For some people, living a debt-free life is just a dream, but for others, it’s a reality.
It takes commitment, self-control, and discipline to move from a life full of debts to one free of them. Although the process of becoming debt-free may not be luxurious, its end results are worth all the pain and sacrifice it may require.
Debt-free individuals experience financial freedom that allows them to live life more fully, since they do not have to be held back or stressed by burdensome debts. This is definitely a nice place to be at, and all it requires is personal commitment and determination. (See also: 6 False Assumptions About Debt-Free Living)
Why Debt Is Bad for You
One of the biggest problems with debts, especially large ones, is that they prohibit you from spending your earned money the way you want to. For example, your may want to save money for retirement or invest to secure your children’s future. However, your obligations to pay back your mortgage, a personal loan, or any other loan may hamper your efforts to reach these life goals.
When you accumulate many debts and are unable to pay them, it can also greatly affect your credit rating. Such a situation may occur due to late payments or defaulting on your monthly obligations. In addition, you may also have to pay hefty fees and penalties, which can further destabilize your financial status.
Getting Rid of Debt
When your money is unable to work to your advantage because of debts, it means you need to take the necessary action to eradicate the debts. Failure to address the issue will only slow your efforts towards achieving your goals.
Creating a budget is one of the simplest, yet most effective means of getting out of debt. Cut down unnecessary expenses in order to create a surplus in your finances. Direct the extra savings towards loan repayment. Remember that sacrifice is necessary when trying to get rid of debt. Once you have the budget in place, stick to it to the best of your ability and strive to make your loan repayments in time every month. In time, this budget should help you pay back your debt and meet all other financial obligations while giving you a clearer picture of how you use your money.
Benefits of Living a Debt Free Life
A debt free life means more money. Since you will have less monthly expenses, your cash flow will definitely increase.
More cash flow will enable you to have greater financial freedom. You might even be able to go on that vacation you have always desired or comfortably pay for your child’s tuition in a good school.
Not having to deal with debt will also allow you to invest your money for greater returns. You will therefore be able to generate more wealth and increase your financial status. You can also effectively fund your retirement to secure your future.
What are your reasons for getting out of debt?