What are the Problems of being totally Debt-Free? ~ The International Finance

Saturday, 17 March 2018

What are the Problems of being totally Debt-Free?

You may not really have realized it yet but do let us tell you that there are a few disadvantages of being debt-free. That a healthy economy is largely reliant on debt may not really be inspiration enough for you to not become debt-free and achieve the much talked about financialfreedom but let us tell you that there are other reasons that may lead you to think otherwise. Kindly keep reading on in order to find out why exactly being 100% debt-free is never advisable.

Do you know that debt is important for economy?


Yes. Let us start off with what we have already mentioned—healthy economies do rely on debts. The primarily consumer-driven economy thrives on the prospect of people’s spending. Yes, it’s true that a high amount of debt can result in the downfall of an economy but do let us tell you that in some cases even a high percentage of savings is held responsible for sluggish economic growth. While everyone would aim for a high-income driven economic status, it’s true that it’s the credit card debts that actually go on to fuel maximum economic growth.

How can a debt-free life lead to indecision?


The chances of indecision also increase. Yes. As has been pointed out by many financial experts out there, let us tell you that becoming 100% debt free also has its own vagaries. It makes it difficult for you to make prompt financial decisions. Where exactly should you put your money? Earlier, when you had debt, it was way easier for you to determine what exactly you would do with any extra amount of money earned by you. You knew that the dollars thus earned would be spent on paying off your debts. However, with no debt to deal with you are now confused as to whether the extra money should go to the savings account or to pay your bills or for that matter to leisure expenses.
So, that does intend to become a little stressful for you!

Are the market returns higher than rates of interest?


There is every chance of the market returns being higher than that of rates of interest. If the stockmarket is experiencing an upward trend and the interest rates are very low, then you being debt-free is not going to help you in any which way. For instance, with some money yet to be paid, you can pay off some money and use the remaining in stock market and secure good returns. This is the reason why even the wealthiest of people actually end up mortgaging their homes.

What’s the myth all about?


Last but not the least it is absolutely a fallacy to think that financial disagreements happen owing to debt. Mostly, couples have different financial priorities altogether – that might be related to savings and spending as well. Trouble starts brewing because they fail to communicate their priorities to each other.

That debt free life is a bed of roses is a myth and that has been amply proved by the points mentioned above.

About Author

Amit Singh is a founder of Theinternationalfinance.com he share his immense knowledge of Finance in this blog.

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