If you’re like most people, you probably have a decent amount of debt that you’re paying down with monthly payments. That’s great, but do you know how long it’s going to take to finish paying everything off?
There are a handful of disadvantages to taking your time becoming debt-free. For instance, the longer you remain in debt, the more interest you’ll pay, and the more stress you’ll feel.
It’s time to get rid of it once and for all.
Here are some of the best reasons to eliminate your debt as fast as you can.
1. Your creditors might sue you (and win)
When a debt has gone unpaid for a certain period of time, many creditors sue the debtor for the balance. If this happens to you and they win, which is likely, your creditors can end up getting a lien on your car, your house, or your bank account.
Bankruptcy is a quick way to eliminate debt, but you have to qualify first. For example, filing under Chapter 7 will discharge (eliminate) your unsecured debt, like credit cards and medical bills, while filing under Chapter 13 will discharge unsecured debt and set you up with an income-based repayment plan for secured debt, like your car payment and mortgage.
To find out if you qualify for bankruptcy, connect with an attorney as soon as possible. Most lawyers offer free consultations, so you have absolutely nothing to lose by checking it out.
2. Debt can weigh heavily on you
Many people today, especially Millennials, feel absolutely crushed by debt. Whether it’s a student loan, back taxes, credit card bills, car payments, or a mortgage, being in debt feels awful.
If you feel like your debt is taking a toll on you emotionally, it’s high time to eliminate it as quickly as possible. Whether you just amp up your payments, file for bankruptcy, or consolidate your debts, you’ll feel better when it’s all over.
3. Interest adds up fast
If you just make your payments every month without a second thought, you might not realize just how much extra you’re paying in interest.
Then there’s compounding interest that applies interest to your interest. It sounds awful, and it is. It’s just one of many types of interest people pay for the privilege of getting a loan. The more sources of debt you have, the more interest you’re paying.
No matter what type of debt you owe, if there’s interest involved, it will keep growing until you pay it off. If you owe back taxes, there are caps on how much interest you can accrue, but it’s still extra money you won’t have to pay if you handle your debt fast.
4. You might need to use credit for something important
Since many things in this world require debt, it’s always a good idea to be in a position where you can take out a small loan or use your credit card for something important. If you carry too many sources of debt, and your debt-to-income ratio is high, your chance of being approved for something else is slim. However, if you limit the amount of debt you carry, it’s much easier to be approved for another line of credit.
When you pay off existing debt as fast as possible, you open the door for the possibility of getting more credit when you need it. For instance, you might want to take out a small business loan or you might need to buy a critically important product that requires paying in installments.
The faster you get out of debt, the sooner you’ll feel free
Nobody likes the feeling of owing money, and it’s especially stressful when you struggle to make your payments. If you’re in debt to any degree, start taking steps now to eliminate it through debt consolidation or filing for bankruptcy.
You’ll restore peace and calm to your life the moment you make the decision to get out of debt. Once the end is in sight, it won’t be as stressful, and you’ll be able to enjoy your life knowing that you will soon be debt-free!