues to cover. This usually means additional stress on your mind, as debt limits your options and can be a problem in case of a financial crisis.
Paying off your house loan in a standard month is easy but when out of the blue there are new bills like medical or repair to manage, the situation is bound to make you anxious. In fact, a study found out that 72% of Americans said that they feel stressed about money and 22% said that they felt extreme stress.
4) Freedom of living
Without debt, life is more relaxed and you have more freedom in your hands as an individual. You get to choose what to do with your entire income, decide how much to spend and save without pending payments haunting you all the time. There are no obligations that hold you back.
On the contrary, with debt, you have to keep a check on the dues, keep an eye on the dates of payments and ensure you spend a limited portion of your income, and all of this is more exhausting a full-time job. So why let debt give you wrinkles on your forehead when you can avoid it easily?
5) No fear of defaulting timelines
Like mentioned, debt makes you agitated. The reason? It is the fear of the consequences of not being able to pay back the debt on time. Say, you take a house loan but then miss out on the instalments, the fear of being homeless starts creeping into your mind. With debt around, life is never completely secure and stable, because you are directly under an external obligation of a debt collection company like cedars business services. Even with a good flow of income, financial security is not completely achieved with debt knocking at your door.
Hence, want to be care-free and relaxed? Want to live a financially secure life? Want to be answerable only to yourself? Then, be debt-free and stress-free! Don’t let debt ruin your happiness when you get your paycheck.