Friday, May 11, 2018

Money Crashers: 17 Reasons Why You Should Get Out of Debt

The only debt Brian and I have ever had—not counting credit cards that get paid off every month—is our mortgage. And pretty much the whole time we had that, we were obsessed with paying it off. We made extra payments as often as possible, and I (in my usual hyper-organizational mode) entered all those payments on a spreadsheet to keep track of our remaining principal, our growing equity, and the time left until it was paid. We didn't have a "mortgage-burning party" to celebrate like some people do, but we certainly felt happier and freer without it.

Now, many financial advisors would say this wasn't really the best move on our part. After all, they'd argue, by throwing all our spare cash at our mortgage, we were only getting a 4.5% return on our investment (or 6% before we refinanced); most likely we could have done better than that by investing in stocks. Now, I would argue that a guaranteed 4.5% return is nothing to sneeze at, but even granted that we could have done better in the stock market, I think paying off the mortgage was still the right choice for us. We're both incredibly uncomfortable with the idea of being in debt, and we were never going to feel entirely secure until that debt was gone.

I realize, of course, that most people don't feel this way. But I'd like to argue that even for those who don't, devoting your extra money to paying off debt has more benefits than you may realize. Aside from the obvious financial perks—more cash to spend or invest, more security—it has documented benefits for your mental and even your physical health. And it has the potential to make your relationships with other people—especially people who share that debt—stronger as well.

Learn about the 17 reasons to get rid of debt in my latest Money Crashers article:
Post a Comment