Monday Morning Money Moment: July 31, 2017
Why Should you be Debt Free?
Welcome back to our Monday Morning Money Moment here at Budget Boss. This week we will delve into the fun subject of debt. Debt, in my opinion, is the biggest thing holding back the middle class in this country. Debt is also killing young people who are trying to start their lives on the right foot. This week I will be touching on various topics about debt including mortgages, student debt, and emergency funds. Today in my post I will be touching on why it is important to be debt free. You might be saying, “Well I know why it is important, debt sucks everyone knows that.” That’s true but there is more to it than that. Being debt free will benefit you in many ways including some you might not think about. It will be your goal moving towards retirement to raise your net worth. Net worth equals assets minus liabilities. You cannot have a high net worth unless you eliminate the liabilities and raise the assets. Being debt free is the key to your financial plan, so let’s get started.
Be More Financially Secure
Being debt free will allow you to be more financially secure. Debt is a huge impediment to your security because it does not allow for you to actively protect yourself. You have to build up savings for a rainy day. You might want to buy a home to further increase your net worth and secure your retirement. You want to contribute to a retirement fund and maybe even start education plans for the kids. The excess money you spend eliminating debt could be used for these purposes. Instead, you are making the banks rich with all the interest you pay servicing your debts. You have a lot going for you, debt isn’t one of them.
Less Stressful
Have you ever had someone call you asking for money for a bill payment? It is absolutely the worst thing ever. What about having your dollars depleted by debt payments? If you are having trouble getting by it is tough to sleep at night. I know I’ve been there. Knowing you have your bases covered and are debt free is the ultimate stress reliever. You will be more relaxed and happy knowing you aren’t wasting money on costly debt. Less stress is also better for your health and relationships. It is worth it believe me!
Less Complicated
Sometimes bills can be confusing. I mean who the hell knows exactly what Hydro is charging you? Debt can be confusing too. Penalties, interest charges, and service fees will eat you alive. Something like overdraft protection can charge you for that service. Kind of silly to charge someone who is broke for being broke, isn’t it? All those little fees add up and make you even more in debt. When you are debt free the monthly bills are much simpler. No more interest charges and fees, just normal bills to pay. I have said it many times before; you have to make your finances less complicated, not more. Being debt free is a sure fire way to do that.
Improve your credit
Have you ever had bad credit? I have and it sucks big time. It is kind of ironic that the times you need help from the bank they are less likely to give it versus the times when you don’t need their help they are rushing to lend you money. Your credit score will follow you around like a bad rash and if it is bad it will be less likely for you to be able to do the things you want. These things include owning a home, buying a car, renting an apartment and even getting a job. Yes, all those things require good credit. The second you are debt free you become a very attractive prospect for lending and the banks will come rushing. You will then have the upper hand, so use it wisely.
Be an owner
That beautiful car in your driveway is a sweet ride. You financed it so it is not yours. The same goes for the ever fabulous “Don’t pay a Cent” financing you got for your living room set. Even your home isn’t fully yours until you pay off the mortgage. You want everything you have to be fully owned by you and not the bank. When you own everything you have it is far less stressful than if you don’t. The couch will be more comfortable, believe me.
More money is more fun
Do you remember how you got into debt? It could have been school, maybe a car or even you got sick or hurt. Some people don’t even fully remember how they got into debt. Chances are if it is credit card if was spent having fun. Now that you are paying off the debt you are hampered with your cash flow and can’t do all the things you want. Having those extra funds every month will allow you to do fun things again and this time with your own money. We all would like a little extra money every month and being debt free will do that. If you like money as much as I do, the money saved will be worth it in the long run.
Those are just a few of the reasons being debt free is so important. Being rich is a goal of many people. Rich in life, rich in experience, rich in family and love. Having debts hampers all of these desires. Debt ruins lives, ruins families and even hurts you physically. Being debt free will allow you to own a home, save more money, have a happy family and retire on your terms. Carrying debt into retirement is absolutely devastating and could make your later years unbearable. While you are younger and healthier it should be your goal to eliminate all debts. Doing so will make your life better in many ways.
Thanks for reading my Monday Morning Money Moment and tune in tomorrow for my Tip of the Week. Have a great day friends!!
“Home life ceases to be free and beautiful as soon as it is founded on borrowing and debt.” – Henrik Ibsen
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Joseph James Francis is a Financial Advisor. You can find him on various social media platforms and at budgetboss.ca.