Debt is a common problem for most Australian families. According to a 2016 report, total personal debt of Australia is around $2 trillion, and every house has a debt of approximately $2, 50,000.
That’s a big number!
It’s a practical problem that many of us think about getting rid of major debt the shortest period of time possible. However, as time goes, our enthusiasm goes down with it. Reality is, the sooner we get rid of debt, the better.
Do you know why?
There are many good reasons of getting out of debt. We have picked some top reasons that would persuade you to get out of your debt. Please have a read and this may inspire you not to fall into the debt trap ever again.
1. Less risk
One of the worst aspects of having a huge debt is you have so much risk on your head. Having no emergency amount of fund could make it much worse. It can make you so much financially vulnerable at times.
Sudden job loss or any medical crisis may make you not being able to pay the amount of your debt. So it would bring some stressful consequences in your life.
You might get calls from the debt collectors. In the worst-case scenario, your debt collectors may call your employer. You may get sued for default in repayment and end up losing your personal belongings. So, to mitigate the risk, you must consider paying off your debt timely.
2. Lower stress in life
Having debt is like having a burden on your head. That you are not going to get rid of easily, so it will cause you a lot of stress both personally and professionally.
When you have debt, you will be mentally stressed regarding payment. You will wonder what would happen if your regular flow of income stops. Any expenditure for the recreational purpose will make you feel guilty.
It is a familiar feeling for most of the people that paying off your debt is like lifting a huge burden from your chest. Getting out of your debt will make your life stress free.
Being in debt has a negative correlation with your level of confidence, as well. More debt leads to less confidence and vice versa.
People free of debt will not have to hide away their authentic condition from others. So getting out of debt can increase your confidence, and you can have even more peace of mind.
3. Financial security
Having debt can be a severe constraint to ensure your financial security. Because you have to provide a good portion of your money to pay it off. There is no guarantee of having that much inflow all the time. There could be an emergency need for the fund as well. So, debt threatens your financial security.
If you can’t figure how to start, you can seek help from an experienced financial counsellor, or you may look for local free debt help services.
Read more: What does financial counsellor do?
4. Own your Asset
When you have a debt, you do not own the asset you bought against it until and unless you repay it all. Just the moment you get out of your debt, you own the asset you had against that particular debt consequently.
5. Increase of your future earning
Every debt you take impacts your future earning no matter what is the amount of that debt.
Having debt means you are borrowing from your future earnings. But, the amount you borrowed has to be paid in future. This would require you to compromise with your standard of living.
So getting out of debt means you are adding a significant portion of your earning. You don’t have to pay it off for your debt.
6. Healthy relationships
Having a debt-free life is good for your relationships as well. Your mind will not be pre-occupied with debt-repayment related stuff. So you will be more invested in the relationships you have like never before.
You will have enough time to rekindle old relationships and friendships as well.
7. Better married life
Any financial obligation hugely impacts the relationship between spouses. Even if the partners remain supportive of each other regarding paying off the debt, it somehow affects their relationship.
Thus, getting out of debt can help you to maintain your marriage as well.
8. Good parenting example
Getting rid of your debt means that you have enough extra money to invest in your kid’s future or education. You will be able to fulfill your kid’s wishes. You will not have a panic attack just by thinking how the money would come.
Children learn from what they see rather than what they are being taught. If they find you living a debt-free life, they would understand the significance of having a debt-free life. That is what they are going to practice in their life too.
9. More scope to enjoying life
When you are in debt, then you will have lesser money to enjoy doing what you want to do. Even a little bit of expenditure will make you feel guilty about it.
It is the ultimate desire trap that makes you go deeper and deeper into the never-ending circle of debt. People cannot afford to buy the things they want in their lives. So, they end up having more debts.
So, getting out of debt will let you spend guilt-free money for enjoyment.
10. Early retirement
Another lucrative perk of getting out of debt is to have the early retirement option open for an individual. By paying off debt, you can invest the extra money in different fruitful opportunities available in the financial market.
If you want to retire early in your life, you will have to pay off all your debts. If you are conscious about those vulnerable stages of your life early, you will be financially independent even at that time.
11. Helping others
Not all people come on this earth with a silver spoon. They need support to survive and sustain from the fortunate ones. So when you get off your debt, you have the needed resources to help out the people in need. Thus, making their life a little bit better.
Wrapping Up
During any stage of your life, you may end up having debts that you will have to repay. The tricky part of not falling in into the vicious cycle of debt is to stay focused on reducing debt with constant efforts. The most challenging part of it is to find out how to get rid of those debts of yours. But if you do enough research regarding paying off your debts, you can figure out ways of making it possible too.
