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5 Reasons To Stay Debt Free

5 Reasons To Stay Debt Free

There are many reasons to stay debt free and excess of debt can affect all aspects of your life and mental well-being. The debt in question is not referring to a couple hundred dollars on a credit card or paying for a flat tire. Small amounts of debt can normally be managed easily and don't adversely affect employment or personal relationships. When debt gets out of hand it can impact quality of life and even drive some individuals to take drastic actions resulting in losing a job or a marriage ending in divorce. Here are the five most common reasons why it is important to stay debt free.

Reduction in Overall Stress

It has been proven in numerous medical studies that excessive amounts of stress can result in increased illness and lower overall health. Life is stressful enough as it is with demands at work and with raising a family at home so why make things more complicated by trying to juggle maxed out credit cards. Stress is also one of those areas which tends to adversely affect other aspects of your life including employment and personal relationships. Anything that can be done to minimize stress including keeping financial obligations and debt under control should be a top priority.

Handle Emergencies Situations Better

Emergencies are those unexpected life altering events which pop up out of the blue and normally need to be dealt with immediately. Getting in an automobile accident or losing your job would be considered an emergency and if you already have excessive debt it can make dealing with these emergencies untenable. Every financial advisor recommends having a 3 to 6 month emergency fund to pay for living expenses. As a result it is best to be debt-free if possible because it will be hard enough making ends meet should an emergency strike but it will be even more difficult if you have to make large credit card payments every month.

Deal with Illness More Effectively

One of those emergencies which can happen unexpectedly is illness. A number of Americans don't currently have medical insurance which already puts them at a disadvantage when it comes to paying medical bills. Even for those Americans with medical insurance many healthcare plans nowadays have increased deductibles which must be met before insurance kicks in. If you have a medical plan which has a $3,000 deductible then it is important to have at least that amount of money available in a separate checking or savings account. Being debt-free allows you to set this money aside and plan for a worst-case medical scenario.

Have Money to Plan for Retirement

It is a common mantra in today's hectic rat race to say why do today what you can do tomorrow. Unfortunately when it comes to planning for retirement it doesn't work that way. Retirement planning takes a long term approach and requires contributions to a company-sponsored or individual retirement account over a span of decades to provide adequate resources for comfortable retirement living. Most retirement planners will suggest contributing a minimum of $50-$100 per month starting in your 20s. While it may seem like a small amount, and in reality it is, most individuals are either unwilling or unable to meet this obligation. Being debt-free frees up additional financial resources and if properly allocated can provide for a comfortable retirement in your golden years.

Strengthen Personal Relationships

Last but most important is how being debt-free positively affects personal relationships. Whether with a significant other or spouse, excess debt can impact all aspects of a relationship from where to go to dinner to fixing up the backyard. Being debt-free helps eliminate one of the many stressors which already exists when being with someone else. Being in a relationship can already be stressful enough due to differences of opinion and ideological viewpoints so why add problems with money to an already volatile mix. In many surveys often the number one reasons for relationships failing is due to financial difficulties. Staying debt-free allows couples to focus on important aspects of the relationship such as working together towards common goals and spending time together. This is hard enough to do without having to stress over how to make ends meet and which bills are going to be paid first if at all.

Summary

As you can see, staying debt-free is probably one of the smartest things an individual can do to live a happy and productive life. It can't be emphasized enough how many areas of a person's life are affected by excessive debt. While these may be the five top reasons to stay debt free there are many other aspects which have not been hit upon such as planning for a child's college education, taking care of elderly parents and having to relocate unexpectedly for family obligations or employment. Staying debt-free is kind of like being honest in that it is always the best policy.