Best Reasons to Repay Your Debt
Posted on October 30, 2012 by Michael Martin Leaño
Have you ever wondered how long you’ve been in debt? If you haven’t really felt that soul-crushing pressure when things get out of hand, you probably haven’t really thought about it. But why wait until your problems get that bad? Here are the best reasons to repay your debt.
Reason #1: You get to keep more of your money
No matter what your debt’s size, it’s costing you money—money that should’ve been yours since you worked hard for it. Let’s say you have a personal loan worth $10,000 with an interest rate of 11.5 per cent. That means before you actually start paying for your debt, you have to hand over at least $1,150 in interest. That’s $1,150 for nothing, other than the right to borrow that money. If you took a $1,150 pay cut, you’d be livid. But when you settle your personal loan, you can actually keep that $1,150.
Reason #2: Crises would get worse than it already is
What do you think would happen if an emergency happens (e.g. you get sick or lose your job) and you still haven’t paid off your personal loan? Unless you have a large stash of savings—which is unlikely since you’re still in debt—you’d probably not be able to pay at all and default on the loan. When that happens, your credit score will plunge, which means you won’t be able to borrow until it goes back up. Here’s the sad part: it could get even worse.
Reason #3: You miss out on many things
Being stuck in debt can also cause you to miss out on many opportunities. Look at it this way: if you’re setting aside a chunk of your income to pay off your personal loan, you won’t be able to save up for a holiday, start your own business, invest, gain financial freedom and enjoy more out of life.
Reason #4: To reduce your stress
Do you ever feel overwhelmed when looking at all your bills and monthly statements? Have you ever wondered how you’ll make ends meet? Have you ever gotten into an argument with your spouse or family over finances? Then your debt is probably stressing you out. But hey, everyone goes through stress right? A little stress can’t be that bad.
However, debt isn’t something that goes away in a snap and neither does your stress. If you suffer constant anxiety, then you might be at risk for problems like migraines, ulcers, strokes or heart attacks. So don’t wait for things to get worse; settle your debt and start feeling better instantly.
Reason #5: Prepare for retirement
If you’re still young, retirement is probably far from your mind. However, it’s never too early to start thinking about it since you can retire as early as you want. But if you’re paying off a hefty loan or three and keep getting into debt, you won’t be able to do so—unless you plan to work well into your 70s or 80s.
Reason #6: Improve your credit score
Having too much debt will hurt your credit. How so? If your credit card balance is getting precariously close to the limit, your credit rating will take a hit. Same goes if you have a high balance in your personal loan. But if you settle your debts, your credit score is going to get way better.
Reason #7: Actually own your properties
Did you know that until you pay off your auto loan and mortgage, your car and home still aren’t officially yours? The bank owns them since it holds the title until your debt is paid in full. When you finally do complete your repayment, the bank will turn these assets over to you.
Reason #8: Put you in control of your own money
When you’re in debt, a part of your finances are controlled by your lenders. They dictate the amount you have to pay them, and even when you have to do it. And they’ll keep telling you what to do with your money until you’ve settled your financial obligations with them. If you stay in debt, then you’ll always be under their mercy. Pay it off and you gain control of your own money.