When many of us think of investments, we think of stocks and bonds, and other “traditional” investments. However, few of us think of paying down debt as an investment in future financial success. This is a mistake. One of the best things you can do for yourself is to pay down debt — especially high interest credit card debt — as soon as possible.
Put More of Your Money to Work for YOU
One of the main reasons that paying down debt is so important is that it allows you to put your own money to work for you. The biggest problem with paying interest is that your payments go straight to someone else. Interest doesn’t provide you with any benefits. You can’t buy something new with interest. Instead, you are merely paying for the privilege of borrowing money. There is nothing you receive in return, except debt.
When that money is going into someone else’s pocket, it means that it isn’t being used on your behalf. You can’t use it to buy the things you want, and you also can’t use that money to make sound investments that could help you grow your wealth. Instead, you end up sending interest payments to someone else. If you have several credit cards with balances, you could be paying between $50 and $100 in interest — or more — each month. Imagine if you could invest that money instead of just paying it to someone else!
Peace of Mind
Another issue with debt is that it can destroy peace of mind. When you are in debt, you know that creditors can come after you if you don’t pay. Additionally, debt hangs over you, causing stress and anxiety. Debt can break up marriages, as well as put strain on other relationships. Your emotional and mental health can be affected by debt, and these stresses can even contribute to a reduction in physical health.
If you want to move forward in life, it can help to pay down your debt. You’ll feel a sense of freedom, and a great deal of your stress will melt away. This is especially true when you get rid of high interest credit card debt. If you can, switch to low interest credit cards to pay off your debt faster, and make a plan to get rid of the rest of your debt.
Paying off your debt is one of the best investments you can make in your future. Returns from stocks, and interest from savings, aren’t likely to offset 19.9% interest rates paid on credit card balances. Paying down your debt is a solid investment in your future — for your finances and for your personal life.