Advantages of Paying Down Your Debt

Advantages of Paying Down Your Debt

Written by Caitlin Wood
Last Updated October 5, 2015

Debt can sometimes feel like it’s a part of our everyday lives, it’s a constant issue which makes ignoring it a lot of easier. One of the hardest parts of debt repayment is taking that the first step to get started; if you never take that first step then you never have to come face to face with your debt. Living in blissful ignorance may seem like a good idea but in reality taking the time to face your debt can and will improve your life in so many ways.

The thing about debt is that on the outside it can seem like an impenetrable issue, one that you’re doomed to be burdened with forever. If there’s one thing that we want you to understand, it’s that debt can be conquered and the sooner you start dealing with it the quicker it will be paid off the less painful it will be.

Need a bit more motivation? Here are the top reasons why it’s so important to stop ignoring your debt and face it head on.

  1. Financial Stability

Debt can weigh heavily on both your finances and your personal life; more often than not it will keep you from taking advantage of opportunities which could be beneficial to your future. Financial stability is something everyone wants and something that debt is very good at preventing. Wasting a majority of your income on interest and minimum payments will hinder your ability to create a financially stable future for yourself. You need to create a budget and a plan that will allow you to starting making larger payments towards your deb so that you can become debt free sooner.

  1. A Good Credit Score

Debt greatly affects your credit score. Too much debt means that your debt utilization ratio will increase which will in return make it more difficult for you to get approved for a loan or new credit card. Furthermore, if you are approved for a loan or new credit card you will more than likely be offered a higher interest rate and less than favourable terms. A high credit score and a credit history that proves you can responsibly manage your finances will open up countless doors for you now and in the future.

  1. Interest Savings

Debt accumulates interest and depending on how much debt you have, interest could be ruining your finances. Stop acquiring more debt as soon as possible and then work as hard as you can to pay off the principal of your debt. Paying off your debts means paying less interest which then means you’ll have more money in the bank to start accumulating the kind of interest you actually want.

  1. Your Personal Life

Debt is one of the most stressful things you’ll have to deal with in life, it can and will take a toll on your personal relationships and make you feel as though there is no end in sight. Finally feeling free of your debts and getting rid of the guilt are both great motivators so use them to your advantage and start paying down your debt now. Your future more relaxed self will thank you, trust us.

  1. The Future

No one knows what the future holds so heading in that direction with more debt than you can handle and no plan to pay it off is a serious problem. When you take on more debt you’re basically hoping that you’ll have enough income in the future to pay it back. This is obviously an issue as you have no idea what your income will be in the future or whether you’ll even have one. Paying down you debts now will allow you to have a brighter financial future where you income isn’t already spent on debt repayment.

Make a Plan and Start Today

We hope that you’ve decided to face your debt head on and that you’re determined to finally be debt free. If this is true then you definitely need a plan. Create a budget, make some lists and get organized and no matter what your plan is just remember that the sooner you start the sooner you’ll finally be able to say you’re debt free.

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

Click on the star to rate it!

How useful was this post?

Research & Compare

Canada's Loan Comparison Platform

Largest Lender Network In Canada

Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.

Make Smarter Borrowing Decisions

Whether you have good credit or poor credit, building financial awareness is the best way to save. Find tips, guides and tools to make better financial decisions.

Save With Loans Canada

Special Offers

50 Free Trades Offer

50 Free Trades Offer
Ends August 31st, 2022

Almost $500 in commission-free trades. Code “50TRADESFREE”. Conditions apply.

View Offer
Earn 5% Cash Back With Neo

Earn 5% Cash Back With Neo
No annual fee!

Earn an average 5%¹ cash back at thousands of partners and at least 1%² cashback guaranteed.

View Offer
Build Credit With Refresh

Build Credit With Refresh

Build credit while spending money with the Refresh Financial VISA card.

View Offer
Build Credit For $7/Month

Build Credit For $7/Month

With KOHO’s prepaid card you can build a better credit score for just $7/month.

View Offer
Industry Spotlight

What's happening with Canada's credit industry?

addy ⎯ Making Real Estate Accessible To All Canadians

addy ⎯ Making Real Estate Accessible To All Canadians

Check out our interview with addy; a platform that allows Canadians to invest in different properties across Canada with as little as $1.

Read Post
Find The Best Rate
In Your Region
Best Personal Loan Provider by Greedy Rates

Confidential & risk-free

All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.

When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.

Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.

Your data is protected and your connection is encrypted.

Loans Canada Services Are 100% Free. Disclaimer

Keep Track Of Your Credit Score

Subscribe with Credit Verify to monitor your credit rating and get your free credit score.