Being debt-free is like living a totally different life from the one you are living when you have debts hanging over your head.
Of course, most of us will need to take out a loan or use a credit card from time to time, but if you have never used debt or you have long paid it off, you will notice how much freer you are both mentally and financially, which is why it is definitely worth considering working towards a debt-free life.
Not convinced forgoing any and all debts could be a boon? Take a look at these very real benefits of being debt-free:
You have more money to spend
It’s an obvious point, but when a huge chunk of your money is not being used to service your debts each month, you have a lot more disposable income to spend as you please. ideally, you would put most of this money towards savings, but you will have more options than most people, so you will be able to invest in property, go on lots of nice holidays and just have a better time without having to worry about how much interest you are paying on debts every day of your life.
Your financial life is less risky
If you do not have any debts, then there is very little risk to your financial situation. Sure, you might lose your job that could be a problem for a bit, or the housing market might crash and you may not have as much equity built up as you once did, but you won’t be t risk of bankruptcy and you won’t have creditors chasing you, which means it will be easier for your to get back on your feet, and less risky for you if you want to take a chance and move across the world to look for work, for example.
Your credit score will be improved
Credit scores are weird things; if you’ve never had any debts at all, then your credit score can look worse than someone’s who has taken out credit and paid it back as they should.
However, if you have taken out credit in the past and paid it all off so that you are now debt free, that can often give your credit score a boost, which is really useful if you need to get a mortgage in the future, for example. Yes, you can get a bad credit mortgage, and they are really good if you are in need of one because other bigger lenders will not touch you, but you have more options when your credit score is higher, and being debt-free can help you to achieve that.
Your mental health will be so much better
People who are in debt, especially if they have a lot of debts they need to clear, are often stressed out. That money is hanging over them like a dark shadow. They know they need to pay it back but the thought of spending so much money over so much time in order to do so, worrying what will happen if they lose their jobs, can be too much to bear. Not to mention what happens to people’s mental health when they find themselves in a position of having debts they cannot pay off.
If you do not have any debts, then you do not have to worry about how you are going to find the money to pay for them each month or what will happen if you are unable to do so. Yes, you might still have some worries about being out of work or what will happen if you cannot find a high enough salary to meet your needs, but you will never have to worry about debt collectors and that can be a significant load off your mind.
You can retire early
Okay, so this is only likely to happen if you are smart with your money, but if you do not have to worry about servicing debts like most of the population do, then chances are you will have a little spare at the end of the month, and if you pay that money into a private pension, or invest it in property, for example, then there is every chance that you will be able to retire sooner than your indebted peers and wouldn‘t it be nice to be able to wave goodbye to the world of work a few years sooner than you otherwise might?
It will be easier to get a mortgage
One of the best things about not having a lot of debts is that, when you go to apply for a mortgage, your bank statements will look a lot “closer” than other people’s. The mortgage adviser will be able to see that you do not have a high debt-to-income ratio and you are not spending lots of money servicing debts that could make your mortgage unaffordable.
If you are, then, planning to buy a house in the next few years, then as well as saving for a deposit, doing all you can to clear as many of your debts as you can would be a sensible use of your money right now.
This might sound a bit strange, but when you are not in debt, you are often more productive than you might be. Debts can really wear you down, especially when you are worried about them, and this means that you end up having more sleeplessness might and less get-up-and-go than you otherwise might.
So, if you are someone who is looking to build a business, climb the corporate ladder, or otherwise achieve your goals, then doing what you can to achieve freedom from debt would be a smart move for the rest of your life.
Better job prospects
In some industries, in some parts of the world, people who have a lot of debts, especially if they are struggling to pay them off, will not be considered for certain job roles, which means being in debt really can negatively affect your career path.
So, if you want to get into banking or various high-powered and government roles, being in lots of debt really is not in your best interests and doing whatever you can to climb out of the black hole of debt will stand you in good stead to have the career you have dreamed of snd make lots of money in the future.
You don’t have to work so hard
When you do not have debts to clear, then you do not always have to work as hard as you otherwise might. Many people who are drowning in debt have to take two jobs just to be able to cover the costs of debts on top of regular living expenses, and that can be a hard thing to have to do, especially if you have family commitments, so being debt-free as soon as possible if you are in this situation, would be a huge bonus.
Be a better person
Having debts does not, of course, make you a bad person, but when you are unencumbered by debts, then you tend to be happier, and happier people tend to be more fun, supportive people to be around than people who are stressed out and scared about their debt situations. It is not surprising that so much family discord is sewn by debts, after all.
Do whatever you want whenever you want
Perhaps, the biggest benefit of being debt free is that you can make changes to your life without having to worry about how you will pay off your debts.
If you want to give up work and go travelling around the world for a year, then provided you have the savings to do so, you can, whereas, if you were in debt you would need to stay in your job to ensure you can make the minimum monthly payments, for example.
Or if you want to retrain in a new role, then you can take the hit on your salary that comes with doing so more easily because you will be sure you do not have creditors on your back all of the time.
Or, should you want to be a stay-at-home mum, it might be easier to do so if your family is not already struggling to pay off debts along with the various other costs of living that you will need to attend to.
When you are not in debt, you have more options than everyone else, and that really is something to be valued because being able to live your life just as you want to is better than just about anything sele.
As you can see, being debt-free can be totally transformative for your life in more ways than one, so although it is not always easy to reach a debt-free place, it is something you might want to think about working towards if you want to have a better future, financially speaking, at least.