Whether it’s credit card debt, student loans or personal loans that are burdening you, now is the time to pay them off for good. Although living in debt may seem to be the norm nowadays, it can hold you back from reaching your financial goals and living the way you want. Check out the list below to get motivated to treat debt like something that needs to be taken care of immediately.
No matter how “good” your rates may be, interest on a debt or loan is still extra money that you have to pay. Interest rates can magnify the costs of your purchases quickly. Therefore, even if you snag a deal on a car or an article of clothing, you end up paying way more for it. And interest can add up without you even realizing it. Next time you only pay the minimum amount of your credit card debt, it can be a good idea to calculate how much interest you will be paying overall if you stick to your repayment plan. Then imagine what you could do with that savings if you repay the debt more aggressively. (Check out this credit payoff calculator to see how much interest you’ll pay — or save.)
2. Credit Score
Remember when you took out a loan? Have you ever bought a house? Applied for a credit card? That magic number lenders check to see what interest rate you qualify for and how much money they will lend you is called your credit score. Carrying too much debt can impact your credit score, which can then impact your ability to buy a home, a car or another major purchase. You can see how your debt is impacting your credit scores for free on Credit.com.
3. Financial Security — Now & Later
If you dream of the days you can walk out of your office forever or even just want the peace of mind that comes with knowing you have reserve cash in case an emergency comes up, it’s a good idea to pay off your debt. Saving for retirement and ensuring a prosperous financial future is made easier when a bulk of your paycheck every month isn’t going toward repaying debt.
Some of your more financially secure peers probably spend their time worrying about which CDs or stocks to invest in, whether they should buy or rent their next home and which government bonds have the highest yield instead of barely making ends meet with their monthly payments. The faster you pay off your debt, the faster your money can work for you instead of the other way around.
Finally, debt can wreak havoc on your emotions, relationships and personal well-being. Worrying about whether you can meet your debt obligations can cause a lot of anxiety. This anxiety can then leave you feeling less connected to your friends, family and co-workers. It seems obvious but by paying off debt, you will no longer have to worry about paying off debt!
There are many methods to speed up your debt repayment. Once you decide that it’s a priority, you can begin finding the best way (or ways) for you. You can consolidate, make bulk payments if possible, refinance, cut spending, pick up a side hustle or even create your own combination of methods.
More on Managing Debt:
- The Credit.com Debt Management Learning Center
- How to Pay Off Credit Card Debt
- 5 Tips for Consolidating Credit Card Debt