Five Good Reasons To Pay Off Your Debt ASAP
2016-06-21 minute read
With a continually increasing cost of living, it’s not always easy to convince yourself to part with the few extra dollars you do have on hand, in order to pay off looming debt. In the long run however, reducing (or even eliminating) your debt load — will put you on track for a far brighter future where financial freedom and long-term goals are much more attainable. Consider these five (of many) really good reasons to pay down your debt:
- Financial Security
- More Money to Spend on Things you Enjoy
- Reduce the Stress in your life
- Improve your credit score
- You will be more likely to qualify for the best interest rates on loans and credit cards. The less money you pay on interest, the more you have for everything else;
- Having an excellent credit score doesn’t guarantee approval for loans or credit applications; however, it will improve your chance of being approved;
- More likely to be approved for rental houses or apartments;
- Avoid security deposits on cell phone contracts and/or utilities;
- Attractive mortgage rates;
- Lower financing rates on a car lease;
- Teach your children good money habits
Debt may be a serious threat to your financial security. If you are spending most of your money on debt payments there will be very little money (if any) to save for a rainy day, your retirement, your children’s education or things you enjoy such as vacations or home improvements.
A comfortable nest egg is a sign of good personal financial management. Once you become debt free (or achieve a manageable level of debt), you’ll be able to set aside extra funds to lock in your financial security.
Until you pay down your debt, you’ll have less money to spend on things you really want. Unfortunately, many people end up going deeper and deeper into debt because they can’t afford the things they want, so they use further credit to purchase these desired items. This vicious cycle will continue until they reach the end of their borrowing rope.
Paying off your debt ends this cycle and frees up your available money.
For many people debt creates extra stress. They worry about how they’ll pay their credit card, line of credit, and loan payments while at the same time pay for everyday living expenses. Constant stress can lead to serious health problems and may affect your relationships with family and friends.
Paying off high levels of debt or living debt free could reduce your stress levels and possibly help you be a happier, healthier person.
Too much debt can have a negative impact on your credit score. If your credit card or loan balances are high compared to your credit limit, your credit score is affected. Paying your bills on time and keeping the balances low will help your credit score.
A good credit score will help you save money and make your life easier in the following ways:
If you want your children to stay away from debt, tell them and show them how to live within their means and be debt free. Lead by example.
As long as you have outstanding debt, your lenders are the ones making the decisions about your money. They decide how much you are required to pay and when you are required to make those payments. They can increase your interest rate and minimum payment and give you less than two months to adjust your budget to meet their demands. Paying off your debt and becoming debt free puts you in control of your money.
If you’ve already reached a point where debt has taken its hold and become unmanageable, you still have options. Speaking with a Licensed Insolvency Trustee will help make you aware of the debt solutions available to you, so you can decide which route is best for your unique situation — and begin working towards debt-free future.
