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The Pros and Cons of Paying Off Your Debt Early

The Pros and Cons of Paying Off Your Debt Early

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As a recent college graduate in your 20s, it would be a good idea to start paying off your debts and loans as soon as possible. If you’re a bit older, say in your 30s or 40s, perhaps you should delay your payments until you have invested in something profitable. However, whether you pay off your debts early or not is going to ultimately depend on your personal financial situation. Still undecided? Here are some pros and cons to help you. 

Here are the Pros and Cons of Paying Off Your Debt Early.


1) Reduced Anxiety and Stress

Waking up every morning with the thought of having to clear a massive debt can be disheartening. It can also be quite stressful, ultimately affecting your lifestyle habits such as eating and sleeping.

You can reduce this stress by paying off your debt early and spending your energy elsewhere. You don’t have to wake up every morning with a feeling of dread. Financial burdens can cause anxiety and stress even in other wise strong and happy people. This is probably the most important reason to work on paying off your debt as early as possible.  

2) Lots of Money for Other Important Things

Life is not about going to work every day just so that you can earn enough money to pay off your debt. There’s a lot more to it and every one of us deserves to experience life at its fullest. Paying off your debt early is not easy; you’re gonna have to work twice as hard. But remember: this is only for a short time. At the end of the day you’ll have more money to spend on things like your children’s education, better healthcare, or much needed vacations. 


1) You Might Hurt Your Credit

Paying off your debt early may feel great for a while but a drawback to this is not having a functioning credit history. 

Major credit card bureaus maintain credit history of every individual in the country. Good credit history means you can get a good deal with low-interest rates. You can still get a credit card with no history at all but you will have to pay a higher APR(annual percentage rate).

2) You May Lose Better Investment Opportunities

Sometimes it is better to not pay off the debt quickly. Debts like home loans come with some tax benefits. It’s important to identify your debt as good debt or bad debt. Good debt is like a long term investment that grows with time. For example it’s a good idea to aim for a good education by applying for a student loan. A student loan has one of the lowest interest rates and the payment policy is also quite lenient. 


Whether you clear your debt early or not, it’s essential to educate yourself about how investments are made. This will allow you to make better financial decisions in the future. One way to learn personal finance is to read blogs like this that talk about all facets of personal finance in a clear and concise manner.

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