Why You Should Get Out of Debt
In an article last week I mentioned that everyone should set the goal of becoming debt free. This might seem strange to some, especially if you have read any recent books about how to get rich. Today many of these books teach the benefits of buying real estate with “other people’s money” and how you should leverage yourself by investing as little as you can and borrowing the rest. Unfortunately this advice is only setting people up for disaster. If the last three years have taught us nothing else, it should have shown us the folly of this sort of thinking. The alternative is to become debt free!
So why get out of debt?
Peace of Mind
If you really want to experience peace of mind and freedom from financial worry, get out of debt. Few things add more stress than debt. Being debt free means you don’t have to worry about the value of your home.
Don’t Pay Interest
Imagine interest is a big sucking machine that just sucks your money away into a black hole. As much as renting is considered throwing away money, so is the interest you are paying on your mortgage or other debt. If you finance a car, you’ll end up paying significantly more for that car. If you pay for that new television on your credit card and pay it off monthly, you’ll be paying far more for the TV than you would have ever been willing to pay. Interest is wasting your money.
Significantly Increased Cash Flow
Because you no longer have the money flowing to your debt payments you will have significantly more cash flow. This is something that is easy to imagine. Take your current financial situation. Consider your monthly cash flow – what you earn less what you pay out. Now imagine that you did not have any debt payments. Take your car payments, credit card payments, student loan payments, and even your mortgage away. You no longer have to make those payments. Think of how much you will have left over! This is the increase to your cash flow.
True Financial Freedom
There is a saying in ancient Scriptures that says, “The borrower is slave to the lender” (Proverbs 22:7). You never truly have financial freedom until you are debt free. When you don’t own anyone anything, you can have the benefits of this freedom. Think of how many people today who are “upside down” in their home. In other words they owe more than the value of their home. These people cannot afford to move and sell their home. If they sell the won’t get enough money to pay off the mortgage, let alone have a down payment for a new home. Instead they are locked into their current home and location.
As you can see there are many benefits in being debt free. Being debt free should be one of your goals. Not just a dream that you hope to do “someday”, but a goal that you set out and start pursuing today! For a long time I held the idea of being debt free as a dream; something that would be nice, but not something that I was focused on. I did not have a plan and strategy for achieving it. It is only a goal if you do a few things:
1. Write it down
2. Share it with someone else
3. Make a plan (strategy) for achieving it.
Later this week, I’ll write about the vital elements of a get out of debt plan.
Written by:
Danny Gamache
If you liked this article, leave a comment below, or subscribe by RSS!
I’m looking for partners, if you are looking for a way to earn extra money, click here!
Tags: debt free, Financial Freedom, money, success
