Living with debt may be seen as “normal” these days, but the damage debt does to our lives is far from okay. After all, carrying too much debt can cause more than budgeting problems; it can stress and personal problems, too.
Experts at say that that your mental health and financial health are irrefutably intertwined. People in debt are more likely to drink and abuse drugs, and there is a distinct correlation between high debt levels and increased risk of suicide, they note. A study from even showed that indebted consumers are three times more likely to suffer from a mental health condition.
And what about how debt affects your dreams? Carrying too much debt can put your goals out of reach – or even out of mind, since you know you can’t afford them. When you’re deep in debt, you may never take the vacation you’ve dreamed of, purchase the home you’ve always wanted, or have the cash to pursue the hobby you love. You may have to turn down exciting but low-paying opportunities while you toil in service of your debts, or wind up working forever — even until the day you die. That means that debt could be the reason you never actually retire — or at least never have a retirement you can afford to enjoy.
Eight Ways Life Changes After You Pay Off Your Debt
Everything you’ve just read may be depressing, but it’s true. While it’s easy to buy now and pay later, few people are aware of the effect debt makes on their lives until it’s too late. Of course, debt isn’t a death sentence — or, at least it doesn’t have to be. No matter how helpless your situation feels or how much debt you have, it’s possible to turn things around and make dropping debt a priority.
While the road out of debt won’t be easy, there are benefits waiting for you at the very end. And, those benefits extend far beyond the relief you’ll feel when you make the final payment on your credit cards, student loans, and personal loans; some of the benefits of becoming debt-free are so huge they can change your life forever.
If you’re working your way out of debt and wondering what’s in store in the future – and whether it’s worth the sacrifice – here are some things you can to look forward to.
#1: You have a lot more money to spend, save, or invest.
Paying down debt requires a huge commitment of money and time. Whether you choose to utilize the debt snowball or debt avalanche methods or just pay whatever you can each month, most of your expendable income needs to go toward debt repayment if you want your actions to count.
But, something crazy happens the second you make the final payment toward your debts. All of a sudden, all the income you’ve been throwing toward your debts each month becomes yours. With no more debts to pay off, you get to experience what your paycheck actually feels like without the burden of debt payments every month.
As a result, you’ll have a lot more money to save, spend, or invest going forward. At first, you may even feel rich!
#2: Getting a good night’s sleep becomes easy.
The burden of debt may take more of a mental toll than you think when you add up all the worry, stress, and sleepless nights your debt has caused. Especially at the beginning of your journey, it’s likely you struggled financially and emotionally before building up the courage to change your spending habits and your life.
When you pay down your debt, all of that changes. All of a sudden, you no longer have to worry about insurmountable balances, looming due dates, and relentless interest charges. Without any debts to worry about, your monthly expenses will drop, freeing up your personal cash flow and allowing you to focus on savings and daily living expenses.
Few people understand just how free you can feel when you’re no longer beholden to a slew of banks and lenders. But, when you get there, you will instantly feel the power the comes with that freedom.
- Related: ‘Freedom’ Money
#3: Your credit score may improve.
The amount you owe on your debts in relation to your credit limits, also known as your credit utilization, accounts for 30% of your FICO credit score. Because of this, your credit score has the potential to improve with each monthly payment you make.
And, since your payment history is the biggest determinant of your credit score, your regular monthly payments will also help boost your score over time.
#4: You can dream up new financial goals.
Getting out of debt can take years, depending on how deep of a hole you’re in, and the process itself takes self-discipline and courage. During your journey, you likely kept your head down and focused on your goal. After all, too much distraction can cause you to get off track or fall back into bad habits.
When you’re finally debt-free, however, your journey comes to an end. And while it can almost be disorienting to stop working toward this goal you’ve held for years, after all your hard work, you can finally come up with new dreams that are a lot more fun than paying off old debts.
Maybe you want to retire early, or perhaps you want to help your kids save for college. Maybe you’re finally ready take that family vacation you’ve been dreaming of for what seems like forever. Heck, maybe you just want to sit back and enjoy the peace that comes with being debt-free for a while.
Whatever you really want out of life, becoming debt-free will help you get there faster. Without a ton of bills to pay each month, you can finally save for what you want and pay for it in cash.
#5: You can work less if you want.
A lot of people make huge changes to finally pay off debt, and often those changes include picking up a second job or side hustle. Maybe you’ve been driving for Uber on the weekends to earn more money for debt repayment. Or, you might have picked up some seasonal work, babysitting, or lawn mowing jobs.
No matter your hustle, paying off debt means that you may not have to work quite so hard anymore. If you’re been putting in more hours than you really want to just to pay down debt, reaching your goal may mean it’s time to work less and enjoy life more. Chances are, having the freedom to work less is one of the reasons you decided to get out of debt in the first place.
#6: You have more options.
In addition to not having the option to work less if you want, paying down debt makes it possible to change your life in myriad ways. Maybe you wished you would change careers but couldn’t afford to take a pay cut in the past, or perhaps you want to go back to school to finally finish your degree.
Maybe you want to cut down to part-time work to spend more time with your kids. Whatever it is you want, becoming debt-free means you now have less financial obligations, and more options than ever. Without all your old bills hanging over your head, you can build the life you want instead of the life you had.
#7: Debt becomes something you strive to avoid.
When you’re already in debt, it’s easy to think that adding to the pile won’t even matter. What difference will another credit card or a new car loan make when you’re already struggling as it is?
When you finally become entirely debt-free, you realize that it does matter how much you owe every month. Each bill may not seem like a lot on its own, but the sum of all your debts can make your life harder in too many ways to count.
Once you’ve spent years paying down debt, chances are good you will never want to go down that road again. As a result, you will likely do anything you can to avoid debt like the plague it is. And, if that means spending less and living more frugally, so be it.
#8: You get to finance your own dreams interest-free.
The final benefit of becoming debt-free is one that may not sound exciting until you actually get there – eventually, you will get to finance some of your dreams in cash.
That living room furniture set you’ve always wanted? Imagine walking into your local furniture store and writing a check to pay for whatever you wanted. Need a new car? Imagine having the savings to negotiate a cash price then driving off the lot with your new ride and no car payment to look forward to.
And, how about retirement? Imagine having enough extra money that you can boost your retirement savings without it hurting your bottom line, then retire earlier than you ever dreamed.
The Bottom Line
These are just some of the things you can do if you pay down debt, but there are endless other scenarios to consider. When you’re finally debt-free, you get to design the life you want instead of enduring a life that was built to keep up with endless bills.
If you’re ready to become debt-free or in the throes of a debt repayment plan, it’s crucial to keep your eye on the prize and remember what your life will be like when you reach your goal. There’s so much more to life than debt and “stuff,” and it’s hard to enjoy the spoils of your hard work when all your money is going to somebody else.
You get to decide how you want to live your life. Become debt-free, and you get to call all the shots. Spend your life in debt, and your labor will always belong to someone else.
Holly Johnson is an award-winning personal finance writer and the author of . Johnson shares her obsession with frugality, budgeting, and travel at .