The Many Ways Paying Down Debt is Actually Saving
It’s no secret that debt can be a major financial burden. But what you may not realize is that paying down your debt is actually a form of saving. By paying off your debts, you are freeing up money that can be used for other purposes, like building up your savings or investing in your future. Here are some of the ways in which paying down your debt is actually saving:
You’re freeing up money for other purposes.
When you pay off your debts, you are freeing up money that can be used for other purposes, like building up your savings or investing in your future. For example, let’s say you have a credit card with a balance of $5,000 and an interest rate of 18%. If you make the minimum payment of $100 each month, it will take you over 25 years to pay off the debt, and you will end up paying more than $13,000 in interest! However, if you increase your payment to $200 each month, you will pay off the debt in just over 10 years and save more than $7,000 in interest.
You’re improving your credit score.
Your credit score is one of the most important factors lenders look at when considering a loan application. The higher your credit score, the better chance you have of getting approved for a loan with favorable terms (like a low interest rate). Paying down your debt is one of the best ways to improve your credit score.
You’re reducing stress.
Money problems are one of the leading causes of stress. When you’re constantly worrying about how you’re going to make ends meet or how you’re going to pay off your debts, it can take a toll on your mental and physical health. By paying down your debts, you can reduce stress and live a healthier life.
You’re setting yourself up for success in the future.
By paying down your debt now, you’re setting yourself up for success in the future. Once you’ve paid off your debts, you’ll have more money available to save for retirement or other long-term goals. And if an unexpected expense comes up, you’ll be better equipped to handle it because you won’t have the added burden of high-interest debt payments weighing you down.
As you can see, there are many ways in which paying down debt is actually saving! So, if you’re feeling overwhelmed by your debts, don’t despair — take action and start chipping away at them today! Your future self will thank you!