9 Reasons to Pay Off Your Debt

Paying off debt requires a great deal of motivation. If you want to keep the momentum in your debt payoff, you have to continually remind yourself of the reasons why you want to get out of debt. How will paying off your outstanding bills benefit your life? What can you do when you’re debt free that you can’t do now? If you’re stumped for debt payoff motivation, here are nine reasons you should be debt free.

Increase Your Financial Security

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Debt is a serious threat to your financial security because it keeps you from making the most of your money. What you spend on debt payments could be stashed away for a rainy day, for your retirement, or for your kids’ college education. Once you become debt free, you’ll have more room in your budget to work on becoming financially secure.

Spend on the Things You Enjoy (Without Feeling Guilty)

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Paying for things by taking on debt leaves you with less money to do the things you really want to do in life

Unfortunately, this leads many people deeper into debt. They can’t afford to buy things because of the debt they have, so they use more debt to make purchases until they reach the end of their borrowing rope. Paying off your debt ends this vicious cycle and frees up your money to buy the things you really enjoy.

Reduce the Stress in Your Life

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Debt can lead to extra stress as you worry about how you're going to cover all the debt payments and other living expenses. A little stress every once in a while isn’t harmful, but constant stress can lead to serious health issues including migraines and even heart attack. In some cases, becoming debt free can literally save your life.

Reduce the Number of Bills You Pay

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The more people you owe, the more bills you have to keep up with and pay. Once you become debt free, you’ll have fewer bills coming in the mail every month. You’ll only have a few monthly expenses to worry about, things like utilities, insurance, and cell phone service—all expenses that don’t have minimum payments and interest charges and long-term obligations.

Improve Your Credit Score

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Too much debt, especially credit card debt, can have a negative impact on your credit score. When your credit card balances are high compared with your credit limit, your credit score takes a hit. The same thing applies when your loan balances are high compared to the original borrowed amount. Being debt free has the additional benefit of helping raise your credit score.

Teach Your Children Good Money Habits

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When it comes to finances, it’s better to lead by example. If you want your children to stay away from debt, tell them the importance of being debt free and show them by actually being debt free. That way, your financial lessons won’t seem hypocritical.

Own Your Assets

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When you have a mortgage, you don’t own your home, the bank does. The same thing goes for your car and your auto loan. Being debt free means you own the house you live in, the car you drive, and the clothes you wear. Paying off your secured debts in particular means you don't have to worry about the threat of foreclosure or repossession.


Secured debts are those that are tied to collateral, like property, which can be repossessed if you default. Unsecured debts, on the other hand, aren't protected by any collateral.

Increase Your Future Earnings

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Whenever you take out a loan or charge something on a credit card, you’re simply borrowing from your future income. So, the $1,000 or $100,000 you spend today will be taken from what you earn in the days to come.

Truthfully, debt decreases your future standard of living, by giving you less money to live on than what you have today. Make the most of the income you expect to earn by taking steps to become debt free.

Get Out from Under Your Lenders' Control

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As long as you have outstanding debt, you don’t get to make the decisions about your money; your lenders do. They decide how much you pay them and when you pay them. In some cases, they can increase your interest rate and minimum payment and give you less than two months to adjust your budget to fit them. Paying off your debt and becoming debt free puts you in complete control of your money.

Frequently Asked Questions (FAQs)

What percentage of America is debt-free?

A 2021 study from Northwestern Mutual found that 32% of Americans don't have any major sources of debt. This survey included detailed snapshots of debt portfolios for more than 2,300 U.S. adults.

I'm debt-free. Now what should I do?

Once you pay off all of your debt, you can work on building your emergency savings and retirement savings. Stowing away emergency savings can help you ensure that you won't fall back into debt when you face unexpected expenses. Retirement savings give you long-term financial stability and smooth the transition out of working life when you retire.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. National Center for Biotechnology Information. "Significant Financial Stress Associated With 13-Fold Higher Odds of Having a Heart Attack." Cardiovascular Journal of Africa.

  2. Northwestern Mutual. "2021 Planning & Progress Study," Pages 2-5.

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