6 Things You Didn’t Know About Paying Off Debt

There are many other factors to paying off debt that you may not have considered or may not even know about. With that in mind, here are six things you didn’t know about paying off debt.

1. Paying Off Debt Will Help You Retire Early

Your income is the most valuable wealth-building tool that you have. When you work on paying off debt, you are enabling your income to be used for a more fulfilling purpose.

2. You’ll Create Job Flexibility

Paying off debt is a great way to free up money in your budget to create more flexibility when it comes to trading your time for money. That is because you will have fewer monetary obligations to fulfill every month.

To mitigate any hard-hits to your credit score, continue making on-time payments, and balancing your utilization rate. You can also consider paying off debt with high-interest rates first, like personal loans and credit cards.

3. Your Credit Score Might Tank or Disappear

Here are great examples of what you can do with the extra money that’s burning a hole in your pocket: - Build up an emergency fund - Start or increase retirement contributions (IRAs and 401ks are an excellent place to start.) - Save for college expenses in a 529 - Make a sinking fund for a vacation (utilize travel rewards to decrease your costs)

4. More Money Will Appear in Your Budget

5. Debt Strategies Affect Your Total Costs

When you’re paying off debt, you need to go about it the right way. That involves thinking about how your debt payoff strategy will affect your total cost of debt. The financially savvy way of paying off debt is the debt avalanche method.

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