As a fresh graduate, it’s a great idea to pay off your debts early as you are still not well versed with the investment world. Whereas, a person in his/her 30’s or 40’s would prefer to delay the debt payment as they could see how the money could be invested in something else that would yield better returns. So, whether you should pay off your debt early or depends on a lot of factors.

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. No one can cope with such burden without causing themselves harm either by eating excess junk food or finding unethical ways to clear the debt. Both can make your life worse. It can even put you in jail.

So, by paying off your debt early you can focus your attention on good things in life. You don’t have to wake up every morning with a feeling of dread. The financial burden can cause anxiety and stress even in strong-willed people. So, pay off your debt as early as possible.  

2) Lots of money for other important things

Life is not just about going to work every day just so that you can earn enough money to pay off your debt. There is a lot more to it and every one of us deserves to experience life at it’s fullest. In addition, paying off your debt early is not easy. You will have to work twice as harder. But this is only in the short term. In the long term, you will have more money to spend on things like your children’s education, better healthcare, and much-needed vacations. While if don’t clear your debts, your life will pass by quickly without you experiencing all the good things.


1) You might hurt your credit

Paying off your debt early may feel great for a while. But that doesn’t mean you will never need credit in the future? Moreover, credit cards when used wisely are always useful.

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 instance, it is a wise decision to go 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 done. This will allow you to make better financial decisions in the future. One way to learn personal finance is to read blogs like this one which talks about all facets of personal finance in a clear and concise manner.