Should You Pay Off Your Debt Early? Pros & Cons
Dec 19 | 2024
Let’s get down to the nitty gritty when it comes to paying off your debt early. Debt can accumulate in many ways, be it credit card debt, student loans, gym memberships, car loans, mortgages, or medical bills.
When you consider all the debt that’s piled up over time, it can become invasive and extremely overwhelming. (Just thinking about my student loans gives me a stress rash!) And while it seems like the simple solution is to pay off your debt ASAP, this is often much easier said than done. And while there are several awesome benefits to paying off your debt STAT, there are also a heap of cons to doing so.
Ultimately, there is really no right or wrong answer here – the key is to pick the method that works best for you and your needs. To pay off debt early or not to pay off debt early? That is the question. So let’s get into it.
Pros:
Pro: Paying Off Debt Early Can Be The Ultimate Stress Reliever
Photo Credit: Jakob Owens (Unsplash)
What can be a more significant weight off your shoulders than paying off all your debt as efficiently and swiftly as possible? What a massive achievement it would be to get all those student loans and credit card debt paid off, so you don’t feel like there’s any killer financial burdens holding you back.
This can be a huge confidence booster, as you’ll feel like you’re “adulting” to the truest capacity. Plus, you’ll be able to sleep much better at night knowing you were able to reach a major goal that many Americans feel incapable of achieving. Go you!
Pro: Early-paid Debt May Require ‘Delayed Gratification’
When I learned the term delayed gratification, it completely changed my life. While I used to only focus on the here-and-now at the expense of future consequences, reading up on delayed gratification has made me much more responsible and productive.
Essentially, delayed gratification is when you sacrifice your present self in order to achieve substantial gratification for your future self. So, while you may fantasize about quitting your job and bursting out the front double doors of the skyscraper, this may only benefit you in the short term. In the long term, though, it will lead to you being unemployed and broke. Taking the time to really think about your long term goals and how to better your future self is seminal here.
By paying off your debt sooner than later, you’re doing a favor for future you.
Pro: Paying Off Debt ASAP Can Grant More Financial Freedom
Photo Credit: Kateryna Hliznits, Unsplash
When you don’t have all those monthly expenses to pay off, you’ll gain the financial freedom to spend on things that improve your quality of life. Now, since you’re no longer in debt, you can finally afford that trip to Lake Como you’ve been dreaming about for ages. You can feel the Italian sun soaking the nape of your neck as you take another lick of hazelnut gelato, gazing out at the villas, knowing you are free. Knowing you’ve made it, and that nothing – no financial burdens out there – are going to hold you back.
Pro: You Can Build An Emergency Fund
Another reason why paying off your debt is so appealing is that it allows you to save responsibly. Emergency funds can come in handy when you least expect it. There are times you might be in need of a wad of cash. Thinking ahead and saving up for any future curveballs life throws at you can be a major life-saver down the road.
Pro: You Can Save For Retirement Plans
Photo Credit: Julius Yls (Unsplash)
Although you may be thinking it’s too early to even think about retirement, it’s never too early to formulate your long-term plans. Think about the long term goals you’d like to set out for yourself in the future. Are there countries you’ve always wanted to visit? Classes you want to take? A lake house you’d love to live in? Thinking far ahead is another good example of delayed gratification that can be put into play here.
Pro: It Can Help Relieve Anxiety And Depression
Photo Credit: Zachary Kadolph (Unsplash)
Studies show that having a hefty amount of debt can lead to anxiety and depression. To prevent this, you can organize your finances ahead of time, reducing the risk of mental health challenges piling up alongside your debt.
Cons:
Now let’s dive into the cons of wiping out your debt too soon. While it may seem impossible that there’d be any cons to doing the responsible thing, you might be surprised…
Con: Paying Off Debt Early Can Lead To Quick-Burnout
Photo Credit: Andrew Neel (Unsplash)
You know when you go on a super strict diet and you end up shedding a bunch of weight but in an unhealthy way? So you limit yourself to eating only salads for weeks, but this unsustainable approach often leads to gaining all the weight back – and then some.
Some people are under the impression that the same theory can apply to your financial goals. If you work your butt off to wipe out your debt by working extra-extra shifts and taking on every part-time job under the sun, it can quickly wear you down. This kind of excessive grinding can take a toll. Before you know it, you’ll be completely burned out—so mentally and physically drained that even handling a regular workload feels impossible after pushing yourself too far.
Con: It May Stop You From Living Life To The Fullest
From a more philosophical standpoint, there are significant lifestyle sacrifices that come with paying off your debt early. When you’re spending all your time focusing on financial goals and achievements, you miss life’s simple pleasures. There’s no time to smell the flowers – because you’re too busy working that double shift. This can be exhausting, and while you’re trying to be responsible, it might feel like life is passing you by and you’re wasting your life away.
Con: Over-focusing On Financial Goals Can Lead To Depression
Earlier, I stated how crushing debt can lead to symptoms of anxiety and depression. On the flip side, obsessing over “the grind” can also lead to this negative mental state. “Grind culture” tends to favor financial success over meaningful life experiences. Neglecting the emotional aspects of life – like friendships, family, and romance – can leave you feeling disconnected and unfulfilled. Over time, this can lead to emptiness, anxiety, and even depression.
No matter what your goals are, the key is to find a solid balance. It’s super important to manage your finances responsibly while still making space to enjoy the present moment. Striking this harmony allows you to live fully in the here and now, with as much zest as possible.
