What are the benefits of leading a debt free life?

If there is something that financial advisors stress on, it has to be the need for individuals to take charge or rather control of their finances. We all have seen first-hand what debt can do. The constant worrying, the harassment from debt collectors, the loss of assets, self-respect just to mention but a few are things we might not wish even on the worst of our enemies. The truth of the matter is, living a life laden with debt is not fashionable. In fact, there is nothing to celebrate about being deep in debt. You always have to look over your shoulder, your financial decisions are limited and you simply lack peace of mind. With that in mind, what are some of the benefits of leading a debt free life?

Leading a debt free life means freedom

Leading a debt free life is exhilarating, liberating and above all welcoming. I mean, when you are in deep into debt, your choices in life are limited in many aspects. When you are deep in debt, you suddenly find yourself unable to quit the job that you hate, you can’t wake up one day and decide to move from a town that you clearly hate, and you can’t start a business investment. It’s like you become a slave to your own circumstances.

You have to work to repay your debts and you can’t quit a job you feel is not right for you because it’s your lifeline. The same cannot be said of a person who is debt free. Such a person has the freedom to do whatever they want. They can quit a job that is not fulfilling, move to another city if they so wish and not have to worry about looking over their shoulder or not being able to pay their bills. In other words, being debt free gives you a sense of freedom and the power to do what you want and when you want it.

Increased savings

Think about it for a moment. How often do you save when all your income goes into paying off debts? Never! However, when you are debt free, you can put a lot of your money towards saving and by so doing increasing the same tremendously. You have the leeway to save for your kid’s future education without any problems, put some funds aside for an emergency, save for retirement and effectively save towards buying your first home. I mean, being debt free makes life simple!

Debt free means having peace of mind

The constant worrying about where you will get money, the lack of sleep at night, the fear every time your phone rings because you think a creditor is calling becomes a thing of the past. You worry less, your days are much more fulfilling and you have peace of mind in the knowledge that you have your finances in order.

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In a nutshell, being debt free is rewarding in every sense. You don’t have to worry about high-interest rates or what will happen to your property when you default. You become a happy human being and able to make investment decisions without having to worry about interest rates!

Debunking common Debt myths

When we talk about debt myths, we are essentially referring to flawed thinking and assumptions regarding debt commonly perpetrated by individuals not only in the UK but also other parts of the globe. We are primarily referring to fallacious arguments put forth as to why a person should be in debt or rather how they handle the whole issue of debt. Unfortunately, debt myths are deeply entrenched in the social fabric and most of us unknowingly advance perceptions that are in essence inherently wrong or incorrect. Well, let’s debunk common debt myths.

Debtors should be contented with making minimum payments

Well, the proponents of this myth somehow believe that by so doing, a person avoids getting into further debt or letting the same debt spiral out of control. However, let’s be realistic for a moment here. Let’s assume that you have a debt of 4000 pounds with an interest rate of 19.99%. If you were to ascribe to the aforementioned thinking of making minimum payments, it will take you an unbelievable 9 and a half years to clear your debt not to mention that the initial debt would have spiralled to 4664 pounds. In light of this, one should strive to clear off their debts as soon as possible and do away with the myth of simply making minimum payments.

The false sense of good debt

Apparently, there are people who fallaciously believe that they have good debt and therefore there is no cause for worry. Well, this is a false sense of optimism as there is no such thing as good debt. In fact, what we have is either bad debt or really, really bad debt. So long as you are obligated to clear off your debt and defaults could put you in a precarious position, it would, in all honesty, be foolhardy to believe that there is such a thing as good debt. For instance, a lot of people like to think or rather believe that a mortgage is a good debt. But ever wondered what would happen if one were unable to pay for that debt? Well, they would have to clear the same debt by selling their house. How then is that good debt?

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The only way to afford some things in life is through debt

Well, there are people who believe that the only way to afford say a car, a vacation, an education or even a house is through debt. Again, this thinking is flawed. With the exception of say maybe a house, you can indeed afford a vacation, a car or even an education without getting into debt provided that you plan for the same in advance and check how you essentially use your money. Are you intending to go to the Caribbean for a vacation? How about you save for the same for one year. I mean, really, it’s all about planning and handling your finances in the right way.

Clearing off debt will make you miserable

Really? How is that even remotely possible? If you feel that missing out on a Saturday night drinking spree will make you miserable, then you really need to re-evaluate yourself and put your priorities right. The only way to get out of debt is making some serious sacrifices and unfortunately, that means you have to forego some of the things you believe make your life meaningful. In any case, you will be happier when you are debt free as opposed as to when you are deep in debt.

The quickest way to get out of debt is through bankruptcy

Granted, the idea of having your debts written off through bankruptcy might seem irresistible or rather a wise thing to do. However, think of the backlash and the permanency of bankruptcy not to mention the inability to get meaningful credit in the future and you will understand why resorting to filing bankruptcy is not always the best thing to do. You really need to weigh your options carefully when it comes to debt.

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You have sufficient time to clear off your debt

Well, don’t be misled. The best time to clear off your debt is today. It doesn’t matter if you are single, in your first job and in your early 20s. Endeavour to clear your debt today because the more time you waste, the worst your debt situation becomes.