Debt feels like it can take over your life. You remember it every time you reach for your wallet. It forces you to delay your big dreams, and it keeps you from preparing for your future.
Becoming debt-free isn’t easy. It takes budgeting, good money management, and you may need to seek out help such as non-profit credit counselling services. But you’ll feel like a huge weight has been lifted when you pay down that last credit card.
These are only six of the things you can do when you enjoy a debt-free life, but there are many more. You’ll notice you’re less stressed out and have time to focus on your own priorities.
#1 Save for a Down Payment
A first home is a big deal, but it can feel like an unachievable goal when you’re still struggling with student loans, credit card debts, or lines of credit waiting to be repaid. One of the biggest obstacles to homeownership is saving a down payment.
Saving a bigger down payment is the best thing you can do for your future self. While you may be able to get a mortgage with only a 5% down payment, saving 20% or more means your monthly mortgage payments will be considerably smaller.
#2 Invest in Your Retirement
When was the last time you checked your retirement fund? Living in debt makes it hard to invest. You’re constantly under pressure to pay down the money you owe rather than building the money you have, often because the interest charges on credit cards are higher than the returns you can expect from your investments. Once you are debt-free, you can focus on the future.
#3 Guilt-Free Fun
Not all of your decisions need to be about saving and investing. Once you’ve paid everything off, you can enjoy yourself without the guilt that comes with knowing you should have put that money toward debt. Just make sure that expenditures like travel are paid for in cash, not plastic, and you can use your money however you want. If your goal is a dream vacation, embrace it. The best motivations for becoming debt-free are personal, not what everybody else wants or says you should want.
#4 Financial Security
You’ll have more income to put into an emergency fund and fewer urgent bills and expenses you have to pay. With that extra breathing room, you’ll be able to sleep better at night knowing you’re not living paycheck to paycheck.
#5 Start a Family
Record debt levels among millennial households are causing them to delay starting a family because they don’t have enough money. It keeps you from buying a home, paying for a wedding, or making sure you have enough saved away to start your family.
#6 Open a Business
Always wanted to be your own boss? It helps when you’re not struggling under personal debt. Often business lenders will want to look at your personal assets and credit score before issuing a loan to a business that’s just launched. Debt freedom could be just the beginning of your dreams.