5 Excellent Reasons to start tackling your debt TODAY!
How to pay off debt is one of the most common questions I get asked as an adviser.
“How did you go bankrupt?” “Two ways, gradually and then suddenly”– Ernest Hemingway, The Sun Also Rises.
In this famous quote, the influential 20th-century author, in one of his most revered novels, says that going broke happens slowly at first and then all at once. Individuals who are struggling with debt will probably understand that feeling.
Debt plays an important role in our economy and is necessary for many purchases and endeavours. However, carrying debt for extended periods can restrict your financial freedom, force you to live well below your means, and damage your ability to retire at the age you wish.
Paying off debt isn’t easy, but it is important. Here are five excellent reasons why you should start to pay off your debt today:
1. To stay healthy
The Society of Occupational Medicine ranked 100 life events by the amount of stress they cause. Number five on the list was “Getting in debt beyond means of repayment.” It was considered more stress-inducing than learning of a partner’s infidelity. Experts say that simply relieving the stress of debt can lead to a significant improvement in one’s health.
2. To improve your relationships with those close to you
Financial hardship is one of the leading causes of divorce. The stress associated with substantial debt can lead to arguing, lack of communication, and even deception. That kind of dysfunction between spouses can trickle down and cause stress among children and anyone else in the household. Paying off debt can ease that tension and allow everyone involved to lead less stressful lives.
3. To preserve your retirement
Saving for retirement is hard enough without the added burden of having to service debt in your golden years. Ideally, you should be debt-free when you hit retirement so your savings and income can be used to finance the retirement you’ve always dreamed of. Even so-called “good debt” like mortgages can become difficult to maintain when you’re living off of savings and retirement income.
4. To create financial security
When you’re debt-free, you have the flexibility to absorb changes in your income or take risks. With debt hanging over your head, you may be forced to continue at a job that you don’t enjoy or pass up on business opportunities that you would otherwise pursue. Being debt-free gives you the financial stability to live life your way.
5. To own your assets
There may be no better feeling than knowing that your home, car, and other assets are truly yours and that no one else has any claim on them. Again, owning your assets outright gives you the flexibility to make decisions based on what you want to do rather than what you feel you have to do.
It isn’t an easy process to pay off your debt, but it can be done. The first step is being honest with yourself about how much debt you have and what it will take to pay it off. A financial adviser could help you analyse your situation.
About Mike Coady
Mike Coady is an expat expert based in Dubai and is on hand to help with all of the above and more.
Mike is an award-winning money coach and industry leader in the financial sector.
Qualified to UK Financial Conduct Authority (FCA) standards, a member of the Chartered Insurance Institute, a Founding Fellow of the Institute of Sales Professionals (FF.ISP), and a Fellow of the Institute of Directors (FIoD) and featured as a highly qualified Financial Adviser in Which Financial Adviser.
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Blog published by Mike Coady.