Everyone knows that paying off debt is a great way to build wealth and ensure that setbacks and emergencies won’t send you into a downward money spiral. For that reason alone, kicking debt to the curb is always a great idea. Since paying of consumer debt a few years ago, I’ve also discovered some new reasons to become debt free.
Great Career Opportunities
When we were working to pay off our credit cards, there was no way on earth Jim or I could have thought about changing jobs. We were too dependent on our paychecks to seek out or take advantage of other opportunities. In fact, I really didn’t see lots of opportunity other than one foot in front of the other. I’m not sure if they weren’t there or if I didn’t have the flexibility to see them, but I know changing jobs was not an option during that period of life.
Now that we don’t have consumer debt, it seems that job offers are pouring from the rafters. Besides my full time offer from the government, Jim was asked to take on a new management position a few weeks ago. While we most likely won’t accept either of these jobs, you never know when the perfect position might present itself. We aren’t looking for a change, but it’s still nice to have options.
If one of us did want to quit our day jobs and work from home or go back to school, we could, even if it meant less money. There was no way we could have afforded a pay cut when we had debt.
More Power to Bargain
Have you ever made a major purchase without financing? We didn’t until we paid off debt. Since then we’ve been able to bargain and negotiate on a variety of things from professional services to a new to us car. Yes, people do look at you funny when you go to a car dealership and tell them you are paying in cash, but once sales people get used to the idea, everyone realizes that normal rules don’t apply.
I’ve had especially good luck bargaining with laborers and tradespeople. If you can pay with cash or a check instead of a credit card, most of them will cut you a discount. I also saved about $100 on used appliances for our rental properties for not using credit. I love reward points as much as the next person, but if it saves money, I can pull out the checkbook.
Credit Card Churning
Speaking of reward points, paying off debt opened a new chapter in our credit card story. Now, instead of paying thousands of dollars in interest to Visa and Mastercard, I let them pay for me to go on vacation.
If you have consumer debt, feel that earning travel points might make you spend more, or if you don’t trust yourself to pay the balance off in full every month, don’t ring up any new debt. If you are like us and would cut off a toe before paying interest to credit companies, then there is nothing wrong with earning reward points on things you have to buy anyway.
Interest Rates Don’t Matter
I used to stress myself out trying to keep up with expiration dates on promotional interest rates or how many more months we had on x months same as cash. I screwed up a few times and ended up paying tons more in interest because we didn’t read the fine print on offers that sounded great but were actually too good to be true.
When you pay everything off in full each month, it doesn’t matter if your interest rate is 0% or 29.99%. I love looking at credit card statements now because in the little box that says interest paid for 2015, ours all say zero. If you want to get out of the balance transfer, zero interest, promotional period trap, then pay off debt. You’ll never have to worry because interest rates don’t matter.
You Won’t Feel Embarrassed Over Debt
Even though most people had no idea how much debt we racked up, I still felt embarrassed. Owing $30,000 on credit cards was shameful. I know it seems that some people don’t care how much debt they have, but I think deep down, owing money does play with your emotional state of mind.
While we were on vacation last month, I had three calls from a collection company that was trying to locate one of my family members. I can’t imagine how humiliating it must be to have credit recovery phoning your relatives. We never had an account go into collections, but one misstep could have landed us there. I’m not sure I could face my family if they had to field calls as to my whereabouts, knowing I was delinquent on my debt responsibilities.
Why Not Get Out of Debt?
There are so many good reasons to become debt free. Yes, it’s hard and it takes some sacrifice, but the rewards are so much greater on the other side. Getting started is often the hardest part. Take some time to seriously look at your debt and what it is consuming in monetary and emotional costs.
If you’re at a loss, start by tracking your spending, either on paper or with Mint or Personal Capital. Cut back what you can and stop adding new debt. Often accomplishing that first step can catapult you into a serious debt payoff plan. I bet you’ll find your own list of reasons why paying off debt is such a good idea.
Have you ever had to fight off a collection agency? Have you ever gotten a better deal for paying in cash?