According to the US Federal Reserve, the average household has $54,000 in debt. I’s a serious amount, but a lot of debtors rarely seem fazed. In a way, they have come to accept debt as a way of life and they see the monthly payments and bills as normal as utilities.
Loans and credit cards are useful, but there’s no reason to consider endless debt as normal. Here are five important reasons why you need to get out of debt now:
You’re paying too much interest.
Here’s an example: if you were told to set aside money from your income each month but were told that you won’t get anything in return, would you agree? That’s essentially what happens when you pay interest.
A lot of credit card holders are use to the routine. They purchase something, but instead of paying off the entire amount, they pay only the monthly minimum, and then they pay through the nose for interest. Interest is tricky, and the longer you let it sit (especially if you pay only the minimum required) the higher the amount you’ll have to pay. In fact, high interest rates can push you even further into debt.
You won’t be ready in case of emergencies.
Debt doesn’t seem like so much of a problem when you are able to keep up with the minimum payments.
However, when an emergency strikes, that’s when you realize the value of being debt-free.
Hospitalization, medical emergencies, home maintenance, car trouble all of these things are quite costly and usually unexpected.
In the event of an emergency, you will have to prioritize these expenses, obviously. That means you won’t be able to make your regular debt payments. This could lead to trouble later on, as defaulting on loans has serious consequences.
It prevents you from investing properly.
If you’re paying off your debt regularly, it’s likely that you don’t have enough left over to invest or save. This means you’re not protecting your retirement years, and you’re thinking short-term instead of long-term.
Investing in your retirement is important because you’re planning ahead and ensuring that you won’t suffer financial difficulties when you’re too old to work. The money spent paying off interest would be better off invested in your retirement fund.
It will stress you out.
Most of the time, you can treat debt like that elephant in the room that everyone has to deal with but no one likes to talk about. At some point, however, the amount of debt will take its toll and you’ll start feeling the pressure. It becomes doubly worse when something comes up and you start getting behind on making payments. With collectors after you, your stress levels are bound to shoot up.
Stress is one of the hidden effects of debt, and people with more debt are more likely to suffer from stress-related diseases like ulcers, anxiety, depression, migraines, and heart disease.
By getting out of debt, you’re improving your health and likely lowering the cost of your medical bills, too.
You’re not free.
It’s not a coincidence that they call it debt-free
You’re constantly bogged down not just by the feeling of debt, but by the fact that you don’t have enough money to spend on anything else. Since you’re tied up with debt, you have to put aside some goals like travelling, pursuing higher education, or opening up a business of your own.
If you do make the decision to use loans to further your plans, then you’re not getting out of this scot-free. You’ll have to deal with increasing debt, and over time you will feel more and more trapped emotionally and financially. This is something that can really prevent you from growing as a person.
Of course, you should take your time. It’s impossible to assume that you can get out of debt in one day. You will have to start making changes and improve your attitude towards loans and debt.
