While credit cards and personal loans may help you reach new financial opportunities, they also can weigh down your credit score and sometimes your life. It is important to build a good credit history over time, but it’s not necessary to always have debt in your life. So take charge of your spending, enact a plan to get rid of your debt, and reap the rewards of a debt-free life.
Here are a few of them.
1. You’re Happier
Now that debt has exited your life, you won’t need to worry or have anxiety when the mailman drops off your monthly statement. You also can answer unknown phone calls – collection agencies will no longer be hounding you now that you’re debt free! You can sit back and enjoy your coffee on the porch. Hey, you can even go treat yourself to shopping once in a while. You’ve earned it.
2. You Have a ‘Real’ Savings Account
You may have struggled in the past contributing to a savings account, but now that you’re debt free, you can make good use of it. I recommend re-evaluating your goals and budget. Are you planning on taking a trip anytime soon? Take this time, to save up for something extravagant. You may have missed out on a lot with debt weighing you down; treat yourself to the gift of saving. You may even consider taking this time to start an emergency fund to help you stay prepared for unexpected expenses.
3. You Have Cash Flow
Cash flow is almost like winning the lottery — the money that used to be spent on debt can now relax in your checking or savings account. You can go to the ATM and take out money as you please. You can reward yourself (as needed) and relax knowing there is now money in your account. You no longer need to sacrifice half of your paycheck and put it towards your credit card bill or student loan — you can sit back and take it all in. Tip: Remember to manage your cash flow wisely. You don’t want to fall back into debt.
4. You Have Better Financial Health
Being debt-free not only means you won’t have anxiety about your bills anymore, but you can now look at your credit score without cringing! Consider ordering multiple copies of your credit report annually and checking your credit score frequently so you stay on track. Try and continue to improve your financial health. Make sure all your bills are always paid on time and in full. While it may not be your goal to take on any new debt, having good financial health can be very beneficial. You may now qualify for lower interest rates when taking out a car loan or personal loan of your choice.
5. You Have the Opportunity To Do More
You may notice that once you live a happier and more care-free lifestyle that your mind opens up new opportunities for you to try. Maybe you’re interested in traveling, backpacking or even joining the Peace Corps! Now that you’re debt-free, there is so much more you can do with your life. Take this time to really enjoy it. Explore new opportunities and join new organizations. You can even spread your financial literacy around the world and teach others what you have learned about debt. It can’t hurt to get more involved with your newfound financial freedom.
And remember, just because you’re debt free doesn’t mean your credit can’t take still take a hit from unexpected incidents like credit report errors, fraudulent charges or identity theft. It’s now as important as ever to keep an eye on your credit. After all, you’ve worked hard to get where you are. You can keep track of your credit by checking two of your credit scores for free, updated monthly, on Credit.com.
More on Credit Reports & Credit Scores:
- How Do I Dispute an Error on My Credit Report?
- What’s a Bad Credit Score?
- How Credit Impacts Your Day-to-Day Life
Image: Jacob Ammentorp Lund