We live in a consumeristic world where people tell themselves that debt is as sure as death and taxes. However, that shouldn't be the case, especially if you can avoid the plague of taking on unnecessary loans.
While it's true that debt is a means of survival for a percentage of the population, that's not the point of this post. This post is directed to people earning enough but still trapped in the debt cycle.
In this post, I'll share seven benefits of being debt-free.
Table of Contents
- 1. Freedom to Choose
- 2. Improved Mental Health
- 3. Better Physical Health
- 4. Better Relationships
- 5. Increased Savings and Investing Rate
- 6. More Disposable Income
- 7. One Step Closer to Financial Goals
- Final Thought
1. Freedom to Choose
If you're debt-free, you will have more confidence to choose between options that come your way.
I remember a quote from Kathryn Bernardo in the movie Hello, Love, Goodbye. She said, "Ang choice, para lang sa may pera." Though this quote is more applicable to the breadwinners, it can also apply to debt.
I met people, especially when working in the academe, who are earning enough but are spending more than they take home and taking on unnecessary loans until they have nothing left.
Many of them have a gross income of more than P30,000, but because of their various loans, they are only taking home P5,000 for their monthly salary. It may look ridiculous to some, but this reality exists in many public schools and universities.
So, even if some of them have long contemplated resigning to focus on other endeavors, they said they just can't leave because of their debt.
By becoming debt-free and avoiding debt (if you still don't have any), you will be more confident that if you ever want to leave your work or shift to a different career, you can do it because you're not afraid of missing payments.
2. Improved Mental Health
Debt will also plague your mental health, especially if you don't have the means to pay for them.
There are people sharing their experiences in forums, such as when they maxed out their credit cards while enjoying luxurious living. Then, when the bills came, they didn't have the money to pay for them.
Debt can cause anxiety, fear, restlessness, self-pity, depression, and other negative mental states, especially if you feel trapped in your situation.
So, by striving to live debt-free and taking the baby steps and sacrifices necessary to improve your current situation, your mental health will also improve.
3. Better Physical Health
Our mental state will manifest in our physical health. For instance, if you're depressed, anxious, and restless, it will probably be challenging to sleep, which will cause a lower energy level and a weaker immune system. It may even lead to some serious lifestyle diseases along the line.
So, by finding ways to pay off debt fast, like through side hustles, lowering lifestyle costs, selling some of your possessions, and other strategies, you can improve your mental health, leading to better physical health.
4. Better Relationships
No one likes people who constantly ask to borrow money because lenders don't get their money back frequently, leading to a destroyed relationship.
Remember that when it comes to lending and borrowing, especially with friends and family, the issue is not only about the money but also the broken relationship and trust.
So, by aiming to be debt-free as fast as possible and paying your debtors, you can improve your relationships, especially if you're not constantly checking over your shoulders to see if one of your lenders is following you.
There is great satisfaction and confidence when you can stand tall and not hide from the crowd to avoid bumping into your lenders.
5. Increased Savings and Investing Rate
Since you don't have any debt to pay, the money that's supposed to go to your lenders will be freed up, which can be wisely used to increase your savings and top up on your investing, which will take you one step closer to your financial goals.
There are many high-interest-rate savings digital banks you can choose from and a variety of investment vehicles you can try, especially if you want to retire early or do other things.
6. More Disposable Income
Being debt-free also opens up to more disposable income, which you can use to buy big-ticket items, like a house or a car. Just ensure you do not fall into another debt trap by taking on long-term loans, which will redo the cycle.
More disposable income also allows you to buy something for yourself and your loved ones, like clothes, a gadget upgrade, or an out-of-town travel with your special someone.
7. One Step Closer to Financial Goals
If you're a parent, then you'll want to prepare for your child's education, even if it's still 10-15 years in the future.
By being debt-free, you can use some of your freed-up money to buy long-term investment products for your child's education.
Another financial goal you can have is if you're planning to get married, you can use your freed-up money to buy an engagement ring and start saving for your wedding. It's also important not to take debt into your marriage.
Final Thought
Being debt-free is one of the biggest flex you can do because it's countercultural and often seem impossible. Don't fall in the debt trap, which kills people's hopes and dreams.
Take control of your finances, seek help if needed, and be responsible. Your future self and family will thank you.