1. Happiness

The overarching reason why we want to become debt free is that it can lead to increased happiness. Here are 18 reasons for getting out of debt and how it can lead to a happier life:

2. Complexity

Eliminating debt reduces the complexity of your monthly finances. No debt, means no more: tracking home mortgage interest in preparation for taxes, worrying if your adjustable interest rate will go up, and ensuring your loan payments are sent on time.

3. Stress

The burden of borrowing and having to pay someone back is taxing on your mental health. Proverbs 22:7 says “The rich rule over the poor, and the borrower is a slave to the lender.”

4. Risk

The risk of having financial setbacks is lessened when you are not burdened by debt. If you lose your job, wreck your car, or have a large medical expense, you can focus on finding a new job, used the car, or healing rather than thinking about how to pay your old debt obligations along with your new ones.

5. Retirement

Achieving financial freedom allows you to spend your life chasing your passions rather than paying your bills. Becoming debt free is a crucial step in reaching retirement and financial freedom.

6. Leadership

You are setting a great example for your family and those that look up to you. We live in a consumerist culture that pushes us to spend more than we earn. Since others make money off of you when you purchase their products, there will always be pressure to buy more. By living below your means, you set a financially healthy example for those that may struggle to resist impulses to buy, buy, buy.

7. Stability

Reducing debt builds a stronger financial foundation to work from when an unforeseen circumstance arises. If you lose your job and have kids in school, you may be able to wait until the school year is over before expanding your job search radius.

8. Achievement

It is empowering to achieve your goals. Setting out to eliminate your debt and then accomplishing that goal can be invigorating. (i.e the Dave Ramsey’s debt-free scream!)

9. Giving

One source of happiness comes from helping others. If you stop helping the bank by paying loan interest you free up an opportunity to help others instead.

10. Investing

To build wealth. There are many benefits of having your money work for you instead of you working for it. If you are no longer paying off debt, you can invest what you do not give to others and begin building wealth.

11. Future

Debt presumes on the future, you commit to owing someone else future payments without the knowledge of your future earning ability. “Do not boast about tomorrow, for you do not know what a day may bring forth” Proverbs 27:1

12. Compounding

Debt compounds against you rather than for you. Debt can unknowingly become an insurmountable burden to you and your family.

13. Ownership

The cost of ownership tends to be less than the cost of renting (owing).

Ownership adds security. When you have a vehicle loan the lender owns your vehicle, not you. The same is true with a home mortgage. There is no need to worry about someone taking your home or car when you hit a rough spot if YOU own them.

14. Value

Poor decisions result from customers judging the affordability of payment rather than the cost and value of the product. This approach, often pushed by car dealerships and “rent to own” merchants, causes you to over-pay and can leave you with the feeling of being ripped off.

15. When to say “no”

Sometimes saying no is hard at the moment but is the best option for the long-term. Having the ability to say no when you cannot afford things helps build and reinforce this discipline, which can help lead you to better choices in the future.

16. Entitlement

If you earn money before you spend it, you reduce the potential feeling of entitlement. Feeling entitled can lead to a reduction in happiness.

17. Fees

Costs matter. Often times debt comes with additional fees leading you to pay more over a longer period of time i.e. origination fee, recording fee, late fee, early payment penalty, interest.

18. Healthy Marriage

According to a survey performed by Citibank, 57% of divorced couples cited money and debt as the primary reason for the deterioration of their marriage.

19. Credit Score

30% of your credit score is based upon the debt you carry. The more debt you carry in comparison to your credit limits the worse your credit score. Having a healthy credit score allows you to obtain favorable debt terms when life requires – think home purchase or your child’s college tuition. Sometimes debt is a necessity – securing favorable terms makes it that much easier to handle.