How Lowering Your Debt Can Improve Your Life
Statistics say that almost half of American households spend more money than they make each year. And if that’s not worrying enough, other statistics show that the average American household is more than $8,000 in debt – and that’s for credit cards alone!
The result: Households spend years, even decades, paying off debts. And this puts the rest of the American Dream at risk: The lack of money can leave the family unprepared for accidents, disasters, economic downturns, and retirement.
This is why debt reduction (if not debt elimination) should be everyone’s #1 financial goal. Before you put your money in an emergency fund, or insurance, or business, or retirement… we strongly recommend you lower your debt as soon as you can. Here are 4 compelling reasons why:
#1: You’ll Save More Money in the Long-Term
Death by debt comes in the form of compounded interest payments. On average, credit cards charge a total of 42% interest per year. Assuming your household is $8,000 in debt, that means you’ll be paying $3,360 in debt every single year… and if you can’t keep up with the interest payments, you’ll be paying EVEN MORE the following year.
But when you get out of debt, all that money goes into your pocket instead. You can use that extra $3,000+ to buy insurance, fill an emergency fund, start passive income streams, and prepare for your retirement.
The sooner you lower or eliminate your debts, the more money you’ll save, and the more things you can do in life.
#2: You Can Spend Money Freely
When you’re free of debt, you’re basically free to spend your money on life’s other necessities: Insurance, an emergency fund, retirement investments, more comfortable living arrangements, and so on. And without any interest payments to worry about, you have peace of mind.
Being debt-free means you basically know that whenever you spend for anything, you’re spending money you HAVE, not money you OWE. Plus, you can sleep well at night knowing that you have enough money in the bank to carry you through any emergency, plus enough insurance just in case.
#3: Better Chances of Qualifying for Loans
The lower your debt, the lower your debt-to-income ratio (a valuable indication of your true financial wealth) will be. And when you have a low debt-to-income ratio, lenders will trust you more – they know you’re someone who pays their dues in time. So you’ll have a much easier time qualifying for loans – whether it’s for a new home, a new car, or capital for a new business, and so on. And on top of that, you’ll get the best interest rates possible.
#4: Worry-Free Retirement
When you’re buried in debt, you’re always stressed. And stress has been proven to lead to various life-shortening (and even life-ending) medical conditions. The longer you stay in debt, the higher your chances of getting seriously sick!
But when you have no debt (or at least keep it at a very manageable level), you have peace of mind. You can focus on preparing for retirement, pursuing a career, or simply enjoying life.
Lower or Eliminate Your Debt Now!
There are many ways to lower or eliminate debt out there, but it all starts with spending less money than you make, and then diligently paying off your debts every single month. That way, achieving financial freedom will only be a matter of time.
Learn how you can lower your debt more effectively by increasing your credit score and lowering your interest rates by contacting Credit Absolute today!