Debt is sometimes a necessary evil to help you get ahead. However, uncontrolled debt or chronic debt is something that holds you back. Any debt taken out should be for a fixed period of time and should result in you bettering your situation – otherwise it was an unnecessary and costly expense.
The benefit of getting out of debt is obvious, but many people overlook the benefits in exchange for short-term gains. The following benefits should help you become more frugal and aware of why getting out of debt is a good thing.
1. The ability to grow your net wealth instead of paying out money to credit card companies, banks and loan companies. By growing your net wealth you will be providing a better retirement for yourself and a better legacy for your loved ones.
2. The ability to save for a deposit on a house instead of paying out monthly bank charges and credit card charges. This also gives you a chance to replace your monthly rent with a mortgage payment. By owning your own home you will be able to free up a lot more money when the mortgage is paid.
3. With a low debt to income ratio you can get better rates of interest for any large purchases. This means you will be paying less for large purchases over the longer term.
4. You will be able to choose what you want to spend your hard earned money on rather than having it dictated by the bank or Credit Card Company. This gives you a lot of freedom of choice and should mean you never worry or become stressed about financial matters. This has to be good for your overall health.
5. You will be able to spend more time enjoying life rather than trying to make ends meet. You can spend more time on your hobbies and more quality time with friends and family.
6. You will have fewer expenses each month. This means you will be able to put more money into a savings account. This will help future-proof your lifestyle as money will have been set aside for special occasions and emergencies.
7. You will be able to manage on a lower income job as you will not be tied into any lengthy financial contracts. This means you have greater flexibility in the type of job you can do – making it easier to do something you have passion for without worrying about the salary.
Overall, the benefits of getting out of debt far outweigh the reasons you get into debt in the first place. The benefits above are not the only benefits, but they are some of the most important ones that will help you decide to work your way out of debt and then remain debt free in future.