This site often features articles on how to get out of debt. Learning how to get out of debt is an important step toward financial success. Being hunted down by debt collectors is no one’s dream. Living in debt can often turn into a nightmare and if you don’t attack the balance of your loans as soon as possible, the interest will make it almost impossible to repay. The best way to avoid this mess is not only to get out of debt as soon as possible, but to avoid it all together.
It’s Possible to Avoid Debt
Living in debt seems to be all too common these days. While having lots of debt can be the fault of poor financial planning, it can also result from unavoidable emergencies. Certain health or family emergencies do come up for certain individuals. I am not trying to suggest that this is their fault. However, getting in over your head with debt can be avoided most of the time.
A common area where people get into debt is getting through college. With the high prices of college tuition, many people are forced to take out student loans just to get through. I write about how to graduate from college without student loans on my blog. It takes a lot of hard work, but it isn’t impossible. For example, I am currently in grad school. I am working full-time at the university and as a result, I get free tuition. Most universities offer free tuition to all full-time staff members. If you can land a job at the university where you want to get your degree, you can save yourself from the student loans that could haunt you for a long time after you graduate.
Why It’s Important to Avoid Debt
Planning ahead and working as hard as you can to avoid debt offers more than just the interest that is charged on the amount you owe. Here is what staying out of debt can offer you:
- Interest: This is the obvious one. If you don’t have any debt, you aren’t paying interest to your lender. This equates to more money in your pocket.
- Freedom: Living a life without any debt ultimately means more freedom when you are deciding what to do with your life. When my wife and I graduated from college, we didn’t have any debt. Instead of jumping into 9 to 5 jobs to start paying back loans, we went to Latin America to teach English at a university. You can also think of Mrs. LAMF’s recent choice of whether to pursue her photography business or find another day job. While she hasn’t announced her decision yet, I imagine that she wouldn’t think twice about avoiding another “regular” job if they were in debt. Simply put, staying out of debt gives you lots of options down the road.
- Peace of Mind: Having peace of mind is priceless. Instead of constantly worrying about how you are going to repay your loans, you are able to rest easy. You don’t have to look over your shoulder for debt collectors or wince as your open the bills. Knowing that you don’t owe money to anyone takes a lot of weight off your shoulders.
- Compound Interest: I know you are thinking that I already covered interest, but being debt-free allows you to invest money. Instead of having to put part of your income towards debt, think of what you could do with that extra money. If you invest the money, you are capable of earning money on your money. How great does that sound? All the more reason to invest now!
If you are thinking about taking out loans to pay for something now, make sure that it is truly unavoidable. Thinking towards the future and avoiding debt at all costs can make a huge impact on your life.
How have you avoided debt?
This post was written by Corey, a staff writer from 20’s Finances where he shares his story staying debt free. He writes to help others plan for their future. Follow @20sFinances on Twitter for updates.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.