The Added Bonus of Paying Off Debt

Posted on Mar 11th, 2015 | Budgeting, Credit, Debt

Two years ago I had $20,000 in my savings account, and my biggest problem was figuring out where to invest it. I found myself bragging about my savings prowess to anybody who would listen. Then everything changed when I got divorced. My $20,000 was reduced to nothing overnight. Then all of a sudden, I was looking at $6,000 in credit card debt.

As you can imagine, it was a bit of a financial blow — but making payments on my card balance now acts as an instant mood elevator. Even if I just have five extra dollars, when I put it toward my credit card, I feel better. My slow but steady progress means three things: I’m getting my finances back in order, I’m moving on from my past and I’m reducing those pesky interest charges. I don’t want to say that my debt was a blessing in disguise, and I wouldn’t suggest it as therapeutic by any means, but there are some positives that come along with repaying it.

The Benefits
Paying down debt replaces feelings of blame, shame and guilt with positive emotions like hope and relief. According to Business Insider, being in debt may eliminate the happiness you get from spending your money — such as the excitement of looking forward to a vacation or a night out. It stands to reason that reducing your debt can have the opposite effect, and it often does. It restores the notion that the future is something to look forward to.

It helps repair personal relationships. Money is the number one thing that couples fight about. So working on money issues in a positive way can be the antidote to conflict.
Couples who look at their finances together, create a budget and stick to it, often find their relationship improves as their debt decreases. While repaying debt can jump-start the process, healthy communication is essential. If one person in the relationship is a saver, and the other a spender, tension created by unnecessary purchases can surface quickly. Couples who function better financially have the added benefits of better communication, less stress and a learned sense of financial responsibility that can be passed down to children when the time comes.

It erases past mistakes and can help in the healing process. For me, it was a divorce that drained my bank account, but we all have our reasons for sliding into debt. Physical evidence of that debt — bills, online statements or a record of calls from collectors — can serve as a reminder of the negative experiences that got us there. Rekindling a bank account or settling a balance can be an important step in moving forward, unburdening yourself and moving on.

It gives you freedom to advance toward your goals. Debt can keep us from starting a business, starting a family or going back to school. Many experience a feeling of being stalled; that you have to wait to start your life until your finances are in order. Paying the debt off or even making one small payment in that direction is helpful for regaining hope. It’s also motivation to keep going and watch that balance shrink smaller as a growing sense of accomplishment will lead to increased self-confidence in everyday activities. That’s how you win a marathon; just keep putting one foot in front of the other. In fact, many people who have stuck to a budget and paid off large portions of debt are less likely to fall back into debt later in life.

Paying off outstanding debt has many emotional, physical and psychological benefits. These extra perks to becoming debt-free include: Less stress, improved health, emotional relief, freedom to pursue other life goals, confidence in your sense of self, stronger resolve to remain debt-free, improved relationships and cutting the tie between spending and happiness. Whether you’re making the minimum payment month to month, or paying off large portions at a time, paying off debt will not only benefit your emotional well-being, but your physiological, physical and financial well-being as well.

Photo by Chris Potter via cc