Nobody really wants to carry credit card debt – but it’s easy to rationalize debt as just one more unpleasant part of life. For many people, credit card debt becomes an endless cycle – we pay it down, rack it up again, pay it down, rack it up again – and so on.
But have you ever stopped to think about just how great it would be to live debt-free? About how much freedom – financial and emotional – comes from not being in debt?
If you’ve become complacent about your debt – or if you just need a little motivation to start getting serious about paying off your balance(s), it might help to think about all of the great benefits that come from having a zero balance on your credit card:
1. You’ll have more money. I know, this is kind of an obvious one – but seriously, have you ever thought about how much extra money you’d have if you didn’t have any credit card debt? Let’s say you owe $10,000 in credit card debt, and your monthly payments are around $300 (including interest at the average rate of around 15%, of course). That’s $3,600 a year that could be going toward other things.
In other words, paying off your credit card debt would mean that you’d end keeping way more of your hard-earned money, which leads to our second benefit . . .
2. More money = more freedom. Once you’ve stopped forking over thousands of dollars to your credit card company, you’ll be able to do all sorts of great things that you couldn’t do before. Like travel. Or save for retirement. Or invest. Or start an emergency fund. Or treat yourself to the (very) occasional impulse purchase.
3. You’ll be healthier. Debt is stressful – anyone who has ever lost sleep over a sky-high credit card balance can tell you that. But did you know that there’s actually a condition called “Debt Stress Syndrome”? In a 2009 appearance on CBS’ Early Show, clinical psychiatrist Dr. Alan Manevitz described the health hazards associated with the stress of living with debt. According to Manevitz, folks who are stressed out about debt are more likely to suffer from common stress-related health issues such as migraines, anxiety, and ulcers – and they’re also more susceptible to other illnesses, such as the flu. Debt-related stress can also exacerbate existing health issues. A 2008 survey about stress and debt conducted by AOL and the Associated Press linked debt-related stress to an increased risk in severe depression and heart attacks.
Bottom line: Debt is hazardous to your health. The sooner you get out of debt, the better you’ll feel.
4. One less “what if” to worry about. Life is unpredictable. So is the economy. And the job market. Even if you have a relatively secure job, you should still have some idea of what you’d do if you lost your job or were suddenly too sick to work. Even if you have a few months’ worth of living expenses saved up in an emergency fund, high-interest credit card payments will put a serious strain on your finances.
If you don’t have an emergency fund and you can’t afford to make your credit card payments, you could end up seriously hurting your credit score – which can, in turn, seriously hurt your ability to do things like rent an apartment, buy a home, or even find a new job. If you’re not in debt, you’ll have the ability to build up a stronger financial safety net to guard against the unexpected.
So, there you have it: Four compelling reasons to get – and stay – out of debt. Do you have any more to add to my list? What do you want to do when you get out of debt? What’s your biggest motivator for staying out of debt? Leave me a comment and let me know!