Are you tired of living paycheck to paycheck and shifting from one monthly payment to the next? Way too many people think it’s “normal” to stress about money. They don’t know the advantages of being debt-free and think a life without monthly payments is dull or a fantasy.
If you’re trying to picture being debt-free, these advantages will do more than tickle your ears.
Get an Instant Pay Raise
Sometimes, you don’t need to ask your boss for a raise to have more money at the end of every month. How so?
Eliminating monthly payments is the equivalent of a pay raise at work. Instead of thinking you need to make $500 more each month to afford a new loan, change your mindset. Be happy with your current possessions and focus on repaying your current loans first. After you pay them back, don’t think about the next big purchase.
In fact, you might be richer living on $35,000 a year than making $50,000 and living paycheck to paycheck. After all, think of all the lottery winners and celebrities that are millionaires in public but are broke and end up on a terrible reality tv show.
Gain Financial Security
With more money at your disposal, you can supercharge your financial goals. Instead of being like the 63% of Americans who can’t afford a $500 emergency, you can pay for life’s surprise expenses with ease. Being debt-free means you can quickly save for planned expenses and even boost your emergency fund beyond the recommendation of three months.
By having a cash cushion in your bank account, you can pull from savings and repay yourself without interest instead of making monthly interest payments to the bank.
Tip: Reducing your monthly expenses is only one step in getting debt-free.
You can also take a FREE course to learn how to get out of debt now.
Have More Fun
Some debt-free households have a “fun fund.” Instead of borrowing money to go on vacation, you can put cash in this fund each month. When it’s time to pay for a vacation or go to a concert or game, you don’t have to borrow money or pull from your life savings to make it happen.
Maybe you’ve heard this Dave Ramsey saying before, “If you will live like no one else, later you can live like no one else.” By focusing on getting out of debt, you can enjoy the advantages of being debt-free for the rest of your life.
Maybe you have co-workers and family members who are hoping they can afford to retire. Because you’re debt-free, you can live the life your friends can only dream of. After all, you can be rich and wealthy because you no longer owe other people money and don’t have any left for yourself.
Sure, you might pinch pennies to take simple vacations, drive old cars, and stay in on Friday nights to live within your means, but you can enjoy the rewards afterward. Although you should still manage your money responsibly after being debt-free, you can finally take that dream vacation, upgrade to a better car, or complete that home renovation you’ve been putting off.
You don’t have to squirrel away all your money for the future. Being debt-free gives you the luxury of enjoying the finer things in life without worrying if you can still pay the monthly bills at the same time.
Become a Millionaire
You will also discover that being debt-free can open many doors of opportunity you couldn’t afford before. Instead of making somebody else rich, you can make yourself rich and maybe even become a millionaire.
For example, you can finally invest the recommended monthly amount that the retirement calculator recommends so you can retire on-time with an abundant nest egg. Or, contribute to your child’s 529 plan, so they don’t have to graduate college with a mountain of student loan debt.
The possibilities are endless. Although being debt-free won’t make you an instant millionaire, it’s finally a real possibility with diligent saving.
Life isn’t only about how many zeros are behind your bank account balance but being able to build net worth is the best way to leave a legacy behind for your family.
You Have Excellent Credit
Not constantly borrowing money has many advantages beyond being able to build wealth and having increased financial flexibility. Your credit score will improve because you’re not continually having new accounts being added to your credit report.
Having clean credit gives a better first impression to your future landlords, employers, and lenders. Sparingly applying for credit shows you’re responsible with how you handle your money. When you need to apply for a loan, you can get the lowest interest rate available for the entire amount you request to borrow.
You Can Focus on More Important Things in Life
Wondering if you’ll have enough money to make ends meet each month, takes away your time to focus on other important life matters. Life is a game of Chess and you need to always plan one or two moves ahead in order to win.
If you’re only focusing on surviving one month to the next, you can find yourself missing out on some of these life events:
- Watching your children grow up (they’re only young once)
- Having fun with friends without thinking “Can we afford this?”
- Being able to take the weekend off from work to relax
- Switching careers because you can’t afford to quit
- Showing others how to get out of debt
- Using money to help others (Charity)
Worrying about money isn’t healthy. Instead of getting caught in the trap, take a minute to evaluate your finances and make a plan to get out of debt. It can truly be the best hour you’ve ever spent thinking about money.
Getting into debt is easy as banks are willing to lend anybody money with a steady income. While there are a time and place for being in debt, it should be for as few years as possible. By making a few changes to you handle money on a month-to-month basis, being debt-free can be a reality sooner than you imagine.
Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.