The benefits of being debt free
Paying off your debt can positively impact multiple aspects of life. Discover the financial, mental and relationship benefits of being debt free.
October 2021 – 3 minute read
Key takeaways from this article:
- The financial benefits of being debt free
- The mental benefits of a debt free lifestyle
- The relationship benefits of debt-free living
- Where do I start?
Over the course of your life, you’ll most likely come across some type of debt. Certain debts signify positive developments in your life such as going to university or buying a home. However, if you find yourself accumulating credit card debt on top of your mortgage, student loan or car loan, it can start to feel overwhelming. Paying off your debt can have a positive impact on your mental and financial wellbeing as well as improve your relationships with others. We can help you understand how to pay off your debt with our guide to debt consolidation. But first, consider the following benefits of being debt free.
The financial benefits of being debt free
More of your income is available to you
The portion of your income that was devoted to paying off debt becomes yours to spend or save as you wish. In short, by paying less, it will feel like you are earning more. Whether you put the money towards monthly expenses or something bigger like your next holiday, you can enjoy the autonomy and financial freedom that being debt free brings.
Less financial risk
If you are in debt without an emergency fund to fall back on, things can get dicey quite quickly if you suffer financial hardship or job loss. A life without debt gives your budget some wiggle room so that if things go awry, you have a safety net to fall back on that is not tied to debt payments. Being debt free also means that you don’t have to worry about late payment fees, or in a more drastic scenario, losing your car or home.
Improved credit score
Paying off your debt can give you a better credit score which has many benefits. A higher credit score can get you a better interest rate on any future loans as well as lower insurance premiums. It can also make you more desirable to employers or landlords who use credit scores as a measure of reliability.
Taking the time to pay off your debt now means you can free up that extra money for your retirement savings. Without the obligation of making regular debt payments, you can put more money into a separate bank account for your future financial goals and potentially retire earlier than planned.
The mental benefits of a debt free lifestyle
Living with uncertainty about your financial situation can create a great deal of unwanted stress. Being debt free can alleviate this stress as you will not be preoccupied with worrying about how to pay the bills or suffering a financial shock. The time spent stressing over money can instead be spent enjoying yourself with your friends and family.
Improved mental and physical health
Being in debt can be as much of a headache literally as it is figuratively. Stress can manifest itself physically in the form of health problems such as insomnia, pain, high blood pressure or simply feeling run down. When you take care of your mental health, your physical health follows. Becoming debt free can reduce anxiety about money and quite literally help you sleep at night.
Those who are in debt may hide the truth from their friends or keep up the appearance of a life that looks perfect from the outside. Living a debt-free lifestyle can release you from this burden and boost your confidence as you experience feelings of pride about your financial situation.
Debt can have an impact on your productivity as you may be distracted or unable to concentrate due to money worries. When you are debt free, you have more brain-space and attention-span to focus on tasks. This improved cognitive ability can help with decision making, self-control and, overall, positively benefit your working life.
The relationship benefits of debt-free living
Be a better colleague
Financial stress can negatively impact the way we treat others. Anxiousness about debt may present itself as impatience, anger or an inability to actively listen to your friends and colleagues. Debt payoff can minimise this stress which in turn may improve your ability to connect and collaborate authentically with those around you. You may also find yourself with an increased willingness to help and support those in your friendship and career circles where you may have been unable to previously.
Be a better partner
When one or both parties in a relationship are stressed about debt it can cause irritability and short tempers. Paying off your debt together can strengthen your partnership as you demonstrate that you can overcome obstacles and make financial decisions as a couple.
Be a better parent or caregiver
Being debt free gives you back the time that would usually be spent paying bills, making phone calls to the bank and generally worrying about providing for your family. It means you can spend more quality time with your children and the people in your care and give them your undivided attention. Living a debt free life can also improve your mood and your capacity to have fun with those you love.
Where do I start?
As outlined in the above benefits, getting out of debt can positively impact almost all aspects of your life. Read our debt consolidation tips or call us for financial advice on 132 032 and let us help you start the journey towards a debt free life today.
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Things you should know
This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness for the information to your own circumstances and, if necessary, seek appropriate professional advice.
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