This article explores some of the ways that paying off debt can impact your life. The elimination of debt can have both positive or negative impacts on your credit score, which could effect your ability to qualify for a mortgage. Paying off debt could positively or negatively impact your quality of life, depending on your goals and financial situation. Paying off debt could save or cost you money over time depending on the size and type of debt. It is important to have clear goals and intentions when eliminating debt and to take into account potential effects.
by Christian Scully
Paying off debt should definitely be a goal of anyone seeking to live what we consider to be a better life. Being financially free from creditors, not having monthly payments to worry about, and having the ability to save and invest more of our hard earned income should be everyone's goal. The idea that we forever have to have some sort of debt bill, we have to owe somebody money just to live a decent life is engrained in our society. When the Diners Club card was first offered in 1950, it began a shift in the culture's view of money and lifestyle aspirations. It was easier to appear rich as opposed to slowly build wealth over a lifetime. Those who remained frugal, bootstrapped small businesses, bought goods with money they had and invested any budget surplus managed to grow wealth enough to live incredible lives with generational financial security.
When our mindset shift occurred and we began our debt-free journey to financial freedom, we were only focused on the main goal: pay off all debts as fast as possible. We didn't have a target date in mind, but I had long held a personal goal of not having children while in debt. Not having the financial strain of debt interfering with family life and raising children was number one on my list of reasons to be debt free. We used this as a starting point, but over the next couple years we learned about the different types and effects of debt and how we could find a balance to reach our goals and not put our lives on hold.
I think there are two basic things to keep in mind from the start. First, when making any plan for the near or distant future, make a list of what you are hoping to achieve. What is the ideal result? What is the end goal? Then second and most important: fully expect those goals and the plan to morph over time. In fact it is super important that it does. Things come up, events happen, opportunities arise, markets change. Keep your eye on your goals, re-evaluate your list of goals regularly to make sure the targets don't need to be adjusted, and then shift and alter strategies as new opportunities or roadblocks come up. Once you have your goals targeted, consider the following ways paying off debt can effect you: