3 Reasons reducing debt is good for you
We have become so accustomed to debt fixing everything. If we need money for anything, we can just borrow it. Car loans, personal loans, By Now Pay Later, credit cards, the list goes on.
In reality though the more debt you have the less your ability to save and if you don't have your own money, then you are at the mercy of the lender, their terms, their interest rates etc.
With that in mind it is important to take the level of debt you may have at any given time seriously and there are a number of benefits in doing so.
1. You don’t have to put your life on hold.
While there is nothing wrong with debt, unmanageable debt is another story. Think of debt like a seesaw. The more debt you have the less ability you have to save.
No savings means life gets put on hold, unless of course you take on more debt to fund what you really want to do in life. Truth is though, there are only so many times you can get away with a bandaid before you are going to need surgery.
Reducing debt to the right manageable amount for your personal circumstances opens the door to adding back the fun and enjoyable things into your life.
2. Debt management is a way of life, not a quick fix
Habits that have allowed your debt levels to get where they are don’t change if the debt suddenly disappeared.
That’s why most people who consolidate a bunch of debts find themselves right back where they started.
It’s not always the repayments that create the debt problem it’s the choices and habits being made along the way.
Managing debt levels so they go down and not up takes time and focus to both identify and change the habits that created the debt.
Replacing them with better money choices doesn’t happen overnight, it’s not a quick fix but it is possible when you become intentional about what you really want.
3. Debt is not a solution. It’s a trap
Debt can seem so easy to get whether it’s that long-term 5year car loan or personal loan. Even that short-term 4 - 8 week BNPL option.
No matter what form it takes, it is simply robbing you of your future money and lifestyle.
One of the main reasons we gravitate to debt so easily is the debts we already have are getting in the way of our ability to save. We become trapped from building our own resource or emergency fund.
It’s also very attractive spending someone else’s money to get what we want right now.
When you can turn that around and save the money first you then find yourself thinking twice about spending it. You now find yourself wanting to protect it becuase it feels good and brings with it a degree of confidence.
Final thoughts
Getting the fun back into life, developing habits that create better money choices and getting away from seeing debt as a solution takes action and a decision.
Why not test this out?
Next time you find yourself thinking about committing to more debt, be it a personal loan, BNPL option or some other debt, instead start tucking away the same amount that your repayments would be for several weeks.
Then ask yourself later, do you still want to commit your future money (plus what you have already saved) to someone else or has what you thought you needed debt for taken a back seat, no longer as important as you think.
It's an interesting exercise if nothing else and chances are you will change your mind or use your cash for something else of better value to you. Now you aren’t trapped, you are experiencing freedom.