It’s hard to believe there are any benefits to having debt. Nowadays, most people will have some kind of debt from credit cards, overdraft payments, student loan payments, mortgage, etc. No one likes to be in debt, but I think there can be value to it. Below are 4 lessons I have learned from having debt:
Debt lesson #1: It taught me to take responsibility for my finances.
It can cause major stress to have debt in your life. But it is not going to magically disappear on its own. You have to make a conscious decision to create a plan to get yourself out of it. For me, I was determined to pay off my debt on my own especially since it was solely my own. By making this decision, it was the first step in empowering myself to take charge of my finances.
Debt lesson #2: It made me evaluate my expenses.
I needed to know what all my expenses were and I began tracking my expenses and pay cheques. I did it through a tracking app. There are many tracking apps available for both iPhone and Android users. Rachel uses the app Wally and I use Spendee. I’m a visual person and love that the app has colour-coordinated all the categories to easily identify them. Rachel loves that Wally allows you to input data quickly. Check out our in-depth comparison of these apps. For example, all my bills are in green and I can view all transactions for each month. When I was evaluating my expenses, I also reviewed my banking accounts. For example, my current chequing account was not meeting my needs and there were unnecessary monthly charges. I began to look into other chequing accounts and found an account where I could earn interest and have no monthly fees.
Debt lesson #3: I learned to set monthly financial goals.
Once I evaluated my expenses, I determined a range of how much money was left from my income each month. I say a range of certain expenses will vary from month to month such as groceries, entertainment, gifts etc. Then you can determine if you can pay more than your minimum debt payment, which would be ideal especially if your goal is to pay off your debt sooner. One of my other monthly goals was an emergency fund. I decided on $5000 for this goal. At first, it was a daunting goal but I needed a safety net for my financial security and mental well-being. I didn’t want to incur an unexpected major expense like car repairs and have to charge it to my credit card to incur further debt. Once I established an emergency fund, it greatly eased my anxiety to know that I was prepared for emergency expenses.
Debt lesson #4: It taught me financial literacy.
The first and biggest lesson I learned from having debt is how to budget. I don’t think that you should only budget when you have debt. You could budget to save money towards an emergency fund, to buy a car or to have a down payment on a home. Budgeting can help prevent you from accumulating debt again. Here is a great book to help you learn more about budgeting. Best part is, it’s low price will definitely fit your budget: Budgeting: How to Make a Budget and Manage Your Money and Personal Finances Like a Pro (FREE Bonus Inside) (Budgeting, Money Management, Personal Finance, Planning Guide)
The second lesson was on how to save. There are many different ways to save. One of the strategies I used was paying cash for smaller expenses such as coffee and putting the leftover change into a piggy bank like this adorable Blue Ceramic Piggy Bank / Blue Pig Money Box. You can remove the change and deposit it on a monthly basis. It’s an easy strategy but it can certainly help you towards achieving your financial goals.
Do you think there are any other benefits to having debt?