6 Reasons to Get Out of Debt

Americans feel conflicted about their debt. About eight out of ten Americans have debts. Most people believe that debt is necessary but that they would rather not have it. Today, I will focus on the benefits of being debt-free. Reducing your debt can also help with some of these feelings.

1. Free up your income. Not having debt payments each month, gives you opportunities to spend your money wherever you want. It also allows more freedom in the kind of work you do. Dave Ramsey posted, “My grandmother always said, ‘There’s a great place to go when you’re broke – to work.'” Debt compels you to work more and harder. If you’re debt free, you are “free” to change jobs, take time off, and enjoy your family more.
2. Less risk. Many people are one paycheck away from losing everything. Budgeting can help with this. But, also, getting yourself out of debt helps. You’ve learned how to budget, live within your means and you have a savings cushion. Debt-free is a big cushion to get by for many months with smaller income.
3. Less stress. #1 and #2 are great reasons and they also contribute to less stress. Debt creates stress. You worry about how you’re going to pay all your bills. When you have debt, sometimes, it is difficult to enjoy doing anything because you are worried about your debt. Getting rid of your debt releases a lot of stress. Then, you can spend time with your family, enjoying your work, and find new hobbies.
4. Better relationships. Do you see the pattern of these reasons all building on the one before? When you don’t have debt, you can enjoy your family more. You can also enjoy all the activities that come with kids even though they are expensive. When you’re not worried about your debt, you know exactly how to pay for those expensive things that come up. I still require my kids to help pay for half of the activities they do once in high school. I think this better prepares them for life. My son plays football and he can’t have a regular job most of the year but he can do a couple of yard clean-ups every month to help pay his expenses.
5. Helping others. I know that helping others helps you. Debt-free means you can help others. Even if you are still in debt, start finding ways to help others that don’t cost money. You can help people shovel snow, rake leaves, visit with family or friends. Once debt-free, you already know the benefits of helping others and will want to continue.
6. Higher Self-Esteem and Confidence. I will give an example. One person goes into a dealership to buy a car not even sure of their credit score or how much they can afford. The second person goes into a dealership with cash to buy a car that they have been saving up for and know exactly which one they want and can afford. Buying a car is a high-stress situation but which of these two is more confident when they walk in the dealership? Which one gets the better car even if they spend the same amount? Buying a car is a great reason to be debt-free and easy to see the confidence it will bring to you.

These are only my top six reasons to be debt-free. But, knowing why it’s good and doing it are two different things. Start with a budget. If you can’t make your budget make sense, you should consider talking to a credit counselor. I offer free budgeting consultations. I do not consolidate your debt but I can help you make a budget that works for you. Erin Barbee erin@e3accountingsolutions.com