7 Ways Paying off Debt in 2020 Can Change Your Life

1. You’ll feel better about yourself

Paying off debt won’t solve all your problems, but it’s one of the best ways to boost your self-image. Once you relegate calls from bill collectors, debt shame and beating yourself up for missed or late payments to the past, you’ll be a better version of yourself.

You’ll stand straighter, sleep better and be a more likeable person when you’re not stressed over how to make all those payments every month. Plus, you’ll feel great about accomplishing what may have seemed an insurmountable goal before you hunkered down and got serious about eliminating debt.

2. You may improve your credit score

One factor that affects around 30% of your credit score is your credit utilization ratio, which is the percentage of available credit that you’re using. For example, if your total available credit is $10,000 in credit card limits, and you have $5,000 in credit card debt, your credit utilization rate would be 50%.

Ideally, you should keep your credit utilization rate below 30% for a better credit score, according to major credit bureau Experian. When you pay off debt (and don’t replace it with new debt), you may improve your credit score by lowering your credit utilization rate.

3. You’ll be free to pursue goals you couldn’t afford before

Maybe buying a house seems impossible because you have too much debt or past-due payments dragged down your credit score. Perhaps you want to get married, return to school or start a family but can’t get started on milestone goals because most of your money goes toward credit card, student loan or other debt.

Even if paying off debt in 2020 means you must live frugally or take a part-time job for a while, the sacrifice will be worth it when financial freedom clears the path to your goals.

4. Career opportunities expand

Are you staying at a job because you don’t dare make a change while you owe so many creditors? Maybe you want to further your education so you can get a better job, but instead, you work overtime hours so you can make multiple monthly payments on time.

There’s no guarantee that you’ll get a new or better job once you pay off debt. However, you’ll have more options, since career choices won’t hinge mainly (or solely) on how much you earn.

Find out: 20 Dreams That Credit Card Payments Hold You Back From Achieving

5. You can save more for retirement

Whatever your age, you’ll eventually retire. So, the sooner you start socking money away for retirement, the better off you’ll be when you wave goodbye to the workaday world.

What if you could eventually save the hundreds of dollars you currently pay each month toward debt in a retirement account? You can even start gradually, saving a bit more as you pay off each debt.

6. You may be able to retire earlier

Owing a large amount of credit card or other debt as you near retirement age may mean you have to work longer because you can’t afford to retire. Even worse, many people dip into retirement savings to pay off debt, diminishing retirement income.

Around 23% of respondents in a 2019 Bankrate survey cited “debt repayment” as a reason they took early withdrawals from retirement accounts. ^[2] By breaking the debt habit in 2020, you have a better chance of not only saving more for retirement but also needing less of a retirement income.

7. You move up the ranks as a dating choice

Nobody fantasizes about finding a soulmate who has bad credit and a bunch of debt. You may have to work hard to pay off debt this year, but once you do it, you’ll become better dating or marriage material.

Having no debt shows potential mates that you’re responsible, dependable and planning for a better future. Good looks and passion fade eventually, but a zero balance is forever sexy.

This article by Deb Hipp was originally published on Debt.com.