You often hear talk about the importance of getting out of debt. But what magical thing will happen when you achieve that milestone?
Debt is a crusher. It messes with your life, your future, and it fills the pockets of those that need it less than you. It stinks. But there is good news. If your end game is to get out of debt, you will find a way to make it happen.
So let’s focus on why you should do it. Because we Fools are always trying to exceed your evolving expectations, I’m going to give you not 1, not 2, but 3 magical things that will happen once you wipe out your debt load. Stick around, you’re going to like this.
A nation in debt
But before we get to that, I want you to know, you are not alone. According to Tim Chen at nerdwallet.com, average American credit card debt was $15,611 in 2014. Mortgage debt equaled $155,192 and student loan debt was $32,264 over the same period. That’s massive.
For more perspective, U.S. consumers owe $11.74 trillion in total debt, up 3.3% from 2013 and $882.6 billion to the credit card companies. The bottom line is, that is a massive transfer of wealth. It also ensures that the poor stay poor.
But there is a better way. Just the fact that you’re here (and ragging your debt problem) means you’ve got a leg up on most everyone else. You take your debt seriously and the odds are good you will find ways to wipe it out. All you need is a strong enough why.
Magic act #1 Save More
When you crush debt, you have more to save. Play with me for a second — instead of plowing $500 per month into credit card payments, you’ll be able to better fund your retirement accounts, starting with your company-sponsored 401K or a Roth IRA. Your 401K is particularly attractive because most employers offer a match. That means free money for you!
Let’s say you’re already contributing to your retirement accounts and you want to have a bit more scratch. Another great option is to open up a brokerage account. It takes very little time to open up a new account. The fees are cheap, the rewards are many.
So what should you do with this new brokerage account? Well to quote one of my favorite characters in all of Fooldom, the Duke of Wall Street, “Get thee to a newsletter!” To learn more about tons of high-quality businesses, head over to Stock Advisor. It’s our flagship service, it’s crushing the market, it’s cheap, and it can help make you piles of golden ducats.
Magic act #2 Live More
While saving more is great, living more is even more fun. Why not enjoy the fruits of your labor? Think of all the experiences that you, your kids, and your family are missing out on because of debt. Think of how your life can and will improve. Think of the joy.
Whether it’s a vacation, some fun new gadget, or an upgrade to your home, being debt-free means one thing: Freedom! Of course you can save, but having fun is what life is all about. Just please be sensible, remember more debt equals less freedom.
Magic act #3 Give More
A very good friend of mine says that the secret to living is giving. And if you’re debt-free, you have more to give. Whether it’s your favorite charity, your church, an animal shelter, a food bank, a cause, there are plenty of places to send your loot. And frankly all of them are better than Visa, MasterCard, or American Express.
Please, don’t underestimate the power of giving. After all, what’s the sense of being the richest man in the graveyard? There is a power, a fulfillment, to giving beyond yourself, and anyone who does it consistently will tell you that. Whether it’s money, time, or both, try it on for size. I promise you, it feels so good, you get addicted to it.
The sum of all the parts
Once you slay the debt monster, doors open. You’re now able to live more, give more, and save more. You’ll be free, you will be happier, you will have less stress, and you will have more joy.
Remember becoming debt free is 80% about the why and 20% about the how. Yes, you need a solid strategy, but the why behind it is what will drive you. Focus on the why, focus on the joy, and you will find ways to make it happen.
— Answer provided by Fool member Wade Michels