If you’ve ever been in debt, and real debt at that, then you know how much of a stressful

burden it can be, especially if it’s so much money that all you can do at times is pay the

minimum payment to get to the next month. And you’re not alone; in fact two out of three

people today have some kind of debt balance they are carrying from paycheck to

paycheck.

The most common debts are credit cards, cars, and home loans. The second two are a bit

less problematic since they generally involve a set amount that does

not increase (unless they have a variable interest rate) and a

payment schedule. However, it’s the credit cards and similar

revolving debt that cause the most heartburn nationwide.

So the idea of actually paying off debt or eliminating debt

completely for many is a dream come true. To be able to be free

again of that nagging monthly payment worry and a debt balance

that doesn’t seem to get smaller is what many folks will admit they

want if possible.

The Benefits of Paying Off Debt

The benefits of paying off debt are multiple. First off, you get an immediate boost to your monthly cash

flow. The money that you used to spend on your debt payments is now freed up. That can give you an

immediate pot of discretionary cash, you can save it, or you can use the change to pay off another debt

even faster. It just depends on your circumstances and what you want to do.

The second benefit is psychological. Large amounts of rising debt can be mentally crushing and depressing.

You feel like you’re working just to hand your money over to someone else. There’s no positive benefit to what you do because

your debt won’t go away. It’s like running in water; you’re making no headway. People have frequently commented they actually

feel a physical release of weight off themselves when they finally finish the last payment owed.

Paying off your debt also improves your financial picture and credit

worthiness. Debts are liabilities and will always dilute the power of

your savings since you ultimately have to pay them off. Additionally,

having a small amount or no debt versus your income and assets

makes you a very viable customer for future financing if you’re

thinking about a house or car. A great credit report saves you

thousands in lower interest rates in new purchases. And if you think a

couple percentage points is nothing, multiply 1% of $300,000 for a

typical house compounded over 30 years. The result will blow your

mind how much money it represents.

Finally, having no debt allows you to put your money into savings

and investments instead. This is critical, not just for the immediate,

short-term needs, but for your long-term future and retirement. Too

many Americans simply don’t save enough for their later years and

then are rudely awakened to the fact that they will not live the way

they thought their senior years would be. Saving funds now avoids

that nightmare in the future.

Copyright 2009 PayingOffDebt.us

When is zero the best number?

When paying off your debt!