For many, being debt-free is an ideal way to live — for good reasons. When you aren’t held back by financial obligations, such as loan payments, you can live a life that is rich in many ways.

Consider the following benefits of being debt-free. You can enjoy:

1. The Freedom to Choose

When you’re overburdened by debt, you find yourself trapped on the debt treadmill. Being free of owing others money puts a spring in your step, because you know that you’re not obligated. Instead of pouring any extra earnings into debt, you can spend the money on whatever you choose, such as traveling or giving to charitable organizations.

2. Relief From Anxiety

There’s anxiety in owing money. Knowing you’re expected to pay a certain amount on bills like credit cards and auto loans can be unsettling, especially if your budget is tight. Worse is the anxiety that comes with having to scrape together your mortgage payment each month. Pay down your debt and you’ll feel an immense relief at knowing that if something happens and your income becomes limited, you won’t have to worry about making debt payments.

3. Increased Savings

No debt also means paying no interest and no interest means you can funnel a significant amount of money into your savings account. Additional savings allows you to build an emergency fund and save for retirement.

4. More Fun

Funding your dreams gets a whole lot easier when you have no debt. With the money you would otherwise be paying toward debt you can create a “fun fund” that allows you to enjoy life and do things like travel throughout Europe or take up a new hobby without having to worry about the expense.

5. Better Financial Health

When you have no debt, your credit score and other indicators of financial health, such as debt-to-income ratio (DTI), tend to be very good. Though this may not seem important since your goal is not to get more loans or credit cards, good credit is useful in many ways. Potential landlords can use your credit score to decide whether to rent to you, and you also get better car insurance rates and avoid paying deposits on utilities and cell phones.

6. Increased Security

Being debt-free makes the prospect of losing your home less likely, and it means that you don’t have to worry as much if you lose your job. If you do become unemployed, you’ll have the security to look for the ideal position rather than grabbing the first thing that comes along because you have to pay off your debt. Living free-and-clear also means that you can leave a job that you don’t like without worrying about your finances.

Participation Pays Off: What do you think is or will be the biggest benefit to being debt-free?

4 Responses to 6 Benefits of Being Debt-Free

  1. Paul says:

    When you’re debt free you can use the money you would otherwise pay debts, to help build your credit for a future car or mortgage

  2. Mark says:

    Too many people, until recently myself included, work for the things they want opposed to the things they need. The list of needs are stable and unchanging generally. The list of wants are endless and there is always something else to want. Most things we want are for the wrong reason. It is ego projection. Cars, clothes, gadgets etc. Do you NEED or want it?

    No one needs or wants debt…

  3. I really like the idea to start a “fun fund.” Once the debt is gone, you take the money that you would have used to pay it off and put it toward a travel fund. I was trying to imagine what I would do with that money once I could use it. Travelling is a better idea than buying more things.

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