Once my wife and I sold our house after the housing market collapse and downsized to a smaller home, we officially became debt-free. After paying off student loans, paying off baby birthing bills for our two kids, staying credit card debt free, and riding ourselves of a mortgage, it was a huge sigh of relief as we felt the weight of debt lifted from our shoulders. However, there can be more benefits to becoming debt-free than just the stress relief.
A MSN Money article regarding the joys of being debt-free asks the question, "What happens when you don't have to worry about debt anymore?" It's answer? "You suddenly have freedom to make choices based more on your hopes and desires and less on financial obligations! Imagine a life in which you can choose a career you love -- even if the pay isn't as high as other jobs -- because you don't have debt payments to make. Or a life in which you can take that trip you've always wanted to go on or save for the home of your dreams -- all because you can apply your extra money toward a savings account rather than paying off debt."
1.) Long-term savings
Without debt hanging over your head, there can be so many more options as to what to do with your money. According to that MSN Money article I mentioned previously, "That's the ultimate financial freedom -- to choose where your money goes. Without debt, you have more ability to invest and watch your money grow, put aside for your retirement, and build a strong financial house."
In our case, we've been able to do things like make more purchases outright (keeping debt at bay), build our emergency fund, and begin to invest for the long term rather than constantly deal with the here and now in the form of debt payments. Even just sticking a little extra cash in the old checking account each month feels better than mailing it off to someone in the form of a debt payment.
2.) Other income earning options
Of course without debt absorbing more of our money, there can be more opportunity to branch out and try to develop other income earning options with that money. It's money kind of building on money…a snowball effect of sorts.
Whether it's through starting a side business or having the ability to take a chance and becoming self-employed since expenses are lower (as I did), or investing in things like stocks, bonds, commodities, mutual funds, certificates of deposit, real estate, or other investments that there may not have been money available to try before, developing other income earning options can be a real benefit of paying off debt.
3.) The reverse snowball effect
Once the real effects of being debt-free begin, it's amazing what can be accomplished. Being able to convert that $400 that was going toward interest payments on debt each month into an investment that just earns 2 or 3 percent over the next 30 years could grow to become more than $200,000! Not bad considering it would only have been given to creditors for the right to use their money otherwise.
Turning debt around to grow the money that would have otherwise gone toward it can make a huge difference. Consider using online financial calculators to get a better feel for how this money can grow over time. Doing so can not only illustrate how this money can grow, but in what ways, and in what amounts over time.
A MSN Money article regarding the joys of being debt-free asks the question, "What happens when you don't have to worry about debt anymore?" It's answer? "You suddenly have freedom to make choices based more on your hopes and desires and less on financial obligations! Imagine a life in which you can choose a career you love -- even if the pay isn't as high as other jobs -- because you don't have debt payments to make. Or a life in which you can take that trip you've always wanted to go on or save for the home of your dreams -- all because you can apply your extra money toward a savings account rather than paying off debt."
1.) Long-term savings
Without debt hanging over your head, there can be so many more options as to what to do with your money. According to that MSN Money article I mentioned previously, "That's the ultimate financial freedom -- to choose where your money goes. Without debt, you have more ability to invest and watch your money grow, put aside for your retirement, and build a strong financial house."
In our case, we've been able to do things like make more purchases outright (keeping debt at bay), build our emergency fund, and begin to invest for the long term rather than constantly deal with the here and now in the form of debt payments. Even just sticking a little extra cash in the old checking account each month feels better than mailing it off to someone in the form of a debt payment.
2.) Other income earning options
Of course without debt absorbing more of our money, there can be more opportunity to branch out and try to develop other income earning options with that money. It's money kind of building on money…a snowball effect of sorts.
Whether it's through starting a side business or having the ability to take a chance and becoming self-employed since expenses are lower (as I did), or investing in things like stocks, bonds, commodities, mutual funds, certificates of deposit, real estate, or other investments that there may not have been money available to try before, developing other income earning options can be a real benefit of paying off debt.
3.) The reverse snowball effect
Once the real effects of being debt-free begin, it's amazing what can be accomplished. Being able to convert that $400 that was going toward interest payments on debt each month into an investment that just earns 2 or 3 percent over the next 30 years could grow to become more than $200,000! Not bad considering it would only have been given to creditors for the right to use their money otherwise.
Turning debt around to grow the money that would have otherwise gone toward it can make a huge difference. Consider using online financial calculators to get a better feel for how this money can grow over time. Doing so can not only illustrate how this money can grow, but in what ways, and in what amounts over time.
