The growing appetite for debt has turned lives into a living hell. In fact, some people are so used to this life that they see it as normal. Debt, however, can have negative effects on one’s life if not monitored.
Excessive debt can have effects, not only on your pocketbook, but also on your psychological wellbeing. According to experts at Psychology Today, the relationship between your finances and your mental health is close. This is why debt is known to drive borrowers into drug abuse and alcoholism. In worst case scenarios, debts have led to suicides.
It doesn’t stop there. Being in debt can also obscure your dreams in life since you can’t afford to work toward them. Without money, you cannot even think of going on a vacation or buying your dream home. In an effort to get out of debt, you may resolve to get side jobs and work long hours, thus denying yourself certain freedoms. It’s no surprise that many people are paying their debts well into retirement.
This is all depressing and the journey toward financial freedom is long and difficult. However, there are numerous benefits waiting for you at the finish line and they are worth the journey.
If you’re on the road to recovery and you’re always thinking of what life would be like without debt— here is what you can expect once you are debt-free.
You have Extra Cash to Save and Invest
The journey to a debt-free life can be tedious and draining, both financially and mentally. Whichever method you use to get yourself out of debt, all your money will be channeled toward clearing it. This means most of the time you won’t have any leftover cash to throw into your savings.
However, after you make your final debt payment, life becomes easier. With no more realistic loans for 12 months in installment into pay off, you have the financial freedom you’ve always wished for. Finally, you can save and invest your money.
You Become a Smart Spender
It is easy to accumulate more debt when you are already in debt. However, once you complete your last payment and you have a zero balance, the smart spender in you kicks in.
You now know what it feels like to have a debt burden hanging over your head. It’s not a pleasurable experience. Going forward, you take every precaution while spending your money because the road to a debt-free life is not one you want to go down again.
Sustaining this life without debt means thinking twice before making purchases, knowing if you spend without doing so, it will take you back to a life full of debt.
You Can Sleep Well for Once
Being in debt can drain you mentally. All you think about are your outstanding balances and how you’ll repay them. This can cause a lot of sleepless nights and stress. When starting out on your journey to recovery, it sometimes feels like you’ll never get to the end. You have to seek mental and emotional strength from various areas to keep you company.
On the day you finish paying your debts, you longer have due dates and sky-high interest rates weighing you down. What you do have, is peace of mind and the freedom to choose what to do with your money. For the first time, you might be able to get some quality sleep.
You Can Dream Again
The journey to a debt-free life can be long, depending on your situation. It requires you to focus every ounce of your concentration and self-discipline. Any deviation from your plan is a step backward meaning more time on the road to recovery.
This all changes once you clear your debts. All that focus and self-discipline can be transferred to another dream. This dream can be early retirement, saving for your child’s college education or even taking some time off to cool down.
Whatever it is, clearing your debt will help you realize this dream faster. Without those burdening monthly payments, you can now save for whatever you want.
You Can Tone Down Your Work
When paying off debts, many people resort to drastic measures such as taking on a side job. This may include offering your skills as a freelancer, babysitter, or Uber driver. So what happens when you clear your debts?
To start, you no longer have to work late into the night, trying to make ends meet. You can finally forget about the long hours you put into your side jobs in order to dig yourself out debt. You now have the freedom to work the hours you’ve always dreamt of.
You Have Multiple Options
Having debt limits your options in life. For example, you may have wanted to switch careers, but couldn’t afford the risk of losing your income with creditors breathing down your neck. You might have also wanted to go back to school to advance your education, but all your income went toward paying debts.
With a debt-free life, you no longer have numerous financial obligations, which translates into more freedom concerning your money.
You Can Stop Paying Interest
You may not realize how beneficial this is until you get to a point where you are debt-free. You get to finance your dreams without the worry of paying interest.
Collecting interest is how banks and other lending institutions make money, and the percentage depends on the type of loan you take out. Paying interest can cost you thousands of dollars.
Now that you don’t have any monthly payments to make, you can walk into that furniture store and buy yourself a cozy leather set in cash. You can even increase the contributions toward your retirement and retire early.
Your Credit Score Will Receive a Boost
While paying off your debts, you could run into financial problems. This can have a negative impact on your credit score. In addition, when you have debt, you increase your credit utilization ratio, which is a critical factor in determining your credit score. In fact, it constitutes about thirty percent of it.
However, once you pay off your debt, you create a trustworthy credit profile since you’ll have a great payment history. Furthermore, since you won’t have any debt, your credit utilization ratio will come down and your credit score will rise.
There are numerous ways life is better when you pay off your debts. The ones listed in this article are just a drop in the ocean. For example, you can steer your life in the direction you’ve always wanted.
Above all, it’s important to always remember what life was like when you were deep in debt in order to avoid ending up in the same scenario. On the other hand, if you’re in debt, you should always strive to visualize how life would be if you didn’t have those debts to pay off.
When it comes to personal finance, you are the only master of your destiny. The outlook becomes even better when you have no debts bullying you around.