MONEY
6 Benefits of Being Debt-Free
August 22, 2022
For many, being debt-free is an ideal way to live — here are 6 good reasons.
1. INCREASED SAVINGS
That’s right, a debt-free lifestyle makes it easier to save! While it can be hard to become debt free immediately, just lowering your interest rates on credit cards, or auto loans can help you start saving. Those savings can go straight into your savings account, or help you pay down debt even faster. More savings allows you to build an emergency fund, plan a fun trip, and even save for retirement.
2. RELIEF FROM ANXIETY
What if you had no bills? For many Americans that would be a welcome relief. There’s anxiety in owing money. Knowing you’re expected to pay large bills can be unsettling, especially if your budget is tight. When you are debt-free you won’t have to worry about making debt payments.
3. MORE FUN
Funding your dreams gets a whole lot easier when you have no debt. With the money you would otherwise be paying toward debt you can create a “fun fund” that allows you to enjoy life and do things like travel, eat out, or take up a new hobby without having to worry about debt.
4. THE FREEDOM TO CHOOSE
A debt-free lifestyle lets you choose what you want to do with your money. That freedom can put a spring in your step because instead of pouring any extra money into debt, you can spend the money on whatever you choose.
5. INCREASED FINANCIAL SECURITY
A debt-free lifestyle can increase your financial security and means that you don’t have to worry about debt hanging over you if the unexpected happens. Things like a sudden job loss, or unexpected medical issue are challenging in the best of circumstances.
6. INCREASED SECURITY
When you have no debt, your credit score and other indicators of financial health, such as debt-to-income ratio (DTI), tend to be very good. This can lead to a higher credit score and be useful in other ways. Landlords can use your credit score in rental applications, you may qualify for better mortgage rates if you’re looking to buy a home, and you may be able to avoid paying deposits on utilities and cell phones.