Over and over again we are told that we should be debt free, but rarely are we told why. Sure, we all know that it’s better to pay cash than to owe someone, but why? No one every talks about why you should want to live debt free, just that we should. Living debt free has more advantages than you might realize. (see also our -> The Debt post to see more)
To start, do you realize that when you’re in debt for something, whether it be your home, car, boat or whatever, you don’t truly own that item? At any time you are late with a payment, you can easily lose whatever it is that you’re paying on. This knowledge, while common in our lives today, can cause extra stress on your life.
Speaking of stress, people that live their lives under a cloud of debt often have twice as much, sometimes triple the amount of stress that debt-free people have. Stress isn’t healthy and among other things can cause loss of sleep, weight gain and bigger medical issues so it makes sense that living a debt free life would help you not only be more financially free, but also in better overall health.
If less stress isn’t enough of a reason for you, how about your budget? Can you budget handle payment upon payment for the items you want? Monthly payments can get out of control very easily and as I said earlier, when you’re making them, the item you’re paying for isn’t truly yours until it is marked paid in full.
So how are you supposed to pay for that nice house you’re looking to buy? How do you get behind the wheel of your dream car? Cash. Cash really is king as they say and by making sure you can pay cash for your items, you’ll eliminate the need to take on debt and your belief in the debt free lie.
On another financial front, you have the sheer amount of extra that you will pay when you take debt. Interest, penalties, processing and administrative fees can all add up to thousands of extra money owed on top of your principal debt amount. Living debt free means that you keep those monies in your pocket longer.
To make it easier on yourself, you can “pay” yourself a sort of mock payment. Figure out a number you want to go with and put that money aside in a savings account every week or month just as you would a regular car or house payment. The difference is that your money will stay with you, you won’t be accruing penalties and fees and eventually, you’ll be able to sign that deed or title knowing that you walk away without owing anyone anything.
Have you been able to become debt free?