You probably know the importance of getting out of debt. But looking at it as the quickest way to give yourself a raise can really motivate you to stick with your plan!
Money is like water in a bucket and your debts are holes in the bucket. So every month you have debt, the funds in your money bucket are being leaked out more and more.
But when you pay off your debt accounts and regain control of your finances, it's like plugging the holes in your bucket and being able to use the money as you see fit. No more siphoning away your hard-earned money.
According to Experian, the average monthly debt payment in the U.S. ranges from $763 to $1,285. Imagine what you could do with that extra income if it wasn't going towards debt!
Symptoms of Being in Debt
Before we get into how to give yourself a raise by not having debt, let's look at what exactly qualifies as a debt problem:
-Your debts are growing instead of shrinking
-You get hit with late payments and interest charges
-You have a low credit score
-You're living paycheck to paycheck
-You're only able to pay the minimum on your credit cards
-You're unable to save for the future
These are just a few of the things that happen when you have a debt problem, but there are other things too -- like stress or constantly arguing with your spouse. Creating a plan to pay off debt will not only give you a raise but help you cure the symptoms that occur from debt.
Here's how to instantly give yourself a raise by regaining control of your money:
1. Paying Off Debt Stops Interest Fees and Charges
When you decide to finally get out of debt and make your financial goals a priority, you're no longer at the mercy of financial institutions and loan sharks. Paying off debt stops the interest charges, late fees and annual credit card fees which constantly drain your monthly income.
Your income is your most powerful wealth building tool, so by not wasting it on late fees and credit charge interest, you're instantly giving yourself a raise. Then you can use that new-found money to save, invest or give away however you see fit.
2. Paying Off Debt Frees Up Future Income
None of us truly know what our income will be in the future. If the 2008 recession taught us anything, it's that no one can count on their place in the economy. We can no longer continue taking out loans, or buying things on credit with the promise of paying it back in the future. The risk is simply too great.
What if you lose your job? What if your child gets seriously injured?
Your future income and stability are not worth sacrificing for the latest tech gadget or new car. If you really want those things, take the time to save up cash to pay for them outright. By keeping your finances in check, when the next recession or economic downturn hits you'll be prepared and fully capable of riding out any waves.
3. Paying Off Debt Allows You to Save and Invest
Saving cash for an emergency fund or investing into your retirement account are some of the best ways to "spend" your money. But if you're in debt, you're probably unable to make much of a dent towards those financial goals.
By eliminating your debts you can start earning interest from your savings and investment accounts, instead of paying them. You can even help out family members or friends who need help, or start giving a portion of your income to charity. It's a win-win!
Spend Money On What Matters
When you prioritize what you spend your money on, you're able to really determine what things are worth paying for, and what items are worth eliminating. For example; having a cell phone with a good internet plan may be more important to you (and your mobile business) than paying for cable TV service.
Stop paying for the things that you don't really care about, and start putting more money in your pocket. Remind yourself that it's more beneficial to pay for experiences, not things. And when you've gotten your budget in order, you can spend money on things that really matter.
Give Yourself a Raise By Paying Off Debt
Debt can be really frustrating. But you can conquer it. And staying motivated is how you'll do it! If you haven't already, it's time to create a plan to pay off your debts today.
To see how much of a raise you could be getting, add up all your debt accounts, or view them in a financial software like ReadyForZero. The total of your debt payments is what you could be saving, or spending, each month -- instead of paying off debt.
How's that for motivation to kick your debt repayment into high gear?
This content is property of Careful Cents and originally appeared here.