Debt makes one a slave.
Every month without fail, your car payment, credit card bills, student loans, housing loans and other forms of expenses erode away the hours that you spent at a job that kills your soul. Having the burden of unpaid debt restricts one from moving on to greater things that may matter more, such as going on a getaway or even pursuing your passion.
We understand that undertaking some of the debts is necessary. Such debts include a student loan to propel yourself forward in your career, or even housing loan to give yourself a roof over your head.
There are, however, debts which are unnecessary such as the credit card bills on our weekend drinking sessions or splurging on fashion we cannot afford.
Motivating oneself to be debt free requires a great deal of discipline and a whole lot of commitment. Such motivating factor will not be possible without a constant reminder of the reasons behind why being debt free is so important.
” I’m so happy to keep paying this for the next ten years”, says no one ever.
In this guide are 4 good reasons to get out of debt as soon as possible.
Improves Your Credit Score
A CBS Credit Score is a four-digit number based on your past payment history on your loan accounts. It is one of the factors taken into consideration by lenders during a loan application.
The downside of having a less than optimal credit score will result in a few disadvantage:
- You may end up having to pay a larger deposit.
- Almost all insurance companies now factor your credit score when calculating your premium payments for auto insurance policy.
- If you are looking at getting a business loan for your business, your individual credit score will affect your ability to get a loan for your business.
- A negative score or history could potentially keep you from getting a job. This is especially so for government and financial sectors
- Financial institutions outweigh the risk of lending by charging a possible higher interest rate for an individual with poor credit.
Improve your credit score by making loan payments on time, paying off loans before the end of the loan period, and paying off your credit card in full each month.
Being in debt can lead to unnecessary stress when you start questioning your ability to repay your debt payments and cost of living. This constant stress of seeing how much money you owe can result in health implications such as migraines and heart attack in the long run.
Debt Decreases Your Future Standard Of Living
By taking up a loan, what you are really spending is your future income. You are actually borrowing money from your ” future earnings” to pay for something you intend to purchase at the moment.
With that, debt hinders the amount of money available to spend in future reducing your future standard of living.
Rightfully Own Your Assets
When you make a purchase on loan, be it your home or car, you do not really own the assets. The money lender does. By clearing your debt, you own the house you live in, the car you drive, and the clothes you wear.
Royal London in the United Kingdom similarly found that some people who used smartphone budgeting apps report striking changes in behaviour that allows them to budget better. Are you on a smartphone budgeting app today?
This article first appeared in blog.seedly.sg