If you have ever lived paycheck to paycheck you know it is no cakewalk. Oftentimes, people are living this way because they don’t have all of their debts paid off or their cost of living is simply too high. Relieving that stress is only one of the many advantages of being debt-free. Here are some more to inspire your journey.
3 Advantages of Being Debt-Free
Anyone who has decided to embark on their own debt freedom journey probably knows most of the benefits of living a debt-free life. However, here are three perks you may have not considered yet…
- You get an instant pay raise. When all of your debts are paid, you’ll have more free income to spend, save, invest, and live your life with. Think about it. Every monthly payment you are making now towards an account will now be yours to spend as you wish. For us, that would mean more than $1,000 in extra cash month to month.
- You’re able to have more fun. Instead of borrowing money to go on vacation or biting your nails over the cost, you can stash away money more easily for fun things. You may feel like you are pinching pennies to make these things happen but you are able to freely take vacations and go out to have fun without worrying about where the money is being borrowed from.
- The potential to gain wealth is greater. Being debt-free will open more doors for you than you could imagine. You can create a plan to generate wealth for yourself and your family. You might even be able to become a millionaire because you’ll have the freed-up money to start saving and investing. If you are able to build up your net worth this way you are more likely to be able to leave behind a legacy for your family.
Debt Freedom Does Have Some Disadvantages
Believe it or not, not everything that comes with debt freedom is beneficial. There are a couple of disadvantages to being debt-free too.
- It can have a negative impact on your credit score. You would think paying off all of your debts would have a positive impact on your credit score but it can sometimes have the opposite effect. If you work to pay everything off and avoid debt altogether, your score may go down because you have no way of proving you will pay for things on time. This can make it hard to get a mortgage or loan of any type.
- You may feel out of touch with the rest of the world. Debt freedom also puts many people out of touch with the things going on in the financial world. For instance, if you are focused on paying things off and stashing money away you may miss a big investment opportunity. It can also make you feel withdrawn from family and friends. While everyone is out on Friday night, you may make the conscious decision to stay in and save money.
That being said, the advantages of being debt-free outweigh the cons every time when it comes to improving your finances. So, don’t let these two things stop you from pursuing your debt-free lifestyle.
Read More
- Slow Progress is Better Than No Progress
- How to “Spring Clean” Your Finances
- Paying Off Debt vs Saving: Which Is Better?
Amanda Blankenship is the Director of Social Media for District Media. In addition to her duties handling everything social media, she frequently writes for a handful of blogs and loves to share her own personal finance story with others. When she isn’t typing away at her desk, she enjoys spending time with her daughter, husband, and dog. During her free time, you’re likely to find her with her nose in a book, hiking, or playing RPG video games.