Debt can be dangerous, and it takes away your financial freedom. While you probably already know that it is better to have as little debt as possible, below are a few more reasons to become debt free, as well as a look at why people stay in the debt cycle.

More Money Available to Enjoy Life

The idea that money cannot buy happiness has become a cliché. Sure, you can be rich and still be unhappy, but being stuck without any money limits your options for enjoying life. With numerous store accounts, you are likely to end up paying a large percentage of your salary to cover the debts, leaving you with little or no spending money.

Once you are debt-free, you no longer have to pay the higher prices associated with store accounts. You can have money at hand to go to restaurants, movies, and family outings. It is certainly better to have cash in hand to purchase an airline ticket than to do so using a credit card that comes with interest. Living debt-free thus gives you more money in your pocket to enjoy the finer things in life.

Reduce Your Monthly Expenses

When you become debt-free, you also reduce your monthly expenses. Instead of having to pay eight to ten bills monthly, you only pay your service bills, such as school fees, cellphone contracts, and utility accounts. You thus have better control over cash flow, and should you lose your job, you will not have to be as concerned about losing your house, vehicles, and furniture. The lower your monthly expense bill is, the more you can save for those rainy days.

Reduce Your Risk

This brings us to the risk issue. Every company manager knows how important effective risk management is. By staying in the debt-cycle, you increase your risk. When you become debt-free, you reduce the risk of losing everything, as the result of unexpected expenses or situations. If you do not have various credit accounts to pay, you have money available to pay for unpleasant financial surprises.

Increase Security

Unexpected illness or injury can lead to extremely high medical costs. You may have to pay the shortfall on your medical cover for treatment of a particular medical condition. Having money saved up for such emergencies helps to improve your security. When you are in the debt-cycle, chances are that you hardly have money to buy anything with cash, and may find it impossible to save money. When you become debt-free, you improve your financial security for instances like unexpected medical costs, moving houses, job losses, etc.

Why People Stay in Debt

People stay in debt because they do not know how to break the cycle. In many instances, they do not want to make sacrifices. In other instances, they are so deep in debt that they are unable to pay it off without making more debt. Reasons for getting into financial trouble include an increase in living costs, unexpected job losses, needing to pay for children’s tertiary tuitions, changes in the economy, and more.

Whatever the reason for landing in the debt-cycle, you need help if you want to become debt-free. Speak to our insolvency attorneys about possible solutions, including voluntary sequestration, to help you regain financial freedom.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Call our attorneys for legal advice, rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing.