Are you wondering whether or not being debt-free is worth it? Well, in our experience, it is one of the best financial moves you can make. To prove it, here are 10 key benefits of living without debt.
When my wife and I first decided that we wanted to get out of debt, we owed more than $34,000. And, to be honest, throughout our debt-payoff journey, I recall quite a few moments when I wondered if all the hard work and sacrifices we were making would even be worth it.
Seriously, we cut our budget to the frickin’ bone. Between the two of us, we were spending less than $400 per month on food, a total of $10 per week on fun, and I went nearly six months without eating a Chipotle burrito. (The horror!)
But after all that sacrifice, I can tell you that the moment our debt hit $0, every ounce of our debt-free effort was worth it.
Because the benefits we have experienced from that moment on, have been nothing short of fantastic.
So, if you’re in the middle of a debt-free journey, or just considering whether you should head down that path, I can’t encourage you enough to knock out your debt as fast as you possibly can.
In fact, for the rest of this article, I’m going to cover the top 10 reasons why being debt-free is worth it!
Let’s dive in!
1. It’s Less Stressful
To begin, the moment you pay off all your debt, you’re likely to experience a giant sense of financial relief. Think about it, all the money you used to pay toward debt, will now get to stay in your bank account. Which, in the moment, feels a lot like getting a raise.
That means that paying your bills will be a more pleasant experience, saving money will be easier, and receiving your paycheck will be a lot more fun.
2. You Have More Financial Control
When you take on debt, for any reason, you are giving away a piece of your financial control.
Think of it like this, if you earn $5,000 per month, and you get to keep all of it, you get complete control over what you do with your money. But, if every month, you have to pay a $500 car payment, you only get to control $4,500 of your money. Meanwhile, the company that gave you the loan gets to have a say over what you do with the other $500.
And the more debt you add to the pile, the less control you have over your money — which is why being debt-free is worth it.
When you have complete control of the money you earn, and your financial situation as a whole, it becomes much easier to achieve your goals, and build the life of your dreams.
3. You Get To Have More Fun
Along the same lines of having more financial control, when you don’t owe anybody money, you have the opportunity to have more fun.
Rather than paying for your past, you get to use your money for the present, or to build your future. So, if you want to take a vacation, you can! If you want to start that business you’ve been dreaming of for the past few years, you can do so, unencumbered by debt. And, if you want to take your spouse or significant other out for a fancy dinner (that used to be out of your price range) you can do it.
When you get rid of your debt, you open your financial life up for some really fun opportunities that you wouldn’t have otherwise had. I don’t know about you, but that, alone, was one of the main reasons why being debt free was worth it for my wife and I.
4. It’s Easier On Your Marriage
I don’t think it’s a big secret that financial struggles, and arguments, can be one of the hardest things on a marriage. And that’s just another reason why being debt free is so awesome.
When you don’t owe any debt, and you live a debt-free lifestyle, it eliminates a major source of financial struggle. For one, it reduces financial stress, which sets every financial conversation on a better footing. Two, you don’t have to worry about who paid what, and whether or not the payment was on time, which makes life a lot easier. And three, as I mentioned earlier, you have more money to spend on fun activities like: dates, vacations, and spending time together doing things you both enjoy.
Seriously, I have yet to discover a single reason why being debt-free is hard on a marriage, and I’m confident that if you get out of debt, you and your spouse will discover the same thing.
5. You Have More Freedom
Along with more fun, less stress, and more financial control, when you live a debt-free lifestyle, you have more freedom to do the things that you want to do.
For many people, it’s traveling. Consider this, if you’re currently paying $500 per month in debt payments, that’s $6,000 per year that you could spend on traveling the world. If you’re paying $1,000 per month (ahem… like my wife and I were doing before we got out of debt), that’s $12,000 per year that you could otherwise spend on traveling the world. That’s pretty significant!
For other people, getting out of debt allows them to escape a job they hate. I mean, many people don’t even realize that the reason they’re stuck in a job they can’t stand, is because they are buried in debt payments, and therefore, can’t risk missing a single paycheck while they pursue a different job. As an added note, I have found that when people are less stressed, and pursuing something they are truly passionate about, they tend to be much more attractive in a hiring situation. (Just sayin’…)
If you’re wondering whether or not being debt-free is worth it, I encourage you to take some time and assess the areas in your life where debt is restricting your freedom. I think you’ll be amazed how harmful debt can be when you look at it from that perspective!
The good news is, all you have to do to take back that freedom, is pay off all your debt.
6. It Makes Budgeting Really Easy
If you’re buried in debt, and you also hate budgeting, those two things are probably more related than you think.
To put it simply, the more debt you have, the more payments you have to keep track of, and the messier your financial life can get. On the other hand, when you don’t have any debt, the number of bills you have to pay decreases, the number of accounts you have to keep track of reduces, and budgeting becomes as simple as logging a couple daily expenses from your checking account.
Seriously, if you want to simplify budgeting, the best thing you can do is get out of debt!
7. Your Net Worth Is Always Positive
Have you ever calculated your net worth?
If not, you just have to add up the value of all your assets (the things you own), and then subtract the value of all your liabilities (the money you owe). The result of that equation is your net worth.
Now, I should warn you, if you have a lot of debt, there is a good chance your net worth is less than $0. I would know, because when my wife and I started our debt-free journey, our net worth was somewhere around -$30K. (It hurts me just thinking about it.)
So here’s the thing, when you get out of debt, you eliminate all your liabilities. So, essentially, your net worth equation transforms into addition, alone. In other words, if you don’t have any liabilities to subtract from your assets, your net worth will always be positive. Or, in the absolute worst case scenario, it will equal $0. But, that’s pretty freakin’ unlikely!
8. You Can Build Wealth Faster
This might seem pretty obvious, but the fewer debt payments you have to make each month, the more money you have to invest. And the more money you have to invest, the easier, and faster you can build wealth.
Consider this, if you’re spending a total of $1,000 per month on various debt payments, that’s $12,000 per year that you don’t get to invest. Meanwhile, if you were debt-free, and therefore able to invest that money every month in a mutual fund that earns 10% each year, your money would grow to over $2 million after 30 years.
9. It Improves Your Financial Security
Every time you go into debt, you are making an assumption about the future. And that assumption is: that you will be able to make the payments. But here’s the thing, the future is uncertain.
For instance, you could unexpectedly lose your job. You could get sick and have to pay a bunch of medical bills that you didn’t expect. Your furnace could go out in the middle of winter and cause you to end up in a tight financial spot.
My point is, in any unexpected financial situation, debt has a way of making things a lot more difficult. Meanwhile, when you are debt-free, if any of those same situations were to strike, it becomes a lot easier to make ends meet.
Truthfully, financial security is one of the biggest benefits, as thus, one of the most important reasons why being debt free is worth it.
10. It’s Contagious
One of the strangest things I’ve noticed about being debt-free, is that it has a weird way of spreading into the lives of your loved ones. Whether it’s friends, family or colleagues, when you live a debt-free life, you’ll probably start to notice people around you trying to do the same.
It’s really inspiring.
In fact, the main reason my wife and I decided to get out of debt was because I saw somebody else living debt-free, and it was so appealing that I just had to do it too. And now that my wife and I are debt-free, there are quite a few people in our circle that have followed suit, and escaped debt themselves!
I know it might seem strange, but being debt free can have a really positive financial influence on the people around you.
This is something very few people talk about, but it is one of the best things about being debt-free.
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Getting out of debt is one of the best things you can do for your financial well-being. It can reduce your stress, improve your financial security, and provide you with more financial freedom. Beyond that, it just makes life a lot easier — and more fun.
So, what are you waiting for? Go attack your debt, and free yourself from the burden of owing other people money! I can tell you from personal experience that getting out of debt is well worth it!